Germany aims to safeguard its steel industry by reducing electricity costs and advocating for reforms to the EU's carbon border tariff.

Germany's government has announced plans to safeguard the steel industry by lowering electricity prices and seeking changes to EU policies, including the carbon border tariff system. Chancellor Friedrich Merz emphasized that without significant reductions in electricity costs, the industry's viability is at risk. An “industry power price” subsidy is set to offer relief for three years starting in 2026, and Merz anticipates quick approval of the state aid scheme from the EU.

Currently, the German government is finalizing negotiations with the European Commission on electricity price incentives for industrial firms, aiming for implementation by January 2026. However, sources indicate that the steel sector may not benefit from the industry power price since energy-intensive companies already receive support through power price compensation.

Additionally, the government is advocating for EU action against dumping and subsidies to lower import levels, supporting related EU proposals. Germany is also calling for reforms to the Carbon Border Adjustment Mechanism (CBAM) to include downstream steel products. If adequate protection against carbon leakage isn't achieved, the EU should extend free emissions allowances for steel beyond the current plan ending in 2034. Furthermore, Germany seeks a slower reduction of emissions caps in the Emissions Trading System to ensure continued allowance issuance past 2039.

Finance Minister Lars Klingbeil stated that sustainability will be central to the German steel strategy, focusing on climate-friendly, high-quality steel from Germany and Europe. The government plans to support the transition to clean steel through various programs like climate contracts.