By Joen Martinsen
As COP30 opens in Belém, a central question emerges in debates in Germany: how can Europe’s industries achieve rapid decarbonisation while safeguarding their competitiveness?
Just days before world leaders convened in Brazil, Berlin hosted its own high-stakes climate moment: the German Steel Summit on 6 November 2025. The gathering captured both the urgency of Europe’s industrial transition and the scale of what is at stake.
Chancellor Friedrich Merz, Lars Klingbeil (SPD), Gunnar Groebler, CEO of Salzgitter AG, and Jürgen Kerner, Chief Treasurer of IG Metall, stood shoulder to shoulder before the press, acknowledging the strain on one of Germany’s most strategic sectors.
The sector, long considered the beating heart of Germany’s industrial machinery, is under strain. High electricity prices, new tariffs from a protectionist US president, and a global market flooded with cheap steel, particularly from China, have created a perfect storm.
As COP30 debates how to realign global trade, energy and climate policy, Germany’s struggle over steel has become a microcosm of the wider challenge facing all industrial economies.
Against this backdrop, we took note of three themes that defined the summit- and that Germany must confront head-on if it wants to safeguard not only the strategic importance of domestic steel production, but also the social fabric tied to the thousands of jobs that depend on it.
Trade safeguards
It was clear that Trade was going to be a dominating topic for much of the summit. The commission had just presented its safeguard measures on the 07 October, as the current safeguard measures expire June 24, 2026. One of the most important takeaways from Berlin was the strong endorsement of those measures.
For years, Europe’s steel sector has been squeezed by relentless global overcapacity. The world produces far more steel than it consumes, with the surplus driven largely by China but increasingly also by the MENA region and parts of Southeast Asia. This creates constant downward pressure on prices, which Europe’s mills, many of them older, energy-intensive and costly to modernise, are not able to withstand. Competing on volume with these regions is simply not feasible, leaving European producers exposed in a market where price often outweighs quality or sustainability.
Germany’s producers have long asked for stronger protection against imports that undercut domestic production, and the message at the summit was unmistakable: Berlin now firmly supports tightening the EU’s trade defence toolkit. Government officials committed to moving quickly in Brussels and working closely with Paris to accelerate implementation.
CBAM: Briefly Mentioned, But Quietly
The Carbon Border Adjustment Mechanism (CBAM) also made an appearance, albeit a short one. CBAM is meant to ensure that imported steel pays the same carbon costs as steel made in Europe. In theory, it levels the playing field and discourages “carbon leakage,” where companies shift production to countries with weaker environmental rules. Together with the trade safeguards, is also an important tool to facilitate the right conditions to push for the type of steel sector we want in the EU, decarbonize the old, and in with the new.
While the speakers voiced clear support “we need to make it happen”, they did not stress the importance of sticking to the current timeline. With the transitional phase ending this year and payments starting in 2026, CBAM could become one of the most consequential tools for protecting Europe’s low-carbon steelmakers. The silence around timelines suggests that Berlin still hasn’t fully reconciled the political tensions CBAM brings.
Affordable energy
No industrial transformation can take root without reliable and affordable energy. This point was strongly felt at the summit, particularly among representatives from the steel sector, which is one of Germany’s most energy-intensive industries and has been heavily affected by rising electricity costs. For many companies, the Government’s renewed commitment to stabilising energy prices was not only welcome but also met with a sense of cautious optimism.
According to data from Ember (as of 5 November 2025), Germany’s average monthly wholesale day-ahead electricity price increased by 8.2 per cent, reaching €88.54 per megawatt hour. Although prices have declined significantly since the height of the 2022 energy crisis, they still remain well above pre-crisis levels and continue to undermine industrial competitiveness.
In response, policymakers are advancing measures such as an industrial electricity price and an extension of electricity price compensation schemes. These initiatives are intended to give steel producers and other energy-intensive sectors a genuine chance to regain their competitive footing, both within Europe and globally. At a recent press conference, Reiche stated, “I expect that we will be able to introduce the industrial electricity price on 1 January 2026.” This discounted tariff has become a central element of Chancellor Friedrich Merz’s plan to halt industrial decline and guide Germany back towards economic growth.
At the summit, one message was clear. Without predictable and affordable energy, Germany’s green steel transition cannot succeed. The country’s commitment to push for faster and more decisive action at the European level confirmed that this challenge extends well beyond national policy. Achieving a resilient, competitive and climate-aligned industrial future will require coordinated solutions across the European Union.
Green Lead Markets and “European Preference”
While trade safeguards took center stage, the speakers were equally clear that protection won’t revive the sector on its own. Europe needs demand.
Past experience has shown that anti-dumping measures can reduce imports from one country only to make room for cheaper imports from another, without boosting domestic production. The new trade safeguards proposed by the commission are better seen as measures to facilitate the right conditions to transform the sector into making the right investments to improve its competitiveness in the long-term.
In the process of transforming the sector and investing to phase out old coal based Blast Furnaces, Germany and Europe needs a strong, stable markets for green steel, supported by public procurement and private buyers who are willing to choose climate-friendly options even when they come with a higher price tag.
This is where the ideas of "Lead markets" and “European Preference” comes to play. The argument is simple: if Europe wants to reach its climate goals and preserve strategic industries, it must signal demand for clean, low-carbon steel produced within the EU.
A standout moment at the summit was the repeated reference to Deutsche Bahn’s decision to source green steel from Saarstahl. By using a higher share of scrap-based electric arc furnace (EAF) steel, DB claims it can reduce emissions by 70% compared to its usual procurement. That’s not just a climate win; it’s a competitive signal, and a reminder that big buyers can move markets.
But to unleash this effect across Europe, one thing is urgently needed: a clear and consistent definition of “green steel.” Without a common standard, companies are left navigating a patchwork of claims, labels, and marketing, an environment ripe for greenwashing. Clarity is essential for procurement and investment.
ETS: The elephant in the room
Interestingly, one subject barely mentioned by Merz when summarising the summit, despite looming large in the background, was the EU Emissions Trading System (ETS). Many expected it to feature prominently, especially after German ministers recently called for delaying the phase-out of free allowances, a move the steel industry has openly advocated for (Carbon Pulse).
Thyssenkrupp and others have warned that without adjustments, ETS costs could make the transition financially unviable (Wehrmann, 15 October 2025). And yet, the topic received almost no airtime when highlighting what the industry and government had discussed together.
Why? Perhaps because this is the thorniest issue in the entire debate.
Delaying ETS reforms would weaken Europe’s core climate policy and send the wrong message to companies that have already invested heavily based on the price signal ETS provides. At the same time, maintaining the current trajectory without additional support risks pushing high-cost industries to the brink.
For now, the German government and the country’s steelmakers have reached a shared understanding that the European Commission must continue refining the Carbon Border Adjustment Mechanism (CBAM). Should these measures fail to offer sufficient protection against carbon leakage, the continuation of free allowance allocations remains on the table.
Sector at a crossroad
While much of the summit was spent acknowledging the sheer scale of the challenges facing the steel sector, the mood was not one of resignation. Berlin made it clear that it intends to act, on trade safeguards, on industrial power pricing, and on creating the conditions for a competitive steel industry.
Yet, the hardest questions remain unresolved, and this is where the real work begins. The measures announced need to fit together coherently, and we at EPICO recognise that relying on trade defences alone will not secure long-term competitiveness. Energy costs, investment incentives, clear standards for low-carbon steel, and predictable climate policy all have to be aligned if the sector is to regain its footing.
As COP30 unfolds, Germany’s steel debate offers a microcosm of a global challenge: how to reconcile industrial strength with climate ambition. Whether Europe can lead by example may determine not only the future of its steel industry - but the credibility of global climate action itself.