The European Commission has approved €55mn ($58.8mn) in state aid from Germany to steelmaker ArcelorMittal for a €110mn pilot project testing renewable hydrogen in steel production. The company aims to eventually implement the technology across Europe.
ArcelorMittal plans to build a direct reduced iron (DRI) unit in Hamburg that will produce 100,000 t/yr of iron to be fed into an electric arc furnace alongside scrap for steel production. The project will avert 700,000t of CO2 in total, according to the EU.
The steelmaker aims to trial using hydrogen instead of natural gas to produce iron, and to discover how the carbon-free iron reacts in the electric furnace. The start date for the plant has slipped to 2026 from 2025 initially planned.
ArcelorMittal will use the experience gained to decarbonise its EU steel production on a larger scale and has committed to share technical lessons with European steel producers, the EU said. The company is considering using hydrogen at other sites including in France, Belgium, and Bremen in Germany.
Last year the EU approved €1bn for Salzgitter to help decarbonise its steel production using hydrogen. The EU has approved more than €12bn in state aid for hydrogen projects, many of which target hard-to-abate sectors like steel.
The steel industry will be a key consumer of hydrogen as it seeks to decarbonise, but steelmakers are concerned about security and affordability of supply. The sector is about to start a massive transition from coal-based to hydrogen-based production, which means "a major shift in technology," Thyssenkrupp's head of government and regulatory affairs Erika Mink said earlier this week.
"We practically have to build new steel plants while we still run the old ones in order to serve our customers," she said.
Thyssenkrupp is planning large investments for moving to hydrogen-based green steel, including at its plant at Duisburg in western Germany. But its plans are dependent on public funding.
Hydrogen supply is a major concern for Thyssenkrupp. Mink said the company faces a future in which energy accounts for 50-60pc of its production costs post-transition, compared with 5pc at present.
"Our whole business model will depend on availability and affordability of renewable electricity and hydrogen," she said.
Mink called for a "hydrogen map" or "master plan" for Europe to detail demand from different regions and the likely capacity for supply from local production and imports, saying this would allow Europe to set priorities and plan effectively. She also echoed calls for simpler funding mechanisms and said it was concerning for steel makers to see potential hydrogen and electrolyser suppliers prioritising investments in the US over Europe.
