German govt gets EC nod to back ThyssenKrupp decarbonisation project

The European Commission (EC) on Thursday authorised the German government to provide ThyssenKrupp Steel Europe AG with total state aid of up to EUR 2 billion (USD 2.23bn) to decarbonise its steel production in Duisburg.

The tkH2Steel decarbonisation project envisages the installation of a hydrogen-capable direct reduction (DR) plant and two melting units at what the company says is Europe's largest iron and steel production facility. Following the upgrade, the site in Duisburg will be able to produce 2.5 million tonnes of directly reduced iron annually, making for 2.3 million tonnes of hot metal.

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The EC approval relates to a direct grant of up to EUR 550 million and a conditional payment of up to EUR 1.45 billion that should compensate the company for the additional costs of procuring and using green hydrogen rather than just low-carbon molecules for the first ten years of the new DR plant’s operation. The idea is to gradually phase out the use of natural gas and, from 2037 onwards, to operate the plant solely consuming green hydrogen.

The EU regulatory watchdog has determined that the planned provision of state aid is necessary and appropriate for this project and comes with sufficient safeguards to make sure that undue distortions of competition are limited.

The project developer will now be waiting for the German government to give its formal approval of the financial support.

ThyssenKrupp noted that preparatory work for the construction of the facility is proceeding according to plan, with detailed planning and preparatory construction measures already at a correspondingly advanced stage. The German group expects startup at the end of 2026 and the plant to become operational as early as 2029.

(EUR 1.0 = USD 1.114)