Europe’s impossible choice: Which industries should survive the green transition?

NEUSS, Germany — On the left bank of the Rhine, the European Union’s third-largest aluminum smelter sits idle. No smoke rises from its four spindly chimneys; the giant pots, once filled to the brim with molten silvery liquid, have long cooled. They won’t fire up again. 

When the Rheinwerk plant stopped smelting in 2023, citing exorbitant energy prices, it sent shockwaves through a country haunted by the threat of deindustrialization. The shutdown meant job losses and ended a 60-year tradition in Neuss, a midsized German city halfway between Cologne and the Dutch border.

But behind three silent production halls, the factory now hums with round-the-clock activity. Furnaces roar, shredders rumble and electric trucks zip around the foundry. The Rheinwerk is still producing aluminum ingots the length of a minibus. 

There’s just one difference: These metal blocks are made from trash — making them less energy-intensive and more sustainable than the freshly smelted stuff, known as primary aluminum.

“We’re building one recycling furnace after another,” said Volker Backs, managing director of Speira, the company running the Rheinwerk. “We take the green transition seriously here.”

It wasn’t an easy decision, said Backs, but a necessary one — for both profit and planet. “We were of course sorry that we couldn’t maintain primary production of aluminum here,” he added, “but we see recycling as our future.” 

The same hard choice awaits companies and governments across the continent: Prop up products and practices that are no longer competitive, or abandon them. Complicating the matter are soaring costs, fierce competition from China and a looming trade war with the United States.  

Companies need to decide whether to ditch or pour money into parts of their businesses whose green transition will cost billions. And governments need to decide how — and whom — they help. Do they bet on future-oriented enterprises or retain creaky industrial sites? Europe’s strained public purses won’t subsidize it all. 

On Wednesday, the European Commission will offer an initial answer with its Clean Industrial Deal. The EU executive’s plan will propose much-needed measures to slash energy prices and stimulate investment. But it will sidestep the thorniest question: Which sectors and products can and should the EU save — and which should it let die?

Brussels can’t avoid this question forever. The response will determine not only what the EU’s industry and job market look like in the coming decades but also the bloc’s autonomy: Where it gets the aluminum for its wind turbines, the cement for its buildings or the steel for its weapons. 

“It’s something I don’t see enough in the discourse — a transition means you need to make choices, and those choices need to be strategic and explicit,” said Domien Vangenechten, who researches European industrial policy at environmental think tank E3G. “And you cannot save everyone.” 

The choices facing Europe 

Europe has to make those choices now. 

Skyrocketing energy prices hammered the continent’s long-struggling manufacturing industry after Russia invaded Ukraine in 2022. Some companies, notably in the steel sector, say irreversible decline can only be staved off with immediate political and financial support. 

Backs recalls that as electricity costs quadrupled in 2022, the power price to produce one metric ton of primary aluminum suddenly hit more than €5,000 — double the metal’s price on the global market. “You don't have to think very long about whether it's still worth it,” he said. 

The price shock came at the worst possible time. 

Unlike previous industrial transformations, the green transition has a deadline thanks to planetary physics: The faster we stop pumping carbon dioxide into the air, the less severe climate change will be. Scientists say that zeroing out global net emissions by 2050 will prevent the worst, and the EU has enshrined this target date in law. 

Energy-intensive manufacturing sectors — a category including steel, cement, aluminum, chemicals and more — account for more than a fifth of the EU’s greenhouse gas emissions, and their transition will be lengthy and expensive. They’ll have to change their production processes, use clean energy, source more recycled materials and capture the remaining CO2.

As modernizing a factory takes years, companies need to know now what’s worth investing in. They want certainty about the conditions they’ll face and what support they’ll receive.

The Commission’s Clean Industrial Deal seeks to address many of the manufacturers’ concerns, proposing made-in-EU quotas to stimulate demand and new measures to upgrade power grids and lower prices. 

At the same time, the EU executive steers well clear of picking winners and losers in the green transition. 

Yet there are urgent decisions to be made about which industries the EU wants to retain, and where it’s cheaper and more effective to rely on imports. Former European Central Bank leader Mario Draghi spelled it out in his sweeping report on boosting the bloc’s competitiveness.

“There are some technologies, like solar panels, where foreign producers are too far ahead and attempting to capture production in Europe will only set back decarbonization,” he said in a speech presenting the report to the European Parliament last year. 

But, he added, there are other sectors “where we do not want to be fully dependent on foreign technology for strategic reasons, and so it is key to keep the know-how in Europe.”

Aluminum’s role

Where on that divide primary aluminum production will land is an open question.

The metal is in everything from soda cans and window frames to military aircraft and missiles. Demand is also expected to soar in the coming decades given the importance of the lightweight material for climate-friendly technologies like wind turbines and electric vehicles. 

The EU has recognized its strategic role, adding aluminum to its critical raw materials list. NATO followed suit last year, warning that the alliance’s supply of the metal is at “very high risk” of disruption. 

Yet manufacturing fresh aluminum requires more electricity than any other industrial production method — more than double the average German’s annual power consumption for each ton of metal. (At the Rheinwerk, a massive connection cable allowed the factory to use as much power as Neuss’ 150,000 inhabitants combined.)

Once the EU’s power grids are fully decarbonized, this process could run on 100 percent green energy. Plus, once expensive fossil fuels are out of the system, power prices should go down. 

Manufacturers can’t wait for that. EU companies pay two or three times as much for electricity as their Chinese and American rivals, and the 2022 price shock was the final straw for many. 

Speira was only one of many smelters across Europe that curtailed operations during the energy crisis. Within two years, the continent’s primary aluminum production halved. 

By contrast, Europe’s production of so-called secondary aluminum, manufactured using recycled metal, has steadily increased.

Its advantages are obvious: Secondary production requires 95 percent less energy than primary production — making for a significantly lower carbon footprint. One ton of European-produced primary aluminum emits 6.7 tons of CO2 during manufacturing. That drops to as little as 0.5 tons for aluminum made entirely from remelted waste. And in theory, aluminum is infinitely recyclable. 

That isn’t to say secondary aluminum producers don’t face challenges. Key EU aluminum buyers — such as carmakers — are in trouble, affecting short-term demand. The sector is also facing low-cost competition from China, which has accelerated aluminum production. Plus, U.S. President Donald Trump just announced 25 percent tariffs on aluminum, hitting EU companies’ exports. 

But production costs, particularly for energy, are the top problem for European industry — and some argue the price of keeping primary production afloat just isn’t worth it. 

Industry associations and trade unions, however, warn against abandoning domestic primary production. 

For now, the EU cannot cover its demand with recycled aluminum alone, said Rob van Gils, president of Germany’s aluminum association. One day that might be possible, given all the metal in use. But while the average soda can ends up back at a recycling facility within a few months, the material in window frames or wind turbines won’t become scrap for decades. 

Investments in recycling capacity “will pay off over time,” van Gils said. “But we still have to keep this primary process in Europe, because otherwise we will be completely dependent on imports.” 

That’s bad for Europe’s self-sufficiency — and the planet: Primary aluminum produced outside of Europe tends to be far more carbon-intensive. Chinese aluminum spews around twice the emissions of EU-made metal.

Brussels faces choice

Whether it’s worth keeping primary aluminum production in the EU is ultimately a political choice of the sort Brussels is rather bad at. 

The Commission’s power to make strategic decisions about the future of industry is limited. And even where the EU executive can make decisions, it needs buy-in from a majority of national governments.  

“Trying to come up with a holistic vision is challenging,” Vangenechten said. “Trying to come up with a holistic vision and get 27 member states to implement that and work together is even trickier.” 

When the Commission suggested banning sales of new combustion-engine cars after 2035 — deciding to bet on electric vehicles for the future — a massive backlash followed. 

Carmakers, fuel producers and engine-manufacturing countries successfully lobbied for a loophole for cars running on synthetic fuels, giving combustion technology another lease on life — even though such fuels are expected to be scarce, expensive and inefficient. 

Since the 2035 debate, Brussels has faced calls to ensure “technological neutrality” in all its policymaking and let the market alone decide what’s viable. 

But industry isn’t a monolith, and the Commission faces competing demands. 

Clean technology manufacturers — which Brussels also wants to support with its Clean Industrial Deal — are pressuring the EU not to walk back its ambitions, warning that zig-zagging on already-passed climate legislation risks undermining the political predictability they need. 

Or take recycling: The aluminum and steel sectors are asking the EU to restrict exports of scrap metal to ensure a steady supply of recycled material. But Europe’s recycling industry — which derives significant income from exports — warns that this would damage them. 

Brussels won’t be able to make everyone happy. But the sooner it makes those decisions, the smoother the transition will be. 

“The last thing we want is for a bunch of old manufacturing industries to just milk out their old assets and try to get as much revenue out of them [as possible] and then just close things down,” Vangenechten said. “That way we’re just extending the problem, and in 20 years’ time there will be zero jobs.” 

The future of aluminum

Back at the Rheinwerk, workforce levels are expected to return soon to 2023 numbers as the company adds more recycling capacity. The factory is unionized and workers’ representatives were involved in Speira’s plan to stop smelting. 

While some European smelters are restarting primary production now that power prices have fallen to pre-crisis levels, there is no going back for Speira. The Rheinwerk is already producing as much aluminum from recycled cans as it used to smelt from scratch.

Now, instead of power-intensive electrolysis, the Rheinwerk process starts with sorting through a sea of used drink cans. 

In the sorting hall, Speira’s employees set up a cabinet of curiosities they find — coins, license plates, a disturbing amount of yellow Minion keychains, decommissioned military munitions — and decorated a wall with a painting of planet Earth, flanked by two cans. 

“A colleague asked if he could paint that,” said Marcel Tappert, deputy head of the Rheinwerk’s recycling and casting operations. “The staff here are very much aware that they are part of the circular economy. You see what goes in, and what comes out is a new can from which you’ll drink your beer in the summer.” 

After sorting, the cans are shredded, filtered for impurities, softened in huge ovens and sent for remelting. The last two stages run on fossil gas, though Speira has started mixing in oxygen to lower emissions.

Eventually, Tappert said, the Rheinwerk furnaces could run on hydrogen. But that depends on sufficient investments in pipelines to transport the clean-burning gas. “If we relied on trucks, we’d have a truck coming in here every five minutes.” 

Speira is prepared to achieve climate neutrality across its entire value chain by 2045, but the company can’t go it alone, Backs said. The EU and national governments have to ensure the necessary infrastructure gets built. 

If decision-makers in Brussels and EU capitals don’t do their part, there won’t be any companies left to decarbonize, he warned: “Policies that protect only the climate and don’t future-proof the economy are pointless. What’s supposed to become climate-neutral if there is nothing left?”

Lucia Mackenzie contributed to this story.