The European Commission has given its permission under state aid law to the German Federal Government’s plans to grant the steel industry in the German state of Saarland billions in financial support. The goal of this funding is to decarbonise steel production.
For this reason, Brussels has granted the Federal Ministry for Economic Affairs and Climate Action (BMWK) permission under state aid law to provide approx. 2.6 billion euros in government aid, together with the state of Saarland, to Dillinger Hüttenwerke AG, Saarstahl AG and ROGESA mbH for the climate-neutral transformation of steel production.
In the medium term, the companies plan to use this funding to decrease carbon emissions by approx. four million tonnes per year. In a next step, based on the Federal Government’s budget agreement of 13 December 2023, the national grant will be officially issued.
Federal Minister for Economic Affairs and Climate Action Robert Habeck says:
“This is outstanding news for industrial transformation in Saarland and all of Germany. I am especially happy for the many employees who more than deserve this good news right before Christmas! My thanks also go to the European Commission for their constructive cooperation. We are very pleased that the approval process was successfully concluded today.”
The project “Power4Steel” by the Stahl-Holding Saar company was first selected as part of the programme “IPCEI Hydrogen” (Important Projects of Common European Interest – H2). The European Commission has now authorised this as a separate, individual project.
By building a direct reduction system and electric arc furnaces at the traditional steel works sites in Dillingen/Saar and Völklingen, the companies involved are switching about two thirds of their production facilities from coal-based blast furnace production to hydrogen-based steel production.
At a later date, the companies also want to switch the remaining third to the low-carbon route using electric arc furnaces.
There are plans to put the new plants into operation in 2027. The use of hydrogen will subsequently be regularly increased and is to reach 120,000 tonnes of green hydrogen per year with the goal of producing more than three million tonnes of green steel.
In order to supply green hydrogen to the plants at an early stage, further players in the region are planning to establish a hydrogen network and capacities for electrolysis that will go beyond borders.
Federal Minister Habeck visited Stahl-Holding Saar on 11 December 2023 and participated in the works council conference. There, he pointed out the opportunities which the planned grant provides for the 14,000 employees in the Saarland steel industry and for the entire region.
The Federal Government will supply 70 percent of the 2.6 billion euro grant and the state of Saarland will provide 30 percent. In a next step, the official national grants are now being prepared.
This is the third largest grant given to a steel site in Germany to promote decarbonisation as part of IPCEI Hydrogen. In 2023, Salzgitter AG and thyssenkrupp Steel Europe had already received grants.
Another project by ArcelorMittal at the Bremen and Eisenhüttenstadt sites is still undergoing the European Commission’s approval procedure under state aid law.
