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Released August 01, 2023 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (EC) has cleared more than US$3 billion in financial aid for two of Europe's largest green steel projects in France and Germany.
In both cases, the EC said the measures will contribute to the achievement of the European Union (EU) Hydrogen Strategy, the European Green Deal and the Green Deal Industrial Plan, while helping to end dependence on Russian fossil fuels and fast forward the green transition, in line with the REPowerEU Plan. In France, it has approved a plan by the French government to provide 850 million euro (US$941 million) in state aid for ArcelorMittal's (NYSE:MT) (Luxemburg) efforts to partially decarbonize operations at its Dunkirk steel mill. The aid will support the construction of a direct reduction iron (DRI) plant and two electric arc furnaces (EAF), which will substitute two of the three existing blast furnaces and two of the three basic oxygen furnaces.
The three blast furnaces produce liquid hot metal from a mixture of iron ore, pellets, coke, coal and preheated air, while the three basic oxygen furnaces convert the liquid hot metal into liquid steel. In addition, natural gas used to power the DRI plant initially will gradually be phased out of the steel production processes in favor of renewable energy, low-carbon hydrogen, biogas and electricity. The aid will be paid out in four installments during the construction period of the DRI/EAF installation planned between 2023 and 2026. They are both expected to start operating in 2026 and will produce 4 million tonnes of low-carbon liquid steel per year. Once completed, the project is expected to avoid the release of around 70 million tonnes of carbon dioxide (CO2) over its 15-year lifetime.
"This 850 million-euro measure allows France to support ArcelorMittal to decarbonise its steel production plant in Dunkirk, using both low-carbon and renewable hydrogen," commented Margrethe Vestager, Executive Vice-President in charge of EC competition policy. "The measure has a CO2 reduction potential of at least 4.4 million tonnes per year. It demonstrates how our State aid rules enable Member States to help our energy-intensive sectors achieve the EU's ambitious climate goals. And this while ensuring a level playing field."
In Germany, the Commission approved two German measures to support Thyssenkrupp Steel's (Essen) efforts to decarbonize its steel production processes and accelerate its uptake of renewable hydrogen. The "tkH2steel" plant will have a capacity of 2.5 million metric tons--more than twice the original planned capacity--and offset the emissions of 3.5 million metric tons of CO2. The aid will take the form of a direct grant of up to 550 million euro (US$609 million) to help decarbonise its steel production at Duisburg, where it will support the construction and installation of a DRI plant and two melting units, which will replace an existing blast furnace. Natural gas, initially used for the operation of the new DRI plant, will be gradually phased out, and as of 2037, the plant will be operated using only renewable hydrogen. The second aid package is a "conditional payment mechanism" to support Thyssenkrupp's goal of accelerating the phase-in of renewable hydrogen in its steel production processes. Amounting to up to 1.45 billion euro (US$1.6 billion), it will cover the additional costs of procuring and using renewable hydrogen instead of low-carbon hydrogen over a 10-year period.
Vestager said: "This will contribute to the greening of one the most polluting sectors, while helping reduce Germany's dependence on imported fossil fuels and develop the renewable hydrogen value chain in the EU."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
In both cases, the EC said the measures will contribute to the achievement of the European Union (EU) Hydrogen Strategy, the European Green Deal and the Green Deal Industrial Plan, while helping to end dependence on Russian fossil fuels and fast forward the green transition, in line with the REPowerEU Plan. In France, it has approved a plan by the French government to provide 850 million euro (US$941 million) in state aid for ArcelorMittal's (NYSE:MT) (Luxemburg) efforts to partially decarbonize operations at its Dunkirk steel mill. The aid will support the construction of a direct reduction iron (DRI) plant and two electric arc furnaces (EAF), which will substitute two of the three existing blast furnaces and two of the three basic oxygen furnaces.
The three blast furnaces produce liquid hot metal from a mixture of iron ore, pellets, coke, coal and preheated air, while the three basic oxygen furnaces convert the liquid hot metal into liquid steel. In addition, natural gas used to power the DRI plant initially will gradually be phased out of the steel production processes in favor of renewable energy, low-carbon hydrogen, biogas and electricity. The aid will be paid out in four installments during the construction period of the DRI/EAF installation planned between 2023 and 2026. They are both expected to start operating in 2026 and will produce 4 million tonnes of low-carbon liquid steel per year. Once completed, the project is expected to avoid the release of around 70 million tonnes of carbon dioxide (CO2) over its 15-year lifetime.
"This 850 million-euro measure allows France to support ArcelorMittal to decarbonise its steel production plant in Dunkirk, using both low-carbon and renewable hydrogen," commented Margrethe Vestager, Executive Vice-President in charge of EC competition policy. "The measure has a CO2 reduction potential of at least 4.4 million tonnes per year. It demonstrates how our State aid rules enable Member States to help our energy-intensive sectors achieve the EU's ambitious climate goals. And this while ensuring a level playing field."
In Germany, the Commission approved two German measures to support Thyssenkrupp Steel's (Essen) efforts to decarbonize its steel production processes and accelerate its uptake of renewable hydrogen. The "tkH2steel" plant will have a capacity of 2.5 million metric tons--more than twice the original planned capacity--and offset the emissions of 3.5 million metric tons of CO2. The aid will take the form of a direct grant of up to 550 million euro (US$609 million) to help decarbonise its steel production at Duisburg, where it will support the construction and installation of a DRI plant and two melting units, which will replace an existing blast furnace. Natural gas, initially used for the operation of the new DRI plant, will be gradually phased out, and as of 2037, the plant will be operated using only renewable hydrogen. The second aid package is a "conditional payment mechanism" to support Thyssenkrupp's goal of accelerating the phase-in of renewable hydrogen in its steel production processes. Amounting to up to 1.45 billion euro (US$1.6 billion), it will cover the additional costs of procuring and using renewable hydrogen instead of low-carbon hydrogen over a 10-year period.
Vestager said: "This will contribute to the greening of one the most polluting sectors, while helping reduce Germany's dependence on imported fossil fuels and develop the renewable hydrogen value chain in the EU."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
