The European Commission has approved, under EU State aid rules, a €280 million Belgian measure to ArcelorMittal Belgium (‘ArcelorMittal’) in partially decarbonising its steel production processes. The aid, which will take the form of a direct grant and a soft loan, will the construction of a direct reduction iron plant. Together with a new electric arc furnace, the plant will substitute one of the two existing blast furnaces. Natural gas, initially used in the energy mix, will be gradually phased out of the steel production processes. Ultimately, the plant will be operated using renewable hydrogen and only complemented by low-carbon hydrogen if there is not sufficient renewable hydrogen available. 1p3h33

The plant is envisioned to start operating in 2026 and it is expected to produce 2.3 million tonnes of low-carbon direct reduced iron per year. Once completed, the project is expected to avoid the release of above 50 million tonnes of carbon dioxide. ArcelorMittal has committed to disseminate the technical know-how gained through the project.

According to the European Commission, the measure will contribute to the achievement of the EU Hydrogen Strategy, the European Green Deal and the Green Deal Industrial Plan targets, while helping to end dependence on Russian fossil fuels and fast forward the green transition in line with the REPowerEU Plan. The project is subject to monitoring to its progress towards the objectives of CO2 emission savings, phasing out of natural gas and phasing in the renewable hydrogen.

Belgium selected ArcelorMittal's project in the context of an open call in 2021 to form part of an IPCEI on hydrogen technologies and systems. ArcelorMittal's project intends to reduce greenhouse gas emissions in the energy-intensive steel sector. As aid for the reduction of greenhouse gas emissions, including through of decarbonisation projects, is one of the main categories of aid allowed by the CEEAG, the measure was best suited for assessment under these guidelines.

“This €280 million measure enables Belgium to ArcelorMittal’s plan to decarbonise its steel production processes. It will contribute to the greening of the very energy-intensive steel sector, in line with the EU’s commitment to a net zero economy. And with limited distortions of competition”, said Margrethe Vestager, Executive Vice-President in charge of competition policy.