Germany knows green steel.

The very first carbon-neutral smelter in Europe, planned and financed by the Swedish start-up H2 Green Steel, will be built by a German company, the SMS Group from Düsseldorf.

A golden age could dawn for the plant manufacturer, who actively helped China to modernize its steel industry a few decades ago.

Everywhere - and at some point also in China, which is still hesitant - blast furnaces must be dismantled and replaced with clean technologies for climate protection.

The next major project lures in Duisburg: SMS is hoping for the multi-billion dollar order for the construction of a green steel plant from industry leader Thyssenkrupp, which intends to produce the first climate-neutral steel in 2026.

Salzgitter AG and Arcelor-Mittal want to do it a year earlier, in Saarland it could take a little longer.

There is not much time left if the federal government wants to achieve its climate protection goals.

The decarbonization of the steel industry, which alone emits around 30 percent of the carbon dioxide emissions of German industry, plays a key role in this.

Blast furnaces are becoming obsolete.

In direct reduction plants, iron ore is converted into sponge iron using natural gas and later green hydrogen.

When liquefied into pig iron, the material can be further processed into steel.

It is a project of the century that not only poses huge challenges for the steel industry.

It takes a lot of green electricity

Huge amounts of green electricity are required for the melting furnaces, and the need for electrolysis systems is even greater in order to produce at least part of the green hydrogen domestically.

Thousands of new wind turbines have to be set up, and the gaps in the power line network finally closed.

However, despite all the promises of acceleration, the expansion of renewables is only slowly getting off the ground.

After all, there are the first major preliminary contracts for hydrogen imports, and plans for loading ports and hydrogen pipelines are also taking shape.

In view of the risks and costs - the steel industry estimates more than 10 billion euros by 2030 for the technical conversion alone - the calls for state aid are getting louder and louder.

Especially since the whole industry is just going into reverse again: After a record year with unusually high prices, the steelmakers are preparing for a new dry spell.

It is all the more important for the industry that the EU has finally agreed on the long-awaited "green border adjustment".

As long as all trading partners do not pull together in climate protection, a kind of tariff on the CO2 footprint of iron, steel and other imported goods should become due and ensure fair competition.

Are politicians overdoing it with the aid?

The start-up financing – the federal and state governments usually cover more than half of the investment costs – is also making progress.

After approval of the Salzgitter package, Thyssenkrupp is hoping for EU approval.

In the next step, climate protection agreements are now being prepared, with which the state intends to partially offset the additional costs for the green transformation during a transitional period.

There is even talk of a quota system for the use of green steel in order to establish "lead markets" for climate-friendly materials.

With so much concession, it's debatable whether politicians aren't overdoing it with their aid commitments.

There is absolutely no question that steel is still a key industry for the German economy, with hundreds of thousands of jobs directly and indirectly dependent on it.

But does the entire value-added chain have to be kept in one's own country at great expense?

Wouldn't it be more efficient to move the first stage of processing to where green energy and green hydrogen are abundantly available?

Instead of hydrogen, Germany would import sponge iron in the future and process it into steel here.

Such models are also being discussed intensively and show the pressure that the green transformation is causing.

However, the logistical and geopolitical risks must not be ignored.

The past two years have shown how quickly supply chains can tear and control over important primary products can be lost.

This must not be repeated in steel production under any circumstances.

Sufficient self-sufficiency will also be required in the future for this material, which is so important throughout the industry.