The EU has given the green light for the French and German governments to shell out a total of €2.85bn ($3.2bn) in subsidies for two renewable hydrogen-based “green steel” projects in their countries, both of which will use fossil gas instead of green H2 for the first phases of their operation.

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By far the biggest programme is that from the German government, which is to give €2bn to steelmaker Thyssenkrupp for a new “hydrogen-capable” plant at its massive steel complex in Duisburg.

Meanwhile, ArcelorMittal has secured an €850m grant from the French government, bringing the company’s total dollar value of European and Canadian green-steel subsidies bagged so far to $2.3bn.

The Thyssenkrupp project encompasses a new direct-reduced iron (DRI) plant, which will replace one of its blast furnaces that had been used to extract iron from iron ore.

The programme, which also includes two “melters”, will see Thyssenkrupp handed a €550m direct grant to construct the new plant, which will make 2.5 million tonnes of DRI per year, capable of making 2.3 million tonnes of hot steel.

The remaining €1.45bn will be available for the first ten years of the plant’s operation only, to cover the additional costs of procuring and using green hydrogen instead of “low-carbon hydrogen” such as blue H2 made with fossil gas and carbon capture and storage (CCS).

The so-called “conditional payment mechanism” via which this subsidy will be delivered will be dependent on Thyssenkrupp proving exactly how much green H2 it is using, verified by an “independent expert”.

Thyssenkrupp will organise a competitive tendering process to procure the green hydrogen, which the German government will monitor.

Ultimately, Duisburg will use around 143,000 tonnes of hydrogen per year in the plant, Thyssenkrupp said, but only from 2029, three years after it comes into operation in 2026.

Until then, the DRI plant will run wholly on fossil gas, which will remain part of the chemicals mix until 2037 when it will be phased out.

“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,” said Bernhard Osburg, chairman of Thyssenkrupp Steel Europe. “In this way, we can also demonstrate internationally that progress, prosperity and climate change mitigation are not mutually exclusive.”

Elsewhere, the French government is poised to grant €850m to ArcelorMittal to support the construction of a DRI plant and two electric-arc furnaces at its Dunkirk plant, replacing two of the three existing coke blast furnaces used for ironmaking and two of the three basic oxygen furnaces used for steelmaking.

Due to come on line in 2026, it will produce four million tonnes of liquid steel per year, but the DRI element will also operate purely on fossil gas initially, before being replaced gradually by renewable or low-carbon hydrogen.

But unlike the Duisburg plant, there is no timetable for this, which means that the plant could potentially never run on hydrogen at all.

This is just the latest subsidy programme ArcelorMittal has benefitted from, with the company previously collecting around €795m in subsidies from European governments alone, as well as $655m from the Canadian government.

With today’s announcement, the total value of the subsidies the company has secured reached €2.3bn.

But it has been accused of greenwashing for applying for funding for projects that may never use hydrogen, while also continuing to build coal-fired blast furnaces in other parts of the world.