In order to deliver the renewable energy and green hydrogen needed to create low-emission steel in Germany, RWE and steel producer ArcelorMittal have inked an agreement to collaborate on the development, construction, and operation of offshore wind farms and hydrogen facilities.
ArcelorMittal Germany needs a significant amount of renewable energy to decarbonize its production locations in Bremen, Hamburg, Eisenhüttenstadt, and Duisburg as planned.
RWE and ArcelorMittal are considering alternatives for collaborating in bids for North Sea offshore wind farm sites. Success depends on the ongoing revision of the “Wind Energy at Sea Act” (WindSeeG), which will fundamentally alter the cost structure of the German offshore wind industry. Financing wind farms would be more difficult and would send the wrong pricing signals to the market by making wind power unduly expensive if the government were to introduce “negative bids” in offshore wind tenders. If energy-intensive sectors in Germany, such as the steel industry, which competes internationally, are to survive, competitive power costs are a must. RWE and ArcelorMittal have a strong conviction that German green steel has the potential to set a new standard for the manufacture of steel with low carbon emissions.
In order to supply the steel production facilities in Bremen and Eisenhüttenstadt, RWE and ArcelorMittal want to work together to develop green hydrogen. To this end, they are looking for locations where electrolysis plants can be built, with the goal of starting with a 70 MW pilot plant by 2026 and eventually expanding to Gigawatt-scale projects, provided that public funding is approved.
The two businesses think they have strong potential for a successful collaboration arrangement given the combination of RWE’s experience in offshore wind farms and electrolyzers and ArcelorMittal’s role as a guaranteed buyer of green power and hydrogen. Long-term purchase agreements for wind energy and green hydrogen are planned to be finalized by RWE and ArcelorMittal.
“Electricity from renewable energy and green hydrogen must become the hallmark of industrial production in Germany,” says Sven Utermöhlen, CEO of Offshore Wind at RWE Renewables. To meet its climate goals, the industry needs both in significant amounts as soon as practicable. We are thus working with ArcelorMittal to develop one of Germany’s most ambitious growth plans for offshore wind farms and electrolyzers. We hope to be successful jointly in the bidding for offshore territories if the regulatory environment is appropriate. The expansion of our industrial partnership with ArcelorMittal will significantly advance Germany’s decarbonization efforts.
“ArcelorMittal Germany is beginning on a dramatic change to guarantee we meet our CO2 emissions reduction objectives, which means that the energy used to create steel will need to be clean energy,” says Reiner Blaschek, CEO of ArcelorMittal Germany. The alliance we’ve formed with RWE today is crucial for a number of reasons, including the fact that it will provide us access to the green hydrogen and renewable power we need to make low-emission steel while maintaining our competitiveness in the global market. By incorporating the supply of energy and hydrogen into our company, it also provides crucial supply chain security. As we continue to lead the industry in the decarbonization of steelmaking in Germany and abroad, we are looking forward to cooperating with RWE on this extremely important project and utilizing their experience and know-how.
ArcelorMittal, the largest manufacturer of steel worldwide, has aggressive climate action targets, such as an aim to decrease CO2 emissions by 35 percent by 2030 in Europe and a plan to become carbon neutral by 2050 for the whole business. By switching from coal-intensive blast furnace technology to electric arc furnaces and direct reduction (DRI) facilities by 2030, ArcelorMittal hopes to surpass this goal in Germany. Once green hydrogen is cost-competitive on a large scale, they also want to eventually replace natural gas as the fuel for these plants.
The firms intend to look into potential applications for ArcelorMittal’s low-emission steel in parts for RWE’s renewable energy facilities in addition to their partnership on green hydrogen and renewable electricity. By 2040, RWE aspires to be climate-neutral. The use of low-emission steel will significantly aid in the decarbonization of the energy company’s supply chain, which is a need for achieving this aim.