DUISBURG, Germany (Reuters) - Thyssenkrupp (DE:TKAG) unveiled plans on Friday to build a factory that will be able to produce carbon neutral steel by using hydrogen generated via renewables instead of coal.
Germany's largest steelmaker said it plans to complete most of the plant by 2025, enabling it to produce 400,000 tonnes of so-called green steel a year. By 2030, annual production is expected to rise to 3 million tonnes.
European industry already uses millions of tonnes of hydrogen each year but it is mostly produced from coal or natural gas, which is much cheaper than "green" hydrogen extracted from water using renewable energy.
Germany aims to become a pioneer in hydrogen technology and plans up to 5 gigawatts (GW) of hydrogen capacity by 2030, with another 5 GW to be installed by 2040 at the latest. It has earmarked 9 billion euros (8.07 billion pounds) in investment to help achieve its goals.
"We agree with the government that no company can manage the transformation alone," Chief Executive Martina Merz said during a visit by Economy Minister Peter Altmaier to the company's steelmaking facilities in Duisburg.
Merz said the sector needed suitable support and incentive schemes in the beginning to kick-start the turnaround. Germany's steel industry must invest about 30 billion euros to become climate-neutral by 2050, the government has said.
"Steel is a key industry for Germany. We have to do everything to make sure climate-neutral and competitive green steel comes out of Germany in the future," Altmaier said.
Thyssenkrupp has pledged to cut emissions by 30% by 2030 in the production of steel, one of the most polluting industrial activities, and to be CO2-neutral by 2050.
In June, the company unveiled a pilot project with RWE (DE:RWEG), Germany's largest power producer and Europe's No.3 renewables player, to develop green hydrogen production.