The European Commission on Thursday cleared 2.85 billion euros ($3.20 billion) in aid to support the continent's two biggest steelmakers, ArcelorMittal and Thyssenkrupp (TKAG.DE), in their efforts to reduce carbon emissions.
The move highlights Brussels' efforts to help local industry decarbonise production and remain competitive with global rivals, aware that heavy industries are unable to fund the transition on their own.
In addition, it displays the bloc's willingness to prevent industry from leaving to other subsidy-rich regions, most notably the United States, which has lured major players with its Inflation Reduction Act.
"This will contribute to the greening of one the most polluting sectors, while helping reduce Germany's dependence on imported fossil fuels and develop the renewable hydrogen value chain in the EU," said EU antitrust chief Margrethe Vestager.
The approval on Thursday of 2 billion euros in aid marks a major milestone for Thyssenkrupp, which depends on public funding to decarbonise steelmaking, among the most CO2-intense industrial production processes.
Apart from the Thyssenkrupp funding, which is split into a 550 million-euro direct grant and a conditional payment mechanism of up to 1.45 billion euros, the Commission also approved an 850 million-euro package Paris had put in place for ArcelorMittal.
ArcelorMittal, Europe's biggest steelmaker, is planning to use the French government grant to decarbonise its production at Dunkirk, France, while Thyssenkrupp needs the money to build a green steel plant at its Duisburg headquarters.
"Our project is an important contribution to achieving climate targets in Germany and Europe, and secures sustainable industrial jobs not only here but also in related industries," Thyssenkrupp Steel Europe CEO Bernhard Osburg said.
Shares in Thyssenkrupp and ArcelorMittal were up 1.4% and 2.8%, respectively.
German Economy Minister Robert Habeck, who drew flack from labour representatives for what they say was a lack of support for steel, said it was an "enormously important decision for climate protection and for Germany as an industrial location".
($1 = 0.8922 euros)
