German govt pledges €1.3 bln in funding to help decarbonise steel production

The German government has pledged to support the multinational steel manufacturing corporation ArcelorMittal with a total of 1.3 billion euros to help reduce carbon emissions from steel production in the country, economy minister Robert Habeck announced during a visit to the northern-Germany city of Bremen. The money will be used to build electric arc furnaces in factories owned by ArcelorMittal in both Bremen and Eisenhüttenstadt. With an electric arc furnace, steel can be produced using renewable energy. Plans also include increasing the use of recycled scrap metal. ArcelorMittal initially applied for funding in 2021, and the 1.3 billion euros is part of a larger 2.5 billion euro investment package. Before the investment is finalised, however, it will need to be approved by the EU based on state aid rules.

“After a long period of evaluation by the authorities, we are pleased with this news from the federal government to be able to take the next step towards climate-neutral steel production in Germany,” said Reiner Blaschek, the CEO of ArcelorMittal Europe – Flat Products. He added that a sufficient supply of renewable energy and green hydrogen is the next hurdle to overcome. By 2030, the company plans to reduce its carbon emissions by 60 percent.

Following the constitutional court ruling which left a hole in the German government’s budget, steel and renewable industries called for a “transformation summit” in November to clarify the urgently needed funding for industry decarbonisation. In December, the government approved 2.6 billion euros in funding for green steel production in the western German state of Saarland.