Romania’s steel industry is going through a period of major uncertainty, facing volatile energy prices, limited access to critical raw materials and financing challenges in a European landscape geared towards decarbonisation. The report launched by the Energy Policy Group (EPG) emphasises the importance of implementing urgent measures to maintain the competitiveness of this strategic sector. In a rapidly changing industrial environment, Romania needs to use its strengths – its renewable energy potential, strong automotive sector and expanding industrial infrastructure – to support the transition to sustainable steel production.
Expanding renewable energy production capacity
Access to green electricity at competitive prices is essential for the steel industry, given the high consumption of electric arc furnaces. At present, although Romania has vast renewable resources, limited infrastructure and bureaucratic bottlenecks make it difficult to integrate new capacity into the energy system. Accelerating the implementation of wind and solar projects, together with the modernisation of transmission and distribution networks, could ensure price stability and security of supply for the steel industry.
Developing hydrogen infrastructure
Green hydrogen is seen as key to decarbonising primary steel production, but the necessary infrastructure is in its infancy. In the absence of a functioning transport network and viable storage solutions, Romanian producers face uncertainties about the availability of this essential fuel. Romania needs to accelerate the implementation of the National Hydrogen Strategy, develop cross-border transport corridors and support pilot projects to facilitate the transition to hydrogen-based steelmaking processes.
Classifying scrap metal as a critical resource
The demand for green steel is growing and efficient recycling of scrap metal is becoming a strategic solution to reduce emissions and import dependency. However, Romania exports significant amounts of scrapmetal without fully utilising this resource stream. In the context of the European competition for quality recycled materials, the categorisation of scrap metal as a critical resource and the implementation of policies to stimulate domestic recycling could ensure a stable flow of raw materials for local industry.
Effective absorption of EU funds
Romania has access to multiple funding mechanisms to modernise the industry, but the low take-up rate limits the impact of these funds. Large industry support programmes need to be adjusted to meet the specific needs of the steel industry and companies need to be supported in accessing existing funding schemes, including the Modernisation Fund and the Innovation Fund. The implementation of efficient financing mechanisms such as Carbon Contracts for Difference (CCfD) could reduce investment risks and accelerate the decarbonisation of the sector.
Creating new financing and risk mitigation instruments
The difficult access to finance is a significant barrier for the steel industry, given the high costs of technological transition. Romania needs to explore new instruments to mitigate risks, including state guarantees for the purchase of green energy, dedicated funds for decarbonisation projects and public-private partnerships to develop the necessary infrastructure. In addition, better alignment with European initiatives such as the Industrial Decarbonisation Bank could facilitate access to finance for modernisation projects.
Attracting private investment
To maintain the competitiveness of the steel sector, Romania needs to become an attractive environment for private investment in infrastructure and sustainable technologies. The creation of a stable, predictable legislative framework in line with European decarbonisation objectives could encourage private capital to contribute to the modernisation of the industry. In addition, facilitating direct power purchase agreements (PPAs) could give steel producers access to green electricity at stable prices.
Developing markets for green steel
In the absence of a clear demand for low-emission steel, investment in sustainable technologies remains risky. Romania needs to stimulate the creation of dedicated markets for green steel products through the use of green public procurement and by setting clear standards for low carbon footprint materials. Sectors such as construction, automotive and shipbuilding can become locomotives for the demand for green steel, providing stability for producers who adopt innovative solutions.
With considerable potential for transformation and consolidation, the Romanian steel industry depends on the implementation of coherent and effective measures. With adequate support from the authorities and with a clear investment strategy in renewable energy, hydrogen, recycling and sustainable markets, the sector can become a pillar of the national economy and an example of competitiveness in a low-emission industrial environment.
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Ensuring the Long-term Competitiveness of Romania’s Steel Industry is a study by Energy Policy Group (EPG), authored by Mara Bălașa, EPG Associate, and Sabina Strîmbovschi, EPG Senior Researcher. Mara is an Associate within the Clean Economy programme of the EPG. With a background in economics and political science (BSc University of Warwick), applied economic analysis, and data analysis (MSc Stockholm School of Economics), she is currently researching the green transition with a focus on industrial policy. Sabina works as a Senior Researcher in industrial decarbonisation within the Clean Economy Program of EPG. She holds a PhD in Political Science (International Relations) from the National University of Political Studies and Public Administration (SNSPA, Bucharest).