The European Commission has approved EUR1.3bn in German state aid to support ArcelorMittal [MT:EN], the largest steelmaker in Europe and the second largest worldwide, in decarbonizing part of its production processes, as reported by Reuters on February 23. The EUR1.3bn budget will fund ArcelorMittal’s project to decarbonize steel production in Bremen and Eisenhüttenstadt, including the construction of a direct reduction plant and three new electric arc furnaces. These facilities would help the steelmaker gradually replace natural gas with low-carbon and renewable hydrogen, potentially avoiding over 70 million tons of carbon dioxide (CO2) emissions over the 16-year lifetime of the project.

The EUR1.3bn state aid measure will be partially funded through the Recovery and Resilience Facility (RRF), an EU key instrument to finance reforms and investments in member states. Initiated in 2021 to mitigate the economic and social impact of the COVID-19 pandemic, the instrument intends to make European economies and societies more sustainable, resilient, and prepared for green and digital transitions. The Commission states that the EUR1.3bn aid is necessary and appropriate to facilitate the production of green steel, posing positive effects that outweigh any potential distortion of competition and trade in the EU. Furthermore, it could help end dependence on Russian fossil fuels and facilitate the bloc’s green transition. Before the EUR1.3bn financial aid, the Commission had also approved a EUR850m French state aid in July 2023 to support ArcelorMittal in decarbonizing its plants in Dunkirk.

Sources：

https://www.reuters.com/sustainability/sustainable-finance-reporting/eu-approves-german-state-aid-arcelormittal-decarbonisation-2024-02-23/

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1009

https://www.eib.org/en/products/mandates-partnerships/rrf/index#:~:text=It%20aims%20to%20make%20European,eligible%20projects%20through%20financial%20instruments.

EU Approves €850M for ArcelorMittal’s French Measure to Decarbonize Steel Production