Europe's green steel hits hydrogen wall

Fastmarkets reported on May 18 that Europe’s shift to lower-emission steel is being constrained by a problem outside the mill gate: hydrogen supply. The publication said hydrogen-based direct reduced iron and electric-arc furnace projects remain central to decarbonisation plans, but current cost and infrastructure realities are slowing deployment across the region. The result is a more uneven transition than early project announcements suggested, with several producers preserving the option to run on natural gas instead of hydrogen. At the same time, Brussels is moving to replace steel import safeguards that expire on June 30, adding another layer of uncertainty for buyers and suppliers. ### Why is hydrogen holding up Europe’s steel transition? Fastmarkets said on May 18 that Europe’s green steel plans were built around assumptions of affordable hydrogen that “hasn’t materialised.” The publication said projects with the strongest hydrogen case are concentrated in regions with abundant low-cost renewable power, especially Northern Europe and Spain. Stegra’s plant in Boden alone accounts for 35% of European steel-related hydrogen demand by 2035 in a partial-demand scenario, according to Fastmarkets. The report also identified projects from Blastr, SSAB, Hydnum Steel and GravitHy as part of the hydrogen-steel buildout, while saying many integrated producers are now opting for flexible direct-reduced-iron and electric-arc-furnace configurations rather than committing fully to hydrogen. (fastmarkets.com) ### Which steelmakers are changing course? Fastmarkets said Thyssenkrupp and Salzgitter are among the companies whose plans now reflect delays, scaled-back supply targets and a shift toward dual-fuel configurations. The publication said producers are increasingly reluctant to rely only on hydrogen until supply networks expand and costs improve. Many planned facilities can switch between hydrogen-based and natural-gas-based direct reduced iron, Fastmarkets said. (fastmarkets.com) That means actual hydrogen demand will depend on fuel prices, availability and whether buyers are willing to pay a premium for lower-emission steel. ### What is Brussels doing on steel imports before July? The Council of the European Union and the European Parliament reached a provisional agreement on April 13 on a regulation to replace the current steel safeguard regime, which expires on June 30, 2026. (fastmarkets.com) The Council said the new framework is intended to protect the EU market from global overcapacity and trade diversion while preserving supply-chain flexibility for downstream industries. The revised system would cut overall steel import quotas by about 47% compared with 2024 safeguard quotas and raise the out-of-quota duty to 50%, according to both the Council and a European Commission proposal published on October 7, 2025. Commission President Ursula von der Leyen said at the time that “a strong, decarbonised steel sector is vital” for the bloc’s competitiveness and security. (consilium.europa.eu) ### Where does Switzerland fit into the safeguard talks? A European Commission spokesperson said on May 18 that the steel safeguards renewal process should apply to all EU partners, including Switzerland, with only European Economic Area countries partly exempt. That position aligns with the Commission’s 2025 proposal, which exempted Norway, Iceland and Liechtenstein because of their integration into the EU internal market under the EEA Agreement. (consilium.europa.eu) Switzerland’s State Secretariat for Economic Affairs says Swiss exporters have been affected by EU steel safeguard measures since 2018. The agency says those measures are based on WTO law and continue to shape market access for Swiss steel shipments into the bloc. ### What does this mean for steel buyers and project teams? (news.cgtn.com) Fastmarkets said the hydrogen bottleneck is already changing how mills design their decarbonisation pathways, with flexible fuel setups replacing some earlier assumptions of dedicated hydrogen use. The Council said the EU’s replacement trade regime is also being designed to curb import volumes while keeping a controlled level of access for traditional suppliers. (seco.admin.ch) The next formal milestone is July 1, 2026, when the current EU steel safeguard is due to expire. The Council said the replacement regime is intended to be in force without a regulatory gap, and the Commission has said it will engage affected trading partners, including on country-specific allocations, under WTO procedures. (consilium.europa.eu) (fastmarkets.com)