German industry faces the challenge of becoming climate-neutral while remaining competitive. A new study by the Kopernikus Project Ariadne shows: Importing green intermediate products could be a solution. The researchers recommend relocating energy-intensive production abroad and focusing on processing activities.
The new report by the Kopernikus Project Ariadne shows: Importing green intermediate products could be key to the climate-neutral transformation of Germany's basic materials industry. The researchers recommend relocating energy-intensive production steps abroad and focusing on processing activities.
German Industrial Location at Risk
Economic stagnation and rising energy costs are putting pressure on Germany as an industrial location. The loss of Russian natural gas further aggravates the situation. The Ariadne Report, funded by the Federal Ministry of Education and Research, examines solutions for a climate-neutral and competitive basic materials industry.
The researchers warn against attempting to compensate for competitive disadvantages through permanent subsidies. "A subsidized 'business as usual' approach risks ending in a dead end," says Philipp Verpoort from the Potsdam Institute for Climate Impact Research. Complete replacement of fossil fuels with green energy carriers in Germany is unrealistic due to physical and economic limitations.
Adjustment of German Hydrogen Demand
The report suggests a strategy change: Instead of iron ore, the steel industry could import green pig iron in the future. The chemical industry could rely on importing green ammonia and methanol. This would only relocate the most energy-intensive step abroad.
"A large part of the value creation will lie in processing in the future, which also helps secure current jobs," explains Luisa Sievers from the Fraunhofer Institute for Systems and Innovation Research.
Relocating energy-intensive production steps abroad would reduce German hydrogen demand. Nevertheless, hydrogen remains an important energy carrier for certain industrial sectors, so the hydrogen ramp-up must continue to be promoted. The researchers recommend reducing the targeted ramp-up to realistic quantities and establishing plausible target scenarios. Otherwise, the risk of the hydrogen ramp-up failing altogether increases. As the green energy carrier will remain a scarce and expensive commodity for the foreseeable future, high financial support will be necessary even with rising CO₂ prices. Focusing this support on initial major anchor customers like steel production helps the ramp-up and investment decisions in industry.
The authors of the Ariadne Report recommend developing an overall strategy that is both embedded in European context and coordinated across various policy fields. Political objectives should be clearly defined to understand conflicts and enable conscious decision-making. A controlled structural change could largely prevent the loss of jobs and value creation while strengthening the competitiveness of German industry.
