27 August 2026 – Saarland’s “green steel” is supposed to work, whatever the political cost. Economy Minister Jürgen Barke calls the transformation “absolutely right” and describes state support as a necessary “insurance policy”. This exposes the real problem: the market is not deciding whether the project is economically viable. Politics is expected to make it viable.
Saarland’s Green Steel: Tax Billions First, Market Later
The Saarland state government is sticking to “green steel”. Economy Minister Jürgen Barke calls the decision “absolutely right”. Steel, he says, must be understood as an “overall political and economic project”, while state support represents a necessary “insurance policy”.
In doing so, Barke inadvertently identifies the core problem: the market is not supposed to determine whether the project is economically viable. Politics is supposed to make it viable afterwards.
Spend Taxpayers’ Money First, Then Declare There Is No Alternative
Power4Steel costs around €4.6 billion. The federal government and Saarland are contributing €2.6 billion, or around 56.5 per cent. But the subsidies do not end with construction. In 2025, the SPD additionally called for permanent funding programmes, needs based coverage of additional investment and operating costs, lower grid charges for industrial companies and a state supported industrial electricity price.
The reasoning given by the state parliament itself is particularly revealing. The transformation of the steel industry is now described as “effectively irreversible”. With every additional euro invested, the chosen path becomes more firmly established. The state must therefore continue to secure that path.
The risk of sunk costs thus becomes the argument for the next round of public spending.
Just for Green Steel: 8 TWh Become 16 TWh
At the same time, one fundamental production requirement is missing: energy. Barke told the state parliament as early as 2024 that the Green Steel transformation alone would double Saarland’s electricity demand from around eight to 16 TWh, and potentially push it even higher if the economy grows.
The expansion is lagging behind the political narrative. In 2024, Saarland added just 9.8 MW of wind capacity. At the same time, the state’s own climate protection strategy identifies limits to the expansion of renewable energy. The electricity grid must also first be expanded to accommodate the transformation. Among other projects, Amprion is planning a new Prims substation, which is scheduled to enter operation from 2029.
Hydrogen: An Unrealistic Promise of the Future for Years
The discrepancy becomes even clearer when it comes to hydrogen. Saarland’s hydrogen strategy envisaged connected consumers and pipelines reaching Dillinger Hütte by 2026. Yet in 2026, the planning approval procedure for the Leidingen to Dillingen pipeline is still under way. Commissioning is now planned for 2028.
Power4Steel states a long term requirement of up to 120,000 tonnes of hydrogen per year. So far, contracts have secured at least 6,000 tonnes annually from 2029. According to the current project presentation, Dillingen is not expected to be connected to the hydrogen backbone until 2032. The DRI plant can therefore operate using different mixtures of natural gas and hydrogen. “Green” is, initially, the theoretical target state, not necessarily an operational state.
Green Steel: And What If the Market Does Not Cooperate?
PwC reached a devastating conclusion in 2026: for Central Europe, none of the scenarios examined provides a competitive pathway for energy intensive primary steel production. Around half of Europe’s green steel projects have already been postponed, stopped or scaled back.
Yet the political response in Saarland is not to reassess the project, but to introduce even more state intervention: investment subsidies, relief from operating costs, cheaper energy, grid expansion, green lead markets and protection against import competition.
A remarkable concentration of power
There is also a remarkable concentration of power. Montan Stiftung Saar owns 100 per cent of SHS. Its Board of Trustees represents the owner and, according to the foundation, plays a central role in determining the strategic direction.
Its Chairman is former SPD federal minister Heiko Maas, who is also Chairman of the Supervisory Boards of SHS, Dillinger and Saarstahl. Chief Executive Stefan Rauber previously spent many years heading the energy and industry department of Saarland’s Ministry of Economic Affairs.
This does not legally make Saarstahl an “SPD company“. Instead, an effectively highly opaque corporate structure has been placed around it. But it does make the political proximity of a company that depends to an extraordinary extent on government decisions in an SPD governed state a legitimate subject of scrutiny.
The real farce is therefore this: first, an allegedly “green” business model is politically launched with billions in taxpayers’ money. Then it is declared irreversible. Finally, that very irreversibility is used as the justification for making the project economically viable through permanent political intervention.
The costs are borne by small and medium sized enterprises and by citizens, even if the “green steel” project has long since failed.
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