Salzgitter AG and EWE agree to supply green hydrogen for steel

The German steel industry has taken another step towards decarbonization with the signing of a long-term green hydrogen supply agreement between Salzgitter AG and EWE. The contract will supply some of the needs of the SALCOS® program, promoting low-emission steel production and strengthening the development of the hydrogen economy in Germany.

Green hydrogen promotes the decarbonization of steel

Salzgitter AG and energy provider EWE have signed a long-term contract for the supply of green hydrogen to support the transformation of German steel production. The agreement calls for the delivery of approximately 10,000 tons of renewable hydrogen annually, starting in 2030, via Germany’s future hydrogen backbone network.

The signing represents the first major commercial contract associated with the 320 MW electrolysis plant that EWE is developing in Emden and also the first supply agreement of this magnitude signed by Salzgitter AG with an external hydrogen supplier.

Furthermore, the contract will have an initial term of seven years and will allow the commercialization of a significant portion of the initial production capacity of the Emden facility.

Green hydrogen will be fundamental to the SALCOS® program

The supply will be allocated to the SALCOS® (Salzgitter Low CO2 Steelmaking) program, the company’s strategy to progressively reduce carbon emissions associated with steelmaking.

Currently, using natural gas in direct reduction processes allows for a reduction of up to 60% in CO₂ emissions compared to the traditional route based on coal and coke. However, Salzgitter AG’s ultimate goal is to achieve virtually carbon-neutral steel production through the use of green hydrogen.

In this process, hydrogen replaces carbon as a reducing agent during iron production; as a result, instead of carbon dioxide emissions, water is generated, significantly reducing the environmental footprint of the operation.

The company estimates that its facilities will be able to consume up to 150,000 tons of hydrogen annually in the future. Of that volume, approximately 9,000 tons will come from a 100 MW electrolysis plant located within its own steel complex.

Emden strengthens its role in German green hydrogen

Furthermore, the agreement reinforces the role of Emden and the federal state of Lower Saxony as industrial hubs for the development of the hydrogen economy.

EWE participates in the entire hydrogen value chain, including production, storage, transport, and distribution. These capabilities are part of the Clean Hydrogen Coastline project, one of the industrial initiatives supported by the European IPCEI program to accelerate the adoption of renewable hydrogen.

Thanks to this infrastructure, the company seeks to guarantee the supply of clean energy for industrial sectors with high energy needs such as steelmaking.

Industry and energy are driving the hydrogen market

According to Gunnar Groebler, Chairman of the Board of Management of Salzgitter AG, the agreement constitutes a decisive step forward in the transformation of the steel industry and demonstrates that cooperation between producers and consumers can accelerate the development of a national hydrogen market.

Likewise, Stefan Dohler, CEO of EWE, highlighted that a functional hydrogen economy will contribute to strengthening European industrial competitiveness, reducing dependence on imported fossil fuels, and increasing the continent’s energy resilience.

Both executives agreed that the expansion of the sector will require continuous investment, regulatory certainty, and mechanisms to reduce the cost difference between renewable hydrogen and conventional energy sources.

European regulation remains a determining factor

The agreed supply will be subject to RFNBO (Renewable Fuels of Non-Biological Origin) certification, a fundamental requirement to prove the renewable origin of the hydrogen produced.

However, the companies warned that current European requirements related to additionality, temporal correlation and geographical correlation of renewable electricity could significantly increase production costs.

Therefore, EWE and Salzgitter AG requested regulatory adjustments to extend transition periods and make certain operational requirements more flexible, with the aim of accelerating the economic viability of new projects.

Institutional support to promote the energy transition

The agreement has the backing of the German federal government and the state of Lower Saxony. Among the announced aid are 925 million euros for the conversion of steel production in Salzgitter and 267 million euros to support hydrogen production in Emden.

Authorities believe that initiatives of this kind contribute to strengthening Germany’s energy independence, promoting new industrial value chains, and ensuring quality employment in strategic sectors during the transition to a low-carbon economy.

Source: Ewe

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