EU Approves €128 Million Grant to Decarbonize SSAB Steel Production
The European Commission announced today that it has approved a €128 million Swedish state aid measure aimed at supporting a project by steel company SSAB to decarbonize its steel production.
The new funding will support a project to transition from coal-based steel production to electric arc furnace production using fossil-free energy sources. The grant will be made available through the EU’s Just Transition Fund, established in 2021 to ensure that the EU’s shift to a net zero economy over the coming decades is fair and inclusive, particularly concerning its impact on communities that are heavily dependent on fossil fuels or greenhouse gas-intensive industries.
Demand for low-carbon steel is expected to increase significantly, as manufacturers globally aim to decarbonize their supply chains. Steelmaking is one of the biggest emitters of CO2 globally, and one of the more challenging sectors to abate, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels.
The approval follows the decision by SSAB earlier this year to build a mill in Luleå capable of producing 2.5 million tonnes of carbon emission-free steel annually, with a required investment of approximately €4.5 billion. The project will consist of two electric arc furnaces (EAFs) in place of blast furnaces. As opposed to burning coal, an electric arc furnace uses electric currents to create the heat needed to melt and mold metal. The new mill will run on fossil-free electricity and use only fossil-free energy sources, and will be supplied by recycled scrap, as well as fossil free sponge iron
The project is expected to reduce Sweden’s CO2 emissions by 7%, according to SSAB.
In its statement announcing the approval of the grant, the Commission said that the measure will contribute to the achievement of the European Green Deal and the targets of the Green Deal Industrial Plan, in addition to helping to end dependence on Russian fossil fuels and accelerating the green transition.
Margrethe Vestager, European Commission Executive Vice-President in charge of competition policy said:
“This €128 million measure enables Sweden to help SSAB accelerate its switch to electrified steelmaking at its steel plant in the Norrbotten region. This will contribute to the greening of the steel value chain, in line with the EU’s target of climate neutrality by 2050. At the same time, the measure ensures that competition is not distorted.”