Reclaiming Steel: A Public Path for Europe’s Green Industrial Strategy
The European steel industry is once again in crisis. A sector that currently supports around 300,000 direct and between 2.3 and 2.5 million indirect jobs has been increasingly seeing steel companies announce closures, mass layoffs and capacity cuts. These developments accelerate an existing trend: since 2008, the European steel industry has lost over 100,000 direct jobs — approximately 25 per cent of its workforce. In 2024 alone, 18,000 layoffs were announced alongside a record 12 million tonnes of capacity closures. At ThyssenKrupp Steel, 11,000 jobs are set to be cut as part of a restructuring process, and in the Netherlands, Tata Steel plans to cut over 1,200 jobs, bringing the number to more than 3,200 employees in total when restructuring-related redundancies are included.
Against this background, steel companies continue to lag behind in needed decarbonisation investments. In the context of such developments, Italy took control of a steel site owned by ArcelorMittal (its largest in Europe) in 2024, and the French National Assembly approved a bill led by La France Insoumise in November 2025 proposing the nationalisation of ArcelorMittal’s operations in France.
This is not the first time the steel industry has faced such a crisis. The capitalist mode of production experiences periodic crises of overproduction under oligopolistic competition, due to high economies of scale, significant long-term investment costs, and the nature of production through coal-powered blast furnaces. Yet, this is not a normal cyclical downturn: the sector’s long-standing tendencies now collide with the existential imperative of rapid decarbonisation. Steel accounts for around 8-10 per cent of global CO2 emissions and remains one of the hardest-to-abate sectors, with large-scale transformation of primary production to hydrogen-based routes still in its infancy.
On top, global overcapacity today stands at 600 million tonnes, almost a quarter of global steel production, and according to the OECD (Organisation for Economic Cooperation and Development), it is expected to rise to 740 million tonnes by 2027.
Moreover, within the European Union (EU) itself, demand across steel-consuming sectors falls far below the bloc’s production capacity, reflecting the issue of domestic excess capacity even before considering global overproduction.
The current crisis is therefore shaped by the overlap of general structural and cyclical problems with the existential challenge of achieving climate neutrality. Yet steel remains one of the sectors where decarbonisation has not begun at a large scale. Recycling scrap iron with electric arc furnaces (EAFs) has emerged as part of the solution and is already widespread. However, in primary steel production the most promising route, hydrogenbased direct reduction (H2-DRI), remains uncompetitive and corporations have been delaying or cancelling investments, even despite massive state subsidies.
In response to the crisis, governments at the EU and national level have launched a wave of industrial policies, subsidies and trade-defence measures, from the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) to the Steel and Metals Action Plan (SMAP), and to national hydrogen strategies and site-specific rescue packages. In addition, politicians from left and right have called for — and in some cases applied — more far-reaching interventions such as nationalisations.
But a contradiction lies at the heart of Europe’s current steel policy: governments simultaneously claim to defer to market mechanisms while continuously intervening to sustain private profitability. This approach — derisking green steel investments through state subsidies while maintaining private ownership, combined with occasional rescue nationalisations — fails to fundamentally address the sector’s structural problems.
Decarbonisation continues to lag, capital refuses to commit to the long-term investments necessary for transformation, and uncertainty about future profitability deepens the structural inhibition to invest. No subsidy structure can bridge this contradiction, because even substantial subsidies do not make such investments commercially appealing, and cannot guarantee significant new markets. The core issue appears to be irreconcilable: long-term social and ecological needs clash systematically with short-term profit requirements.
Instead of continuing the same failed recipes that have been unable to address the economic, social and ecological challenges of the steel sector as it is today, there is an obvious but less discussed solution: public, democratic ownership and socio-ecological planning. To explore how such a future could come about, this paper will outline an alternative steel policy — one that is based on public ownership and direct public investment in the interest of securing jobs, a resilient economy, and a rapid climate transition.
This paper is structured in the following way:
- The first chapter establishes the empirical foundation, documenting the current state of the steel industry and the decarbonisation challenges it faces.
- The second chapter examines existing EU-level policies and looks at a case study in Sweden.
- The third chapter outlines how socialised public ownership and planning at the European level can provide a genuine solution to the steel crisis
As most investments in steel decarbonisation will still have to happen, adopting an ambitious policy of coordinated financing and public ownership can offer an opportunity to secure Europe’s steel sector’s future in the long-term, and regain strategic control and democratic oversight over industrial production patterns.
Overall, the paper hopes to serve as a basis for futher debate, and a useful resource to left policymakers, unions and civil society exploring how socialised public ownership and planning at the European level can provide a genuine solution not only to the steel crisis but European economy and industry at large.
This study was co-produced by the Rosa-Luxemburg-Stiftung Brussels Office and communia, authored by Alexandra Gerasimcikova, Max Wilken and Justus Henze.