Policy briefs

Policy design, not technology alone, will shape the future of near-zero steel in Europe and China. This new report by Chun Xia, Lukas Hermwille, Anna Leipprand, Maike Venjakob (Wuppertal Institute), Xinyi Shen (CREA) and Hui Kong (Beijing Institute of Technology) compares the policy frameworks for near-zero steel in the EU, with a focus on Germany, and in China. It aims to strengthen mutual understanding, identifies concrete opportunities for mutual learning, and supports more structured dialogue between the two sides. China’s strengths lie in central coordination and closer alignment between climate, industrial and air pollution policy. Its layered CAPEX support architecture, combining public grants, concessional policy-bank lending and transition finance, also offers useful lessons. The EU offers a clearer long-term investment signal through the EU ETS, alongside structured support for R&D on breakthrough technologies. However, a common gap remains as demand-side frameworks for low-carbon steel are not yet strong enough to create reliable market pull at scale.

Transitioning to net-zero in the chemical industry is a shared challenge for Germany/EU and China: emissions must be reduced, the sector must remain investable and globally competitive, and the transition remains socially manageable. In the current context of increasing trade tensions and geopolitical strain, there is a compelling case for structured dialogue and targeted cooperation on transitioning towards net-zero. While such engagement will not eliminate underlying trade frictions, it can reduce misperceptions, support mutual learning and help identify practical pathways towards industrial decarbonisation.