Salzgitter AG's Green Steps Unaffected by Constitution Court Ruling
The recent ruling by Germany's Federal Constitutional Court on climate fund financing doesn't directly sway Salzgitter AG's ongoing restructuring plans. Salzgitter CEO, Gunnar Groebler, clarified this on Thursday in Salzgitter. Despite the ruling, the legally binding funding decision remains valid for the development of lower CO2 production, safeguarding the funding. The Lower Saxony state also assured Groebler that its share won't face any challenge.
With a total of one billion euros committed, the federal and state governments intended to back Salzgitter's first low-CO2 steel plant. Initially, 700 million euros were earmarked for federal funding, sourced from the Climate and Transformation Fund, while the state would contribute 300 million more. Salzgitter will invest 2.2 to 2.4 billion euros in the conversion, with a 2026 launch planned for the first low-CO2 steel plant.
Instead of coal, the plant will use CO2-neutral hydrogen and green electricity. During a transition period, natural gas will also serve as an energy source, lowering CO2 emissions by 60%.
The Federal Constitutional Court invalidated a 60 billion euro reallocation from the 2021 federal budget on Wednesday, ruling it unconstitutional. This decision could affect the Climate and Transformation Fund, but Salzgitter's funding for low-CO2 steel development remains intact thanks to the binding funding decision.
While sources mention a billion-euro funding commitment from the federal government and Lower Saxony, there's no mention of a 700 million euro pledge from the Climate and Transformation Fund. Any potential impact from the Constitution Court ruling on this specific financing would necessitate additional information or sources.
Insights
The SALCOS program, supporting Salzgitter's green efforts, garnered classification as an "Important Project of Common European Interest (IPCEI)" by the European Commission. This classification paved the way for a 1 billion euro financing grant from the Federal Republic of Germany and Lower Saxony. The company self-raised an additional 1.3 billion euros for the program. Deutsche Bank served as a lender and sustainability coordinator, helping secure green loan classification. Furthermore, the project received subsidies from both the German federal government and Lower Saxony.
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[2] Enrichment Data: The European Commission's classification of SALCOS as an IPCEI, the company's self-raised funds, Deutsche Bank's role as a lender and sustainability coordinator, and additional subsidies from the German government and Lower Saxony help facilitate Salzgitter's green efforts.
