Brussels: europe and the arabs

The European Commission has approved, under EU State aid rules, a €1 billion German measure to help Salzgitter Flachstahl GmbH (‘Salzgitter') decarbonise its steel production processes by using hydrogen, including renewable hydrogen produced on site, thanks to a new production facility. The measure contributes to the achievement of the EU Hydrogen Strategy and the European Green Deal targets, while helping reduce dependence on imported Russian fossil fuels and fast forward the green transition, in line with the REPowerEU Plan. The aid, which will take the form of a direct grant, will support the construction and installation at the company's site in the city of Salzgitter (Lower Saxony) of a direct reduction plant and electric arc furnace which will replace one of the blast furnaces currently operated by Salzgitter.  The measure will also support the construction and installation of a large-scale (100 MW) electrolyser, which will produce approximately 9,000 tonnes of renewable hydrogen per year. Once completed, the project is expected to avoid the release of 3.6 million tonnes of carbon dioxide annually. In addition, to maximise the greenhouse gas emissions' reduction, the generated hydrogen will be produced solely with the electricity stemming from renewable sources. The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU'), which enables EU countries to support the development of certain economic activities subject to certain conditions, and the Guidelines on State aid for climate, environmental protection and energy 2022. The Commission found that the project applies an innovative technology and facilitates the development of an economic activity, in particular the production of steel in a more sustainable manner. The aid also has an ‘incentive effect' and a limited impact on competition and trade within the EU. Furthermore, its positive effects outweigh any potential distortion of competition and trade in the EU. On this basis, the Commission approved the aid under EU State aid rules. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €1 billion measure enables Germany to support Salzgitter's plans to decarbonise its steel production processes by using and producing renewable hydrogen. This will contribute to the greening of a very energy-intensive and hard-to-abate sector while reducing Germany's dependence on imported fossil fuels. This is a good example of how our State aid framework enables Member States to help the EU's energy intensive sectors tackle the challenges of greening.