Europe\u2019s steel sector is in crisis. The obvious culprit is the continent\u2019s high energy prices, now further escalating in the wake of the Iran war. But the deeper problem lies elsewhere: the industry risks returning increasingly fewer profits to company bosses and shareholders. Amid their troubles, there\u2019s an opportunity for the Left to make a strong case for public ownership of the steel sector and for a wider reform of European energy markets.<\/p>\n
Today, with gas prices in Europe having already surged by 70 percent following the illegal US-Israeli war on Iran, the continent\u2019s energy-intensive industry is once again on alert. The steel sector is no exception. This comes on top of pressure from cheap steel imports and global overcapacity, which, according to the industry, present an \u201cexistential threat to European steelmaking.\u201d<\/p>\n
But the EU\u2019s crisis lies much deeper.<\/p>\n
The bloc\u2019s steelmakers often blame global competitors, and particularly the world\u2019s largest steelmaker, China, for flooding the market with too much steel. Yet Europe has its own overcapacity issue. While the EU\u2019s installed capacity hovers at around 198 megatons of potential annual output, its domestic steel production sunk to 125.8 megatons in 2025: what the industry calls a \u201chistoric low<\/a>.\u201d Continually weak demand in steel-using sectors like auto manufacturing and construction has pushed steelmakers to decrease output.<\/p>\n Steel production has recurrently faced such crises in Europe. Today, however, a second crisis adds to the first: decarbonization. Steel is one of the world\u2019s most polluting industries, responsible for 8\u201310 percent of global emissions.<\/p>\n This pressure to decarbonize is set to reach new heights, seeing as conventional fossil fuel\u2013intensive steelmaking, which uses blast furnaces, is projected to become increasingly uncompetitive in the EU during the 2030s, as a result of carbon pricing. The EU institutions are largely focused on propping up private steelmakers\u2019 profits to prevent their relocation abroad where electricity and pollution are cheaper. Yet today a movement among unions and left-wing actors across Europe is coalescing around a demand for an alternative path: public ownership of steel production.<\/p>\n In November 2025, France\u2019s National Assembly passed a bill to nationalize ArcelorMittal\u2019s French sites, responding to the company\u2019s refusal to invest in coal-free steel production and its plans to cut 1,600 jobs \u2014 a signal that the company was set on prioritizing steelmaking outside Europe. Proposed by La France Insoumise in support of mobilization by the metalworkers in the Conf\u00e9d\u00e9ration G\u00e9n\u00e9rale du Travail (CGT), France\u2019s largest union, the bill was rejected by the Senate. The struggle continues.<\/p>\n This is not an isolated case of layoffs and canceled decarbonization investments. At Germany\u2019s ThyssenKrupp, ten thousand jobs are slated for cuts, while ArcelorMittal canceled a green steel project despite receiving \u20ac1.3 billion in subsidies from the German government. In this context, the parliamentary group of Germany\u2019s socialist party Die Linke has recently endorsed<\/a> steel socialization. In Italy, the state temporarily seized control of the nearly bankrupt former Ilva steel site in Taranto, previously co-owned with ArcelorMittal, and sued the company for \u20ac7 billion over mismanagement. This intervention follows more than a decade of severe environmental and health damage linked to the site\u2019s toxic emissions, a situation that led the European Court of Human Rights to condemn<\/a> Italy for failing to protect people from industrial pollution.<\/p>\n Producing \u201cgreen steel\u201d can be approached in two main ways. One involves using renewable hydrogen to directly reduce iron ore: a process known as the \u201cdirect reduced iron\u201d (DRI) route. The resulting iron is then processed in electric arc furnaces powered by renewable electricity. Today this is widely considered the most viable method to decarbonize primary steel production, needed in sectors such as automobile manufacturing. The other pathway is to expand secondary steel production by recycling scrap in electric furnaces.<\/p>\n But transitioning fossil fuel\u2013dependent operations to green steel requires enormous amounts of energy. By 2030, now just four years away, the EU\u2019s planned low-carbon steel projects could demand more renewable electricity than all electricity consumed by Belgium. This is on top of rising electricity demand from other sectors that also seek to decarbonize. And yet, even if they become operational, current green steel initiatives in the EU could only decarbonize about 24 per cent of primary steel production.<\/p>\n Even Europe\u2019s most promising green steel project using renewable hydrogen, Sweden\u2019s HYBRIT, has had difficulties scaling up<\/a>, largely due to electricity costs. HYBRIT, a joint venture of steelmaker SSAB, public mining company LKAB, and utility Vattenfall, produced the world\u2019s first renewable hydrogen-reduced sponge iron at pilot scale in 2021.<\/p>\n To scale to a demonstration plant, LKAB has sought a long-term electricity supply agreement with Vattenfall. But the latter, a state-owned company, has insisted on securing long-term electricity prices higher than LKAB prefers before it commits to building new renewable capacity. The European Commission has suggested such agreements as a way to deal with the steel industry\u2019s energy crisis.<\/p>\n But electricity prices are not the only issue: even with favorable agreements, a demonstration plant would increase Sweden\u2019s total electricity consumption by almost 4 percent.<\/p>\n Given the immense electricity requirements, it is unsurprising that renewable hydrogen production at a meaningful industrial scale is yet to materialize. Projects for electrolytic hydrogen are being delayed or canceled worldwide. In Europe, no large-scale electrolysis-based hydrogen capacity currently exists for steel, and overall it amounts to just 0.5 percent<\/a> of the EU\u2019s industry projections of electrolyzer capacity for 2030.<\/p>\n To have any chance of success, renewable hydrogen development must, therefore, focus on sectors where alternatives don\u2019t exist and where it is efficient. Public ownership and strategic planning could achieve this far better than leaving investment to private markets looking for returns, including sectors such as oil refining, which compete for scarce hydrogen resources.<\/p>\n Tough political decisions will need to be taken on where to direct investment. Either they can continue to depend on profitability, or else follow long-term social and environmental priorities.<\/p>\n But Europe is avoiding this reality check by hoping that exporters like Namibia can become its green iron and hydrogen suppliers. Such third countries could presumably produce it more cheaply, and have more resources for renewable electricity such as land and sunshine. But projects there are also delayed, and it is unclear how much green iron is actually produced. One such planned renewable hydrogen project would foresee installing solar panels and wind turbines over an area of Namibia equivalent to the size of Berlin. It is hard to imagine a surface of this size to be made available across Europe, which reveals the logistical and neocolonial limits of such strategies.<\/p>\n