EC approves aid to Salzgitter for renewable hydrogen

The European Commission has approved state aid to the German steel producer Salzgitter to support the company to decarbonise its steel production processes using renewable hydrogen, the commission.

Salzgitter is set to achieve this by producing renewable hydrogen on site at a new production facility.

The aid will take the form of a direct grant, which will “support the construction and installation of a large-scale (100MW) electrolyser, which will produce approximately 9,000 tonnes/year of renewable hydrogen. The hydrogen produced by the electrolyser will be used as feedstock in the direct reduction plant,” the press release said.

As well as hydrogen production, the grant will be used to develop a direct reduction plant and an electric arc furnace as a replacement for one of the blast furnaces at the companies Lower Saxony site.

The hydrogen production plant is expected to begin commercial operations in 2026.

The commission’s review of the state-aid support found that the project:

• applies an innovative technology
• facilitates the development of an economic activity
• has an incentive effect
• has a limited impact on competition and trade
• brings about positive effects that outweigh distortions

This announcement comes shortly after the commission approved state aid to the German chemicals company BASF in the production of renewable (low carbon) hydrogen.

Under EU State Aid rules, a support package of €134mn to BASF “in the production of renewable hydrogen, with the aim of decarbonising its chemical production processes and of promoting hydrogen use in the transport sector.”