Red alert for Remscheider Dirostahl: CO2 crisis threatens jobs!

Red alert for Remscheider Dirostahl: CO2 crisis threatens jobs!

The steel industry is facing enormous challenges, and this also affects Dirostahl, a traditional family company from Remscheid with 380 employees and an annual turnover of around 100 million euros. The company, which specializes in the production of forged components such as seamless rolled rings and drive shafts for wind turbines, ships and machines, is currently suffering from weak demand and has switched its production to short-time work. Managing director Roman Diederichs emphasizes that high energy prices and CO2 costs are the biggest problems for Dirostahl. In fact, the CO2 price is currently 55 euros per ton and is expected to rise to up to 65 euros from 2026, which will result in annual CO2 costs of around 1.1 million euros for Dirostahl.

Dirostahl consumes around 100 gigawatt hours of natural gas annually, which is essential for production. However, electrifying production is not possible and hydrogen, while an option, is currently unaffordable and unavailable. In European competition, companies in Spain and Italy have a clear advantage because they are not subject to comparable CO2 pricing. In addition, the European Union has postponed the planned Europe-wide emissions trading ETS 2 from 2027 to 2028, which further complicates the conditions for Dirostahl. The loss of production volume in the industry is dramatic: According to the Solid Forming Industry Association, there was a decline of 12% in open-die forging in 2024, and in the first half of 2025 this loss is already at 4%.

Competitive conditions and climate protection

Dirostahl only receives compensation for around half of its CO2 costs, while it receives no support at all from industry colleagues like Schmiedag. Johannes Braun from Schmiedag calls for a “level playing field” within the EU in order to avoid unequal competitive conditions. Furthermore, Diederichs and Braun recognize the urgency of climate protection, but are critical of the logic of the European CO2 pricing system.

There are also significant developments at the political level: a recent ruling by the Federal Constitutional Court ruled in November 2023 that 60 billion euros that were planned for the climate transformation fund cannot be used. This could further aggravate the situation for energy-intensive companies such as Dirostahl. Germany aims to become climate neutral by 2045, while the EU is pursuing the goal by 2050. CO2 pricing plays an important role here. Energy-intensive developments are part of a comprehensive emissions trading system that has been in place since 2005 and is now being expanded to include other sectors.

The direction of emissions trading

The Bundestag has passed the TEHG European Law Adaptation Act 2024, which will be implemented in German legislation. This law is important in order to meet the requirements of the amended EU Emissions Trading Directive and to ensure the functionality of the entire system in Germany. From 2026 there will be a switch from fixed prices to emissions trading with prices varying between 55 and 65 euros, which poses major challenges for companies. Further taxes are to be integrated into the European certificate trade from 2027 onwards for sectors such as transport and heating.

The German Emissions Trading Authority defends the current course and sees the Fuel Emissions Trading Act and the planned ETS 2 as fundamental steps towards achieving the climate goals. In addition, an EU climate social fund will be introduced in 2026 to support lower-income households and mitigate the consequences of carbon pricing.

Companies, it seems, now have to have a good hand in navigating a constantly changing market environment. With the certainty that climate protection is a top priority, it remains to be seen how Dirostahl and Co. will overcome this challenge.