Revisiting Investment Costs for Green Steel: Capital Expenditures, Firm Level Impacts, and Policy Implications

Alexandra Hüttel and Judith Lehner

No 2082, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The transition of the steel sector to carbon neutrality requires significant investment. In this study, we aim to better understand the scale of investment required for a transition to hydrogen-based steelmaking and the ability of listed steelmakers to finance this investment. First, we analyze how capital expenditures are estimated in the academic literature and compare them with reported investment costs of green steel projects. Second, we focus on how a targeted transition to carbon neutrality would affect the balance sheet and leverage of listed steelmakers operating in the EU-27 and compare the required investments with the companies’ past capital expenditures. The study concludes that capital expenditure may be underestimated in the academic literature and derives recommendations for referencing and contextualizing capital expenditure estimates. Based on the identified impacts at the company level, we conclude with a discussion of the capabilities of listed steel producers to achieve carbon-neutral production, also from an industrial policy perspective.

Keywords: Steel; investment cost; capital expenditure; CAPEX; decarbonization (search for similar items in EconPapers)
JEL-codes: G31 G32 L61 Q54 Q55 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2024
New Economics Papers: this item is included in nep-cfn, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.901039.de/dp2082.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp2082

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().