(Brussels) – The European Commission gives the green light to support two major German hydrogen projects: The chemical multinational BASF SE and the steel group Salzgitter AG will receive funding worth more than one billion euros as part of the “IPCEI Hydrogen” (Important Project of Common European Interest). These would be provided jointly by the federal government and the states of Lower Saxony and North Rhine-Westphalia. The projects are expected to save over 2,5 million tonnes of CO2 per year.
BASF: Electrolyser in Ludwigshafen
Aid in the form of a direct grant of 134 million euros will support the construction and installation of a large electrolyzer with proton exchange membranes (PEM) at the BASF Ludwigshafen site, which will go into operation in 2025. The electricity required to produce hydrogen should come exclusively from renewable sources. During the 15-year operating period, the release of 565.305 tons of carbon dioxide could be avoided because the green hydrogen replaces the gray hydrogen previously used to produce chemical products.
Salzgitter AG: low-CO2 steel production
The EU Commission has approved funding of around one billion euros for Salzgitter Flachstahl GmbH, part of Salzgitter AG. According to an agreement signed in mid-September, up to 700 million euros of this will come from the federal government and a further 300 million euros from the state of Lower Saxony. The funds are for the project “Salcos(SAlzgitter Low CO2Steelmaking).
Lower Saxony's Prime Minister Stephan Weil and BMWK State Secretary Stefan Wenzel signed the administrative agreements on the provision of funding by the federal and state governments on September 15th. From left to right: Gunnar Groebler, CEO of Salzgitter AG, Stefan Wenzel, Stephan Weil, Ulrich Grethe, Group Management Steel Production/GB Steel Production, Martin Zappe, Program Management Salcos © Salzgitter AG
In addition, the construction and installation of a 100 megawatt electrolyzer, which produces around 9.000 tons of renewable hydrogen annually, will be funded. Salcos' goal is to completely convert steel production in Salzgitter to low-CO2033 crude steel production in three stages by 2. The first stage, with a crude steel capacity of 1,9 million tons per year, is scheduled to come into operation at the end of 2025. As part of the complete transformation, two direct reduction plants and three electric furnaces will be built, which will then gradually replace the blast furnaces and converters. This means that steel production, which was previously based on coking coal, will be replaced by a new hydrogen-based route.
The group's board of directors had already released 723 million euros of equity capital for the project. Once the project has been implemented, the aim is to avoid emissions of 3,6 million tonnes of carbon dioxide per year, according to a statement from the EU Commission.
Commission: Aid is needed
In both cases, the aid would have an “incentive effect” because the aid recipients would not make the investments “without public funding” or not to the same extent, according to a statement from the Commission. Furthermore, they are necessary and suitable to ensure the production of renewable hydrogen and sustainable steel.
They are also appropriate because the amount of aid corresponds to the actual financing needs. If the projects “prove very successful and generate additional net revenue,” the companies would pay back part of the aid received through a “clawback mechanism.”
Further hydrogen projects are to follow
These two projects approved by the Commission are the first large industrial projects as part of the German IPCEI hydrogen process, according to the Federal Ministry of Economics (BMWK). “More will follow, forming the foundation for the hydrogen economy in Germany,” said Minister Robert Habeck.
The BMWK selected the BASF and Salzgitter projects for funding under the IPCEI Hydrogen in a competition in May 2021. Both projects have already started. The EU Commission had previously approved two BMWK projects for research into stationary fuel cell systems at Bosch and for series production of electrolysers at Sunfire.
Photo above
EU Commission approves aid for IPCEI hydrogen projects at BASF and Salzgitter AG © EU Commission
