Sweden– The European Commission announced the approval of a €128 million Swedish state aid initiative to support steelmaker SSAB’s project to decarbonize its steel production.
The funding will facilitate the transition from coal-based steelmaking to electric arc furnace production using fossil-free energy sources. The grant will come from the EU’s Just Transition Fund, established in 2021, aimed at ensuring that the EU’s shift to a net zero economy, especially for communities reliant on fossil fuels or high-emission industries.
With the demand for decarbonization increasing globally, the demand for low-carbon steel is expected to increase. The project is expected to reduce Sweden’s CO2 emissions by 7%, according to SSAB.
The approval follows SSAB’s decision earlier this year to construct a mill in Luleå, which will have the capacity to produce 2.5 million tonnes of carbon emission-free steel per year, requiring an investment of around €4.5 billion. The project will replace traditional blast furnaces with two electric arc furnaces (EAFs), generating heat that will melt and shape metal through electric currents instead of coal combustion.
The new facility will operate using fossil-free electricity and energy sources, relying on recycled scrap and fossil-free sponge iron for production.
As per the official statement announcing the approval of the grant, the Commission said that the aid will contribute to the achievement of the European Green Deal and the targets of the Green Deal Industrial Plan.
Margrethe Vestager, European Commission Executive Vice-President, commented, “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.”