EU Commission approves €128 million Swedish aid for decarbonisation at SSAB

The European Commission has given the green light to a €128 million Swedish state aid package designed to support SSAB in its efforts to transition to a greener production process. This initiative is set to align with key EU objectives, including the European Green Deal and REPowerEU Plan, by aiding SSAB in reducing its reliance on fossil fuels and accelerating its transition towards climate neutrality.

The approved aid will facilitate SSAB’s shift from coal-based steel production in Luleå to a near-zero-emission process. Specifically, the funding will be used to install an electric arc furnace, powered by renewable hydrogen, to produce green steel. Once operational, the new facility is expected to have the capacity to produce 2.5 million tonnes of green steel annually, significantly reducing the carbon footprint of the steelmaking process.

“This €128 million measure enables Sweden to help SSAB accelerate its switch to electrified steelmaking,” said Margrethe Vestager, Executive Vice-President in charge of competition policy. She emphasized that the project is part of the EU's broader goals of climate neutrality by 2050 while ensuring fair competition within the internal market.

The aid is part of the Just Transition Fund and is expected to bring the green steel plant into operation by 2029, three years ahead of schedule. The investment will also result in substantial CO2 savings over a period that would have otherwise seen continued fossil fuel use. SSAB has pledged to share its technical knowledge gained through this project with the wider industry and academic community, further contributing to Europe’s green transition.

Vestager underscored that “this will contribute to the greening of the steel value chain,” reaffirming the EU’s commitment to reducing emissions in heavy industry while maintaining a level playing field for competition.

The Commission’s assessment confirmed that the aid is proportionate to SSAB’s needs and includes safeguards, such as a claw-back mechanism, ensuring that excess profits from the project will be returned to Sweden. The decision also highlights that the positive environmental effects outweigh any potential distortions of competition within the EU market.

Source and Photo: European Commission