Taranto's ILVA Collapse Shows Market-Friendly 'Derisking' Industrial Policy Has Failed and Europe's Steel Sector Needs Democratic Public Control
Source: Valentin Vogl. "The Steel Disaster in Taranto, Italy, Is a Warning to Europe." November 6, 2026. jacobin.com
The Gist
The author argues that the shutdown of Italy's giant Taranto steel plant shows Europe's strategy of paying private companies to go green has failed: the companies took the money, cut back investment, and left polluted towns and insecure workers. He concludes that steel should be put under democratic public control and protected from market pressures, so that health, jobs and the climate come before profit.
Conclusion
The closure of the ILVA mill in Taranto shows that the EU's 'derisking' industrial policy, which tries to coax green steel investment out of private capital through subsidies, has failed. Europe therefore needs a democratic, ecosocialist transformation of its steel industry, with socialized mills protected from capital accumulation logic, rather than continued reliance on private steelmakers.
Premises
- ILVA's emissions caused severe, documented health harms (for example, mesothelioma rates four times the general population), and the court ordered the blast furnaces closed. Residents, unions and the mayor had long demanded closure but were blocked because the government had no plan for alternative financing or jobs.
- The EU Green Deal's 'derisking' approach relied on subsidies, free emissions allowances, tariffs and other incentives to make green steel attractive to private capital, including a €4.7 billion largely private investment plan for Taranto.
- Private steelmakers, especially ArcelorMittal, exploited their bargaining position to provoke subsidy races, took up to €15 billion in subsidies, then shelved hydrogen projects and favored share buybacks. Only a few Swedish and German decarbonization projects remain, and many sites are worse off than before.
- Europe's steel industry is structurally uncompetitive (imported materials and energy, high labor costs, lost innovation leadership, global overcapacity, higher returns in finance). Instead of a democratic alternative, this is used as a pretext for austerity and upward redistribution, keeping steel regions in perpetual crisis that worsens health and climate damage and feeds the authoritarian right.
- Because private capital will not deliver decarbonization or protect communities, steel must be taken out of the logic of capital accumulation. Nationalization is not enough; socialized mills also need protection from the capitalist market (for example, long-term offtake agreements with public infrastructure operators) and a solid transformation strategy with social participation.
Assumptions
- The failure of Taranto and of ArcelorMittal's projects is representative of the derisking approach in general and is not due to contingent factors like the Ukraine-related energy price shock.
- Profit-driven private owners cannot be induced, by any feasible subsidy design, to make long-horizon green investments.
- Public or democratic ownership would pursue decarbonization and worker and community welfare more effectively than private ownership.
- Socialized mills can be shielded from global market competition and overcapacity without prohibitive fiscal or economic costs.
- Economic insecurity in steel regions is a main driver of far-right support, so reducing it would weaken that support.