(Salzgitter) – Flash visit to Salzgitter AG in Lower Saxony: CEO Gunnar Groebler received EU Energy Commissioner Kadri Simson, Federal Minister of Economics Robert Habeck and Lower Saxony's Economics Minister Olaf Lies on the company premises on Wednesday evening. The reason for the visit is the company's plans for climate-neutral steel production.
The group is currently responsible for one percent (eight million tons) of greenhouse gas emissions in Germany. The aim is to save 2025 percent of climate-damaging gases by 30, and 2033 percent by the end of 95. As part of the “Salcos” (SAlzgitter Low CO2Steelmaking), the country's second largest steel company wants to replace the carbon previously required for the smelting of iron ores through direct reduction, initially with natural gas and - if there is sufficient availability - with green hydrogen.
“Salcos” project: Using green hydrogen, Salzgitter AG wants to one day produce sponge iron from iron ore in a direct reduction plant. This in turn produces raw steel in an electric arc furnace for further processing. © Salzgitter AG
Investments totaling more than two billion euros are planned for the implementation of the first phase - around one billion of which will come from the federal government (70 percent) and the state (30 percent). As reported, Robert Habeck publicly presented the funding decision to Groebler in April at the Hanover Trade Fair. “This is probably one of the highest decisions in the history of economic development,” said the Green politician in Salzgitter. Until recently, it was not clear that a steel company would take the lead in energy policy transformation.
Economics Minister Olaf Lies (SPD) emphasized the importance of offshore wind power for Lower Saxony. The federal state is therefore ideally placed to take on a leading role in the production of green electricity and thus also in the production of green hydrogen.
H2Global as a model for all of Europe
In addition, according to Habeck, there is the “positive development” of the “H2Global” foundation. Using this construction, green hydrogen is purchased as cheaply as possible worldwide and auctioned in Germany. Because organic quality gas currently has to be paid for dearly due to the still low supply and local sales do not cover the costs, the Federal Ministry of Economics is paying the price difference for a limited period of time and is providing a total of five billion euros for this.
The first round of tenders for the import of green hydrogen had H2Global launched in December last year. As the number of hydrogen producers and buyers increases, the market will regulate itself in a few years, said Habeck.
Building a European hydrogen bank
This principle of “Contracts for Difference” is open to other actors – also across Europe, said Habeck in Salzgitter, looking at the EU Commissioner standing next to him. They would like to build on Germany's "experience as a pioneer in conducting an international hydrogen auction," said Kadri Simson, and "develop the first tender with the European Hydrogen Bank that is open to all member states." This was already discussed at a bilateral meeting before the Salzgitter visit on the same day in Hanover.
EU Commissioner Kadri Simson (left): “The steel sector is one of the main drivers for the hydrogen economy.” © Andreas Lohse
The European Hydrogen Bank (EHB), an initiative of the EU Commission, is intended to facilitate both the production of renewable hydrogen in the EU and its import. The aim is to bring suppliers together with European customers in order to produce around 2030 million tonnes of renewable hydrogen in and for the EU by 20.
Robert Habeck expressly welcomed making H2Global an “integral part” of the European Hydrogen Bank: “The double auction model can become an important building block for other countries too.”
Direct reduction plant ordered
In any case, plans for a climate-friendly transformation are making progress in Salzgitter: a few days before the visit by the top energy policy trio, the steel company said it had commissioned a consortium of Tenova, Danieli and DSD Steel Group to build the first direct reduction plant on the site of Salzgitter Flachstahl GmbH . The unit is “the largest unit” within Salcos and has a production capacity of around two million tons of iron per year. The system can be operated flexibly with hydrogen and natural gas in any mixing ratio.
Kadri Simon expects that “the steel sector will be one of the main drivers” for the burgeoning hydrogen economy. According to the company, Salzgitter alone needs around 300.000 tons of this annually for the final expansion of Salcos.
Hydrogen network required
At the beginning of May, Salzgitter AG reported that it had signed a declaration of intent with the Oldenburg energy service provider EWE to purchase green hydrogen. So far, there are no fixed contracts to supply the group with the energy source, said Gunnar Groebler when asked and referred to the necessary connection of the plant to pipelines.
Tradition and modernity: Salzgitter AG wants to save around 2033 percent of CO95 emissions by directly reducing iron from 2. The wind turbines in the background are on the company premises and are already supplying green electricity for electrolysis. © Andreas Lohse
The transmission system operators are currently working on this. A network of lines will one day connect producers and buyers of green hydrogen in Europe.
“The planning for this is in full swing,” said Robert Habeck, who appeared quite relaxed on site. For the Federal Minister of Economics, who is currently verbally attacked almost every day, this evening seemed like a home game in the backdrop of tradition and modernity in the steel city: after all, there has been hardly any criticism of the federal government's hydrogen projects so far.
Photos
The top trio in energy policy visiting Salzgitter AG (from left to right): CEO Gunnar Groebler, EU Commissioner Kadri Simon, Federal Minister of Economics Robert Habeck, Minister of Economics of Lower Saxony Olaf Lies. © Andreas Lohse
