According to a state press release, the German government has approved additional funding of 322 million euros for the SALCOS decarbonization project in Salzgitter.
The Federal Ministry of Economy and Energy (BMWE) approved the allocation of funds after receiving approval from the European Commission in accordance with EU state aid rules earlier in February.
SALCOS – Salzgitter's strategy for low–CO2 steel production was initially aimed at reducing CO2 emissions by more than 95% by the end of 2033, by replacing the existing blast furnace-oxygen furnace (BF — BOF) process with an electric arc furnace with direct reduction of iron (DRI — EDP). The DRI plant will run on a mixture of hydrogen and natural gas, which are currently not competitive in Europe due to insufficient scale and high costs.
As noted in the statement of the German government, during the initial approval of state aid in 2022, a funding gap was identified, despite the 1 billion euros promised by the German state. Construction of the first stage of SALCOS in Salzgitter – a DRI plant with a capacity of 2.1 million tons per year, an EAF with a capacity of 1.9 million tons per year and a hydrogen electrolyzer with a capacity of 100 MW – is ongoing, and it is currently supported by an additional grant of 322 million euros, which, according to BMWE, "further ensures the timely implementation of the project."".
Last year, Salzgitter's management said it expected to start producing environmentally friendly steel in the first half of 2027. The implementation of the last stages of the SALCOS project has been suspended until final investment decisions are made, which are expected in 2028-2029, as a result of which plans to expand the H2 electrolyzer may be canceled in favor of external supplies.
Earlier, the German government suggested that additional funding to fill the funding gap for SALCOS could be allocated from other initiatives and state aid instruments in connection with the project's consumption of hydrogen produced within the framework of Important EU Projects of Common European Interest (IPCEI), but such allocation of funds was not carried out. "it turned out to be unworkable," which required approval for the allocation of additional funds.
For more information about SALCOS and other decarbonization projects in the global steel sector, see the McCloskey Global Green Steel Profile
Author: Benjamin Stephen
Opisnet.com
