Germany gets EC nod to aid steel decarbonisation with EUR 2.6bn

The European Commission announced on Tuesday that it has authorised the German government to provide a direct grant of EUR 2.6 billion (USD 2.85bn) to help SHS Stahl-Holding-Saar GmbH & Co KGaA partly decarbonise its steel production in Saarland.

The EC approval comes a week after German economy minister Robert Habeck announced plans to aid the decarbonisation of the Saarland steel industry.

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The Commission said in a press statement that this financial backing has an incentive effect, is necessary, appropriate and proportionate, and comes with sufficient safeguards. “The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU,” it has concluded.

SHS will use the money to partially decarbonise its activities in Voelklingen and Dillingen, Saarland, where it operates two blast furnaces and five basic oxygen converters producing crude steel. More specifically, the company intends to build a direct reduction (DR) plant and a couple of new electric arc furnaces to replace the existing ones. The new DR facility will initially use natural gas but will gradually shift to low-carbon and renewable hydrogen.

The new steel production facilities are expected to begin operation in 2026. They are estimated to produce 3.05 million tonnes of crude steel per year.

(EUR 1.0 = USD 1.097)