On Friday, ArcelorMittal (NYSE: MT), the world’s second-largest steelmaker, said it is delaying planned green investments, blaming uncertainties over European Union regulatory directives.
In January, ArcelorMittal secured 850 million euros ($885 million) in subsidies from the French government to support its 1.7 billion euro decarbonization investment program through 2030 in its Dunkirk and Fos-sur-Mer sites in France.
However, it has yet to make final investment decisions over these projects, notably the replacement of two out of three blast furnaces in Dunkirk for green hydrogen-powered facilities, ArcelorMittal told Reuters on Friday.
“We are operating in a difficult market, and there are a number of policy uncertainties that are impacting the industry,” the company said in an emailed statement.
“We need an effective carbon border adjustment mechanism, as well as more robust trade defense measures, to strengthen the business case,” it added.
ArcelorMittal (NYSE: MT) is also waiting for the European Commission’s decision regarding the Steel and Metals Action Plan, it said.
“Arcelor has been very consistent in its commentary that it won’t commit to material decarbonization spending unless the right circumstances are in place from broader EU policy,” KeyBanc analyst Philip Gibbs told Reuters.
European steelmakers, among the biggest global CO2 polluters, are under intense pressure to cut their greenhouse gas emissions while at the same time maintaining profitability amid fierce competition, mainly from China.
“Companies are cutting down capacity, at the same time they continue to invest in the greening, but they are slowing down and it depends on the region. In some regions it’s so bad that they don’t make any investment anymore,” said Eurofer Director General Axel Eggert.
Green hydrogen, produced from splitting water into hydrogen and oxygen using renewables such as solar or wind, is considered a cleaner energy source, but the technology is still in its infancy and is relatively expensive.
In October, Germany’s Thyssenkrupp said it is reviewing its 3 billion euro plan for the production of green steel, highlighting faced by the industry in meeting emissions targets while staying competitive.
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