German energy company RWE and steel producer ArcelorMittal have signed a memorandum of understanding to work together to develop, build and operate offshore wind farms and hydrogen facilities that will supply the renewable energy and green hydrogen required to produce low-emissions steel in Germany.
The partnership centres on driving forward the production of carbon-neutral steel, with a plan to replace coal with wind power and green hydrogen as the main source of energy in steel production at ArcelorMittal’s steelmaking sites in Germany, RWE said.
To decarbonise its production sites in Bremen, Hamburg, Eisenhüttenstadt, and Duisburg as planned, ArcelorMittal Germany needs renewable energy on a large scale.
RWE and ArcelorMittal are assessing options for joint participation in tenders for offshore wind farm sites in the North Sea.
The amendment of the “Wind Energy at Sea Act” (WindSeeG) currently underway is crucial for success, as it will permanently shape the cost structure in the German offshore wind sector, the companies said.
If the law were to establish “negative bids” in offshore wind tenders, financing wind farms would be more challenging and send the wrong pricing signals to the market by making wind power unnecessarily expensive, according to the companies.
Competitive electricity prices are absolutely necessary, if energy-intensive industries such as the steel industry, which operates in a competitive global environment, are to have a future in Germany.
RWE and ArcelorMittal said that they strongly believe that with the right steer, green steel from Germany can become a benchmark worldwide for low-carbon emissions steel production.
RWE and ArcelorMittal also want to work together on the development of green hydrogen, by jointly looking for areas where electrolysis plants can be built to supply the steel production sites in Bremen and Eisenhüttenstadt, starting with a 70 MW pilot plant by 2026 with the clear intention to increase to gigawatt-scale projects in the long term – subject to approval of public funding.
”Electricity from renewable energies and green hydrogen must become the hallmark of industrial production in Germany,” Sven Utermöhlen, CEO Offshore Wind, RWE Renewables.
”Industry needs both in large quantities as soon as possible in order to achieve its climate targets. That is why we are planning one of the most ambitious expansion projects for offshore wind farms and electrolysers in Germany, together with ArcelorMittal. If the regulatory framework is right, we want to be successful together in the bidding for offshore areas. ArcelorMittal is an excellent partner to expand our industry cooperation and thus give real impetus to decarbonisation projects in Germany.”
With the combination of RWE’s expertise in offshore wind farms and electrolysers, and ArcelorMittal as a guaranteed buyer of the green electricity and hydrogen, the two companies believe they have excellent opportunities for a viable partnership arrangement.
RWE and ArcelorMittal intend to conclude long-term purchase agreements for both wind power and green hydrogen.
”ArcelorMittal Germany is embarking on a radical transition to ensure we reach our CO2 emissions reduction targets, meaning that the energy used to make steel will need to be clean energy,” Reiner Blaschek, CEO ArcelorMittal Germany, said.
”The partnership we have announced with RWE today is significant for a number of reasons: it will provide us with the renewable, affordable electricity and green hydrogen that we need to produce low-emissions steel while remaining competitive in a global market. It also offers vital security in the supply chain, by integrating the supply of energy and hydrogen into our business. We are looking forward to working with RWE on this highly important project and benefiting from their experience and know-how, as we continue to lead the industry in the decarbonisation of steelmaking in Germany and beyond.”
As the world’s leading steel producer, ArcelorMittal has a target to reduce CO2 emissions by 35 per cent by 2030 in Europe, and a group-wide target to be carbon neutral by 2050.
By 2030, ArcelorMittal is aiming to exceed this target in Germany, by moving away from coal-intensive blast furnace technology to electric arc furnaces (EAFs) and direct reduction (DRI) plants. They also plan to gradually replace natural gas with green hydrogen as the fuel for these facilities, once it is cost-competitive at scale.
In addition to the partnership on renewable electricity and green hydrogen, the companies want to investigate possible uses for ArcelorMittal’s low-emissions steel in components for RWE’s renewable electricity plants. RWE wants to be climate-neutral by 2040. To achieve this goal, the energy company needs to decarbonise its supply chain, and the use of low-emissions steel will make an important contribution to this.