Germany has received the green light from the European Commission (EC) to provide EUR 55 million (USD 59m) in state aid to ArcelorMittal SA (AMS:MT) for a demonstration project in Hamburg envisaging the construction of a green steel plant running on 100% renewable hydrogen.
The EC announced this on Friday, saying that the authorised aid will have an “incentive effect” and limited impact on competition and trade within the EU. In any case, the positive effects from the project are expected to outweigh any potential distortion of competition, the Commission has determined.
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ArcelorMittal intends to build Germany’s first industrial-scale, hydrogen-based direct reduced iron (DRI) plant at its existing site in Hamburg, which currently relies on natural gas. The facility will have an annual capacity of 100,000 tonnes of DRI.
The direct grant that is to be provided will cover half of the total project cost of EUR 110 million, according to estimates shared on ArcelorMittal’s website. The demo project is seen to begin operation in 2026 and eliminate the emission of more than 700,000 tonnes of carbon dioxide in total.
ArcelorMittal will use the insights gathered from this pilot project to try to decarbonise its steel production in the EU on a larger scale. The company has pledged to share its technical know-how with other peers in Europe.
(EUR 1.0 = USD 1.073)