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European Union

European Commission Approves German Measures to Support ThyssenKrupp Steel Europe's Decarbonization and Renewable Hydrogen Uptake

Strategic Insights

— 2 min read

The European Commission has approved two German measures to support ThyssenKrupp Steel Europe's (tkSE) decarbonization of its steel production processes and acceleration of renewable hydrogen uptake. The measures are part of the European Green Deal and the EU Hydrogen Strategy, aiming to reduce dependence on Russian fossil fuels and fast-forward the green transition.

Key Takeaways:

  • The European Commission approved two German measures to support ThyssenKrupp Steel Europe's (tkSE) decarbonization of its steel production processes and acceleration of renewable hydrogen uptake.
  • The measures will take the form of a direct grant of up to €550 million and a conditional payment mechanism to support tkSE's phase-in of renewable hydrogen in its steel production processes.
  • The direct grant will support the construction and installation of a direct reduction plant and two melting units in Duisburg, which will replace an existing blast furnace. The plant will be operated using only renewable hydrogen as of 2037.
  • The conditional payment mechanism will cover the additional costs of procuring and using renewable hydrogen instead of low-carbon hydrogen during the first ten years of operation of the new direct reduction plant.
  • tkSE has committed to actively share the technical know-how gained through the project with industry and academia.
  • The Commission found that the measures facilitate the development of an economic activity, support EU policy initiatives, and have an incentive effect, while ensuring that undue distortions of competition are limited.
  • The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU.
  • Germany selected tkSE's project in the context of an open call in 2021 to form part of an IPCEI on hydrogen technologies and systems.

Statistics:

  • The new installations are envisioned to start operating in 2026.
  • The project is expected to produce 2.3 million tonnes of hot metal per year with a reduced CO2 footprint, substituting an equal quantity of hot metal currently produced through the conventional blast furnace route.
  • The project is expected to avoid the release of over 58 million tonnes of carbon dioxide over the project lifetime.
  • The Commission's assessment was made under EU State aid rules, specifically Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the Guidelines on State aid for climate, environmental protection, and energy 2022 (CEEAG).

Sources:

  • European Commission press release: "European Commission approves German measures to support ThyssenKrupp Steel Europe's decarbonisation and renewable hydrogen uptake" (https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3928)
  • European Commission website: "State aid register" (https://ec.europa.eu/competition/state_aid/register/)
  • European Commission website: "Competition Weekly e-News" (https://competition-policy.ec.europa.eu/index_en)
  • European Commission website: "Green Deal Industrial Plan" (https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3928)

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