The European Commission will provide up to €370 million ($401.8m) in financing to support the development of a green hydrogen cluster in Italy targeting steelmaking decarbonisation, Kallanish reports.

Energy companies Edison and Saipem, alongside green investment manager Sosteneo SGR have seen their Puglia Green Hydrogen Valley project selected as part of the IPCEI Hy2Infra scheme. The funding programme announced earlier this month has awarded 33 green hydrogen infrastructure projects in seven EU countries.

The Italian project, deemed of importance and common interest, covers the construction of two electrolysers with a total capacity of 160 megawatts. The plants in Brindisi and Taranto are expected to produce 250 million cubic metres/year of green hydrogen. The clean fuel will be supplied to local industry, particularly the Apulian steelmaking hub.

End-users will have access to the green hydrogen produced at the valley through a dedicated hydrogen pipeline network to be constructed by Snam. The project, also awarded in the Hy2Infra scheme, will transport the fuel between Brindisi and Taranto. Operations are set to start in 2028.

“The IPCEI loan will represent the main driver for the development of the supply chain dedicated to the production of green hydrogen in Europe and will support Puglia Green Hydrogen Valley in the pursuit of decarbonisation projects,” says Sosteneo SGR’s partner and investment principal Europe, Federica Gallina.

Last November, Sosteno said the Puglia hub would primarily enable the use of green hydrogen in future direct reduced iron production plants in the region, including at the Taranto steel mill.

DRI D’Italia, a company owned by state investment agency Invitalia, will lead the potential application of hydrogen in the steelmaking process, in partnership with a consortium of steelmakers. They have finalised a feasibility study for setting up hydrogen-based DRI plants to replace fossil fuels and decarbonise steel production in the country. The engineering and construction of these plants is slated for the first half of 2026, enabling the start of operations in the second half of 2026, according to DRI D’Italia.