German economy ministry: European Commission has already granted state aid approval for additional funds for Salzgitter

German economy ministry: European Commission has already granted state aid approval for additional funds for Salzgitter

EC Approves €1 Billion in State Aid for Salzgitter’s Decarbonization Initiative

The European Commission has approved a €1 billion state aid package for German steelmaker Salzgitter AG to decarbonize its production processes, aligning with EU climate goals and industrial transformation strategies. The funding, authorized under EU state aid rules, supports Salzgitter's SALCOS (Salzgitter Low CO₂-Steelmaking) project, which aims to transition the company's steel production from coal-based methods to hydrogen-based technologies.

The initiative includes constructing a direct reduction plant, replacing blast furnaces with electric arc furnaces (EAF), and installing a 100 MW electrolyser to produce approximately 9,000 tons of green hydrogen annually. These measures are expected to reduce carbon dioxide emissions by 95%, equivalent to 8 million tons per year—accounting for 1% of Germany's total emissions. The project components are slated for completion by 2026, with the first phase of low-carbon steel production targeting 1.9 million tons annually by late 2025.

Funding for the project is split between the German federal government (€700 million) and the state of Lower Saxony (€300 million), complementing Salzgitter's own investment of €723 million. The company has already procured components for the EAF and plans to begin installation by late 2024.

Salzgitter's CEO, Gunnar Groebler, emphasized the significance of the approval, stating that the funding reinforces the company's role in advancing industrial decarbonization across Europe. The project aligns with Germany's broader climate commitments and the EU's push for sustainable industrial practices, positioning Salzgitter to produce up to 1 million tons of green steel annually by 2026.

This approval underscores the EU's support for large-scale decarbonization efforts in energy-intensive sectors, balancing economic competitiveness with environmental objectives.