Thyssenkrupp AG, a leading German metals, engineering, and manufacturing company, has received approval from the European Union for a 2 billion euros ($2.3 billion) package of state subsidies from the German government. This funding is intended to support Thyssenkrupp’s proposed green steel production, as the company aims to reduce its carbon emissions and produce climate-friendly steel at its Duisburg site.
The move towards green production facilities is in line with the EU’s “Green Deal” initiative, which seeks to establish Europe as a leader in clean technology. With other countries providing significant subsidies to companies for green initiatives, the EU hopes to keep pace and drive the development of a Net Zero industry in the region. The steel industry, while generating substantial revenue, is also responsible for up to 9% of global carbon emissions due to its heavy reliance on coal. By adopting clean technology, such as hydrogen-based processes, the industry can reduce its environmental impact.
Thyssenkrupp Steel has been actively testing the viability of green steel technology as part of its climate strategy. The company’s goal is to achieve carbon-neutral steel production by 2045. In the short term, Thyssenkrupp Steel plans to reduce Scope 1 and 2 emissions by 30% by 2030, compared to 2018 levels. One key aspect of their strategy is the construction of a hydrogen-powered direct reduction (DR) plant at the Duisburg site. This innovative plant, known as “tkH2Steel,” has a capacity of 2.5 million metric tons of directly reduced iron (DRI) and can reduce over 3.5 million metric tons of CO2 emissions.
Unlike conventional blast furnaces, DR plants produce solid sponge iron, or direct reduced iron (DRI), which needs further melting to produce high-quality steel. Thyssenkrupp Steel has awarded a contract worth billions of euros to SMS group for the construction of a direct reduction plant, marking one of the largest industrial decarbonization initiatives in the steel industry. By replacing carbon-intensive steel production with clean technology using hydrogen, Thyssenkrupp Steel aims to significantly reduce its emissions and produce carbon-neutral steel.
The approval of the 2 billion euros subsidy by the EU will support Thyssenkrupp in achieving its green steel production targets. The subsidy package includes direct grants and conditional payments to support the company’s decarbonization plan and promote the uptake of hydrogen. In addition to Thyssenkrupp, ArcelorMittal SA in France has also received approval for an 850 million euros subsidy to fund its steel decarbonization plans. Furthermore, a green steel startup in Sweden has secured 190 million euros from private investors to build a green hydrogen-powered steel plant.
Thyssenkrupp aims to begin its green steel production at the hydrogen-powered DRI plant by the end of 2026. This project, which has gained the support of European governments, showcases the business case for investing in clean technology as part of the EU’s Green Deal initiative. By transitioning to green steel production, Thyssenkrupp and other companies in the industry can contribute to a more sustainable future while remaining competitive in the global market.