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Breaking the Carbon Lock-In Decarbonization Pathways for European Steel Industry through Green Lead Markets – A German Case Perspective

Gill, Felix Mateo LU (2025) In IIIEE Master Thesis IMEM01 20251
The International Institute for Industrial Environmental Economics
Abstract
Decarbonising hard-to-abate sectors such as the steel industry presents a major challenge for the European Union and its member states. These sectors must reduce emissions while maintaining global competitiveness, placing considerable pressure on both industry actors and policymakers. One proposed solution is the development of green lead markets, which aim to lower investment risks by enabling market uptake for green steel through a variety of policy instruments. This thesis explores the emerging concept of green lead markets in the context of the steel industry. It looks at possible policy design options, the role of the green premium, and the barriers that slow down the transition. The focus is on the European Union, with a closer look... (More)
Decarbonising hard-to-abate sectors such as the steel industry presents a major challenge for the European Union and its member states. These sectors must reduce emissions while maintaining global competitiveness, placing considerable pressure on both industry actors and policymakers. One proposed solution is the development of green lead markets, which aim to lower investment risks by enabling market uptake for green steel through a variety of policy instruments. This thesis explores the emerging concept of green lead markets in the context of the steel industry. It looks at possible policy design options, the role of the green premium, and the barriers that slow down the transition. The focus is on the European Union, with a closer look at Germany as a potential example of how such a market might be developed. The study uses a qualitative approach. It combines semi-structured interviews with key stakeholders and experts in the steel industry, as well as an analysis of relevant policy documents. The findings suggest that Germany has taken important steps toward establishing a green lead market. Initiatives such as green public procurement and labelling schemes like LESS could provide momentum. In particular, the automotive and construction sectors were identified as key market makers. Nevertheless, significant challenges persist, including legal uncertainty, short political cycles, and global market pressures. Experts noted that the steel value chain is already shifting. Investments are moving toward regions with lower production costs. At the same time, downstream activities are still important in traditional production regions. The growing need for green iron imports is already visible, not just a future risk. This raises concerns about Europe’s strategic autonomy. Finally, the lack European definition of green steel linked to various production methods and system boundaries, hinders the development of lead markets and calls for EU harmonisation. (Less)
Please use this url to cite or link to this publication:
author
Gill, Felix Mateo LU
supervisor
organization
course
IMEM01 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Green lead markets, Green steel, Green premium, Demand-side-instrument, European steel industry
publication/series
IIIEE Master Thesis
report number
2025:10
ISSN
1401-9191
language
English
id
9209349
date added to LUP
2025-08-12 14:08:41
date last changed
2025-08-12 14:08:41
@misc{9209349,
  abstract     = {{Decarbonising hard-to-abate sectors such as the steel industry presents a major challenge for the European Union and its member states. These sectors must reduce emissions while maintaining global competitiveness, placing considerable pressure on both industry actors and policymakers. One proposed solution is the development of green lead markets, which aim to lower investment risks by enabling market uptake for green steel through a variety of policy instruments. This thesis explores the emerging concept of green lead markets in the context of the steel industry. It looks at possible policy design options, the role of the green premium, and the barriers that slow down the transition. The focus is on the European Union, with a closer look at Germany as a potential example of how such a market might be developed. The study uses a qualitative approach. It combines semi-structured interviews with key stakeholders and experts in the steel industry, as well as an analysis of relevant policy documents. The findings suggest that Germany has taken important steps toward establishing a green lead market. Initiatives such as green public procurement and labelling schemes like LESS could provide momentum. In particular, the automotive and construction sectors were identified as key market makers. Nevertheless, significant challenges persist, including legal uncertainty, short political cycles, and global market pressures. Experts noted that the steel value chain is already shifting. Investments are moving toward regions with lower production costs. At the same time, downstream activities are still important in traditional production regions. The growing need for green iron imports is already visible, not just a future risk. This raises concerns about Europe’s strategic autonomy. Finally, the lack European definition of green steel linked to various production methods and system boundaries, hinders the development of lead markets and calls for EU harmonisation.}},
  author       = {{Gill, Felix Mateo}},
  issn         = {{1401-9191}},
  language     = {{eng}},
  note         = {{Student Paper}},
  series       = {{IIIEE Master Thesis}},
  title        = {{Breaking the Carbon Lock-In Decarbonization Pathways for European Steel Industry through Green Lead Markets – A German Case Perspective}},
  year         = {{2025}},
}