The European Commission has approved German state aid for chemical company BASF and steelmaker Salzgitter. The aid will take the form of subsidies to support renewable hydrogen production. In total, it amounts to EUR 1.13bn, enabling the construction of electrolysers with a combined installed capacity of 154 MW.
In recent months, the greatest attention has focused on the energy crisis and, above all, its impact on electricity and gas consumers. Measures to reduce energy commodity prices are a short-term solution; according to the European Commission, hydrogen is to be the long-term solution, at least for part of the energy sector.
The European Commission is currently preparing legislation to enable the development of the hydrogen market, has set production targets in its European hydrogen strategy and, in mid-July and August this year, launched subsidy programmes for selected projects, IPCEI ‘Hy2Tech’ and IPCEI ‘Hy2Use’. The BASF and Salzgitter projects were included in these subsidy programmes.
With the subsidy, Salzgitter will build a direct reduced iron plant and electric arc furnaces. This will make it possible to replace the coal used to reduce iron ore with hydrogen, thereby avoiding most CO2 emissions from steel production. As a result, approximately 1,9 million tonnes of crude steel will be produced annually in a more environmentally friendly way.
“The EUR 1 billion subsidy will enable Germany to support Salzgitter’s plans to decarbonise steel production through the production and subsequent use of renewable hydrogen. This will contribute to greening an energy-intensive sector that is difficult to decarbonise, while also reducing Germany’s dependence on fossil fuel imports,” said Margrethe Vestager, European Commission Executive Vice-President for Competition.
The measure will also support the construction and installation of a 100 MW electrolyser, which will produce approximately 9 000 tonnes of renewable hydrogen annually. The hydrogen produced by the electrolyser will be used as a feedstock in the direct reduction plant.
Chemical company BASF is also planning to move away from fossil fuels and develop hydrogen. With a EUR 134m subsidy, it will develop renewable hydrogen production, which is intended to replace fossil-based hydrogen in chemical manufacturing processes. The state aid provided will support the construction of a 54 MW electrolyser and the production of approximately 5 000 tonnes of renewable hydrogen. The electrolyser is expected to begin operating in 2025.
This article is a machine translation of the Czech original and has not yet been fully reviewed. In case of any doubt, please refer to the Czech version.
