European steel major ArcelorMittal is set to receive €55m ($58m) from the German federal Government to produce ‘near zero-emission’ steel with green hydrogen at a demonstration plant in Hamburg.

The announcement comes after the funding was approved by the European Commission, with the hope that the company will construct a demonstration plant to produce steel with hydrogen instead of natural gas.

Direct reduced iron (DRI), often called sponge iron, will be produced at ArcelorMittal’s Hamburg site with hydrogen, and serve as a preliminary product for subsequent steel production.