EU has approved €2.6 billion in state aid for Germany’s SHS

The EU has approved the German government’s plans to provide €2.6 billion in state aid to support the steel company Stahl-Holding-Saar (SHS) in its environmental transformation. This is stated in the message of the European Commission.

The SHS project is aimed at partial decarbonization of steel production in Pölklingen and Dillingen (Saarland), where the company operates two blast furnaces and five oxygen furnaces.

The assistance will be provided in the form of a direct grant. Among other things, it will support the construction of a direct reduction plant and two new electric arc furnaces to replace the existing facilities. Natural gas, which was initially used in the new direct reduction unit, will be gradually phased out of the steelmaking process. Ultimately, the new facility will operate using predominantly low-carbon and renewable hydrogen.

According to the EC, SHS intends to organize a competitive selection of suppliers of renewable hydrogen. The winners of the tender will install electrolyzers near the company’s facilities. At the next stage, SHS plans to connect to the German hydrogen network.

The new steelmaking facilities are expected to come on stream in 2026 and produce 3.05 million tons of steel per year, replacing the same volumes currently produced using the traditional method. Once completed, the project is expected to avoid emissions of more than 53 million tons of carbon dioxide over its lifetime.

As GMK Center reported earlier, this month Germany announced plans to support SHS in ecological transformation. Economy Minister Robert Habek emphasized the importance of providing financial assistance to steel companies in carrying out costly green reforms in line with climate goals.