Good afternoon, ladies and gentlemen. A very warm welcome from the voestalpine site in Linz. You know, last year, the supervisory board gave the okay for the first measures regarding the transformation in Linz and Donawitz. Yesterday, we got the approval from the supervisory board for the EUR 1.5 billion budget to complete the whole transformation process for the first stage. Next to me is our CEO, Herbert Eibensteiner, who will present details for the first step, as well as will give insights for the full decarbonization path, which will take place by latest 2050.
Thank you. Good afternoon, good morning, ladies and gentlemen. A very warm welcome to our webcast. Let me start with the introduction. Sorry. Excuse me. For the first slide. As a starting point, I would like to mention that climate change is the major task of our generation, and you know that voestalpine is fully committed to the Paris Agreement. We are also a member of the Science Based Targets initiative. I'm sure many of you are quite familiar with this initiative, and it ensures a systematic derivation of corporate targets from the Paris Agreement.
Therefore, all efforts in improving our carbon footprints are so far in line with the Paris Treaty and the goals of Europe's Fit for 55 program. Speaking about decarbonization, it's important to take a look at the production processes in the voestalpine group. We run industrial businesses which play no significant role in the decarbonization efforts. This is the right part of the slide, and those consist of the entire Metal Forming Division. You know, tubes, sections, automotive parts, high bay warehouses, specialty steels and so on. This is not really a CO2-intensive business. I would say around the half of the Metal Engineering divisions, same approach.
Welding, it's a low CO2, a low carbon footprint, and also railway infrastructure when it comes to turnouts and services and so on. So I would say the industrial business is not really affected by CO2 measures. And the other side is the metals business. We run the left-hand side. We run melting units with electric arc furnace processes in the High Performance Metals Division, which is, by the way, not very CO2 intensive. You know, we have recently, or we will recently start in our new steel mill. This is most state-of-the-art of technology and also emissions.
They, this is more a focus on Scope 2 and Scope 3 emissions. On the left-hand side, Steel Division and Metal Engineering, at least the blast furnace part, this is also they are very efficient and we have very low emissions globally, but it has the biggest CO2 footprint. Considering these two divisions, Steel Division, Metal Engineering Division, when you see this blast furnace, altogether 5 blast furnace, this is our program, and this is called greentec steel.
To give you an overview of the size of the various businesses, when we look at the revenue of last business year, counting around EUR 15 billion on group level. As you can see, the industrial business, it's 35%, and the metal business is 65%. You can, I would say, deduct the High Performance Metals business having a lower CO2 footprint. The remaining part is this 45% in Steel Division and Metal Forming. This is the part where we have to decarbonize and where we have to invest huge CapEx.
And so to put it in a nutshell, we have less than half of our business is high carbon— has a high carbon footprint, and more than a half of our business has a by far lower CO2 footprint. So this, what is our decarbonization strategy? As I mentioned before, low, only a minor relevance is our industrial business. Also there are some issues to do in the Metal Forming Division, especially the metal parts portion, with blast furnace technology. This is where we focus, and this is less than a half of the group's revenues. So what are our basic principles?
We think that, and that's clear, we are privately owned, stock listed company, and with a global footprint. Our strategy is very clear. This means that the implementation of decarbonization must balance greenhouse gas emissions reduction and also economy economic efficiency. Therefore, for all our investment projects, the starting point of our considerations is the market. In this case, the market for green steel. This market is currently developing, and we increase our green steel capacity step by step according the expected market volume. A second important point is technology.
Currently, there is a great effort in development of green production technologies all over the globe, we have to ensure to decide for the best available technology regarding emissions, OpEx, CapEx, and product quality requirements to be successful on the long run. The third point is green energy, because green energy is the precondition of and also the major OpEx element for green steel production availability and cost for green energy differs significantly across the globe. Therefore, we have to ensure to decide for the best location for different stages of production, especially when it comes to pre-material and raw material.
As of today, we have many political statements of intent, but only little visibility to a realistic assess developments and also availability and costs of green hydrogen. Maybe we can touch this later on a little bit, and I'm sure you will ask about that. But it's this is decisive for the to completely decarbonize steel production. As a result, voestalpine's decarbonization strategy consists of a step-by-step implementation plan in order to minimize economic risk and maximize impact on reduction of green gas, greenhouse gas emissions. What is our step-by-step approach? Our decarbonization strategy consists of three major phases. Let me first start with the status quo.
We run five blast furnaces. We own a 20% stake of HBI DRI plant in the U.S., which ensures us access to 420,000 tons of HBI per year long term. Already with the current production setup with blast furnaces, we produce at the moment, and some of you know that, with a synthetic green steel model, and this is a banking model to develop the market. With yesterday's approval by the supervisory board, we can enter phase 1, where we will replace two blast furnaces by two EAFs. The start of production of the EAFs is planned in 2027.
In this phase, we will then learn to produce our today's high-quality steel portfolio on different production routes. In this setup, phase one, we will be able to produce up to 2.5 million tons of green steel, and we can reduce our CO2 emissions by around 30%. The CapEx is, they mentioned EUR 1.5 billion, which contains already parts or I would even say significant parts for the second step because we have decided to make the building sizes is also capable to take the second step. Energy supply is also planned for the next step in a couple of other topics as well.
Phase two, after 2030. At this time, we will replace another blast furnace by an additional EAF in the Steel Division. Also Metal Engineering Division will shut down the last remaining blast furnace and open the complete capacity of the EAF. That means also in this division is the first step planned, and for the second step, only minor adaptions or minor CapEx is necessary to make this step in phase two. This is one of the reasons to make some preparations for the second step, is that the CapEx for phase one was increased to EUR 1.5 billion.
Inflation is another topic, but this was the main decision we took in our project scope. After phase 2 is completed, we will produce around 4 million tons of green steel, and we have a CO2 re-reduction of CO2 emissions by around 50% compared to today's figure. A topic which is not yet to decide is to what extent we need additional HBI, DRI or similar input material, and whether we can source it or we can take a stake of a DRI operation, or we have to build DRI or similar capacity on our own. Because we have already for this first phase, this HBI available.
You can imagine that to build a hydrogen DRI plant is the least preferred option, but if it's necessary, we will do it. From a risk perspective, buying from the market would be the best options. We look at the long and short list of potential HBI, DRI plants in the world, and we can expect that in seven, eight, nine years, we will see a reasonable market for that in at least from our perspective.
An additional possibility, especially for this phase two, phase three, is that we have taken into account that there is a development of new technologies for the production of green input material, inOr what we see is HYFOR, example of such a input material. When you look at this green box, in this phase three, in this phase three, area, there is the possibility of hydrogen DRI, yes. HYFOR is also a technology we want to develop. Sustainable steel is also a hydrogen topic, and CCU, CCS is interesting wise, now more and more discussed on a European level.
I think I was too quick. I'm still at the phase two. Maybe we should say that with the bigger investment in step one, only the blast furnace would cost around EUR 500 million. It's the investment is substantially smaller than in phase one because as I mentioned before, phase one already includes major CapEx elements for phase two. This final phase I have touched it after 2030. In this phase, the last blast furnace in the voestalpine group will be shut down and replaced by a hydrogen-based production technology.
The most common technology we talked about today is the classical DRI plant where the reduction of the iron ore pellets is performed by hydrogen. Input material is steel, iron, HBI, and which is then fed in an EAF and transformed into steel. But the input materials are CO2 free. I mentioned before also this HYFOR technology where voestalpine recently signed an MoU together with Primetals and Fortescue. This is HYFOR. This is a hydrogen-based production process like DR-DRI, but uses iron ore fines instead of DRI pellets. That's, you know, everybody we built DRI plants and HBI plants.
Maybe this is also an interesting option because we can use lower grade iron ore input material. This is part of our R&D project, so we will implement a pilot plant in Linz to see how this system or this technology can work on a continuous base. Sustainable steel is a process where iron ore is reduced and made it in a single step with hydrogen plasma. We run a small test plant in mechanical engineering. Please consider this is a topic between 2035 and 2050, which is a long way to go. Last but not least, we also have CCU, CCS technology on our radar screen.
For the last remaining to touch the last remaining CO2 emissions as well. I think it's a high strategic value to keep open several different technology routes with potential, especially when we have a mature, at this time, a mature technology where we can always take into account this is a hydrogen DRI plant. I think the decision on technology is decisive for the cost structure and therefore the economics of future green steel production.
for this reason, I would say, we will take these decisions, especially when it comes to phase three, a few times according to the development of technologies, but also according to the development of the legal framework like CBAM and the economic framework conditions as well. I think the availability and costs of green hydrogen in Europe will be decisive or is that a topic for production of this input material, HDRI, HYFOR, name it, outside of Europe or is it not? What we can decide is we have now the approval of phase one. We have a clear plan for phase two and phase three.
We let, I would say, the final technology decisions yet open, knowing that we have to make a decision right before 2030. I think that's important to mention. Now, coming back to yesterday's supervisory board approval and entering phase one, which is what we are talking today. The increased CapEx, I explained it the previous charts. It's a pull forward of investment for phase two to leverage economics and the next step to be taken. Now the final negotiation on subsidies. In phase one, we follow a low risk approach by using well-established technologies.
I think this is the reason why we can only expect subsidy to be of a minor size, I would say. When we take this HYFOR pilot plant into consideration as well, then we can talk about 5-10% of the total CapEx. That means that the biggest portion of the CapEx we have to carry. As I mentioned before, in the later stage, when we enter hydrogen-based technology, we think that subsidies will play a bigger role, as we can see now in other investments of some peers.
I think after that, we enter then the phase of requests and offers on project allocation. The start of the installation of the EAFs plant at the beginning of 2024 and state start of production is planned for 2027. Just to give you a figure, how does that look and what and how the setup will change the Linz plant. You know, all these gray buildings are the existing in the existing company. The biggest building is this steel mill. Even the steel mill where the EAFs the part of the steel mills where the EAFs are implemented will be a reasonable building.
Then we have to adapt this raw material, supply, HBI supply, power supply, scrapyard. You know, recycling is the topic. Some other things to do. The same in Donawitz, which is a smaller steel production company. Even there, I think this EAF is a very big building. You know, you have everything, the scrap warehouse and the buildings for the EAF and also for the electricity. I mentioned before our hydrogen activities. For the phase three, that means the final decarbonization of our steel making process.
As you're well aware, we run in Voestalpine a PEM electrolyzer for the production of green hydrogen for our steel plant in Linz. The hydrogen from the plant is used in our existing operations to learn how to handle hydrogen in steel producing plants. Is a pilot plant. As I mentioned before, we signed a MoU with Primetals and Fortescue to build a prototype, a pilot plant of an industrial scale HYFOR plant with a smelter using hydrogen from this H2FUTURE plant in Linz. This is beginning is 2023, we want to build it 2024-2025, and start this test production in 2027.
Can do a continuous operation. I would say after that, and this is exactly the time before 2030, we can then see is that a relevant technology for us after 2030, 2035, or do we have to switch to or stay with HDRI. Also, our hydrogen plasma-based steel, SuSteel process, is performed in a test location in Donawitz. From my perspective, I think it's this is the less mature technology we are working on. Apart from the hydrogen-based production process, we entered also several partnerships for the development of sector coupling projects.
That means we are linking our production process which produces CO2 to other industry which use carbon in their production, and also carbon capture and usage technologies on our radar. As I mentioned before, more for the step three technologies to avoid spend the remaining CO2 emissions. I think all together with this relatively clear two steps and the open way in after 2030 to 2050, I think you get an impression about what we are doing to achieve this net zero goal. I'm happy to answer your questions. Yes, so far the presentation from our CEO. Now, we would like to proceed with the Q&A, and we'll be very happy to answer your questions.
That is star one if you have a question or comment. We'll take the first caller from Krishan Agarwal from Citi.
Hi, can you hear me?
Yes. Yes, we can hear you.
Yeah. Yeah, yeah. Thanks a lot for the presentation. The strategy looks comprehensive and calibrated to me. The one question or the two question I have, I can take one by one. The first one is on the raw material strategy. I mean, it is quite open-ended in terms of, you know, buying from the market or, you know, building by yourself. In that context, I mean, have you tested the market in terms of, you know, sourcing the hydrogen-based merchant DRI volumes? I mean, are there enough volumes available by the time your production come on stream? In the worst case, if you were to go and decide to make your own hydrogen DRI, what are the implications in terms of sourcing of the hydrogen, green electricity and the CapEx?
Because I guess that is going to be the bigger part of the decision making in terms of, you know, reducing the emissions. If you were to, you know, make it by yourself, does it delay the entire, you know, process by some years? That's my first question.
Yeah. That's the key questions. What we think, from today's perspective, I think it's, we have this HBI supply long-term for the first step. I think we have to add a little bit for the second step, and I think we are talking about volumes which are available on the market, not yet with hydrogen, but HBI DRI produced by gas, I think. What we think that the hydrogen market is developing, it's where you have enough renewable energy.
And I think there are, and I'm sure you know all these projects in the northern part of Africa and also in the Arab countries, to produce hydrogen by wind and PV. And the question will be, is this then coming to Europe? Or is there additional forward integration to build input material, HBI, DRI, produced by hydrogen, and then there is an open market, you can buy that, or you make a partnership to follow this step-by-step approach we have.
What we think of today, I think it's to get competitive hydrogen prices in Europe or to produce hydrogen in Europe is at the moment very expensive. There are some surveys that come to the conclusion that even when hydrogen comes to Europe, it's not produced directly in Europe. That's the our view on that topic. I think it's hydrogen supply and DRI supply will develop in the next decade, and then in the next five, six years, we get a better view on that. As I mentioned before, we have all options, but I think it's too early to make a final decision, where such a plant, HBI, DRI, HYFOR, name it, is to put at the moment for a step after 2030 or 2055.
I understand. Yeah. I mean, the second question is basically, you know, focusing on the EUR 2 billion investment which you're going to make. I mean, what sort of ROICs you have in your own spreadsheets when you run these calculations for the phase one and the phase two investment combined? My sense is that the cost savings on the carbon certificate, which you are currently buying from the market, is the primary source of the value addition for incremental returns on this EUR 2 billion investment. Is that a fair way to think?
Yes. Yes, it's clear that the first thing is that we think that green steel is more expensive than today's steel. We have less certificates to buy, and this is more or less the metrics of the system. That's also a topic with this step-by-step approach. First thing is the market. We think that we will have an undersupply for green steel. I would say starting 2025, 2026, 2027, and we will see an undersupply even in 2030 or even beyond 2030. I think this is the key.
Do we have a green market? From our perspective, yes. It's important that we get this surcharge for green steel products, which is, by the way, also developing at the moment. This only a calculation topic, how do you save money by this reduced CO2 footprint. We think that's the key topic in this approach.
Understand. Even including the green premiums and the certificate cost saving, are you targeting somewhere around like 15% ROICs on these investment or, there is some kind of upside to that number?
You talk about return on capital employed?
Yes. Yes.
There is, bit upside potential, I would say.
Okay. Understood.
What is that figure you said?
15%.
10%.
You mentioned 15% return on capital employed. No. Is it the right?
No. 10%.
Okay. Okay. 10% is your in-house calculation.
No. You asked me what is the return on capital employed, and you mentioned a figure.
Yes. 15%.
Okay. Yeah, this is a bit high.
Okay.
It's a bit low.
Okay. Okay. That's it from my side.
We'll move next to Patrick Mann from Bank of America. Please go ahead.
Thanks very much for the presentation. Just around the raw material strategy, I'm just trying to understand the decision to sell the stake in the Texas HBI plant and then potentially now be looking to develop or source HBI for phase two, phase three. I mean, was this really just a funding decision? You know, with a better balance sheet, you maybe wouldn't have sold the stake in that HBI plant. Or just help us understand why, you know, we're now looking for more HBI capacity for the further phases of the plan.
The second thing is, can you just talk maybe about the regulatory environment? You know, you're saying there's higher OpEx, but the green premium and the savings on the emissions mean that this still makes sense. Do you feel that you're protected enough from imports, which, you know, under CBAM, that this, that this makes sense? Or does this just make you know, more cost competitive versus European production, but still not versus imports? Thank you.
Yeah. Yeah, this is a question I got very, very frequently. You know, we have, you know that we have built the HBI plant. The problem was that it was too early, I would say. As I mentioned, as I mentioned before. We really need HBI in 2027, this 400,000-500,000 tons. In the meantime, the HBI plant is 2 million tons capacity, so we would be a merchant HBI player. This business is at the moment not very profitable under certain conditions.
This was the topic, and this was the reason why we decided to do it by keeping a share for this first step and sell the rest to a partner who is also in need of HBI for their own production. I think this is the only thing what makes sense to use this HBI for their own production. We were not very successful in this merchant HBI business model. This was the reason why we sell off 80% of this HBI plant, and only consider, or I would say, focus on the exact need for these different steps. Also, this strategy. you know
Thanks very much. Sorry, go ahead.
Yeah. Okay. I think it's very clear, and I think, yes, we think that we get this green premiums for greentec steel. With the reduction, that's clear, we lower the CO2 costs. This should lead to a positive result, at least in our calculations. You are right, this can only work in an environment where you are protecting from imports with lower carbon burden, I would say. What we know from today, we have exact figures how the free allowances will develop till 2034.
CBAM is now in the test phase or will be coming on stream in the next year, I think. CBAM will be the test, how high should be this border adjustment, that European players are protected against these imports. This is the environment we are in. We think and what we hear that the CBAM in the range of our CO2 costs would help. Together with all the other measures, anti-dumping and, what's this? Safeguard measures. I think this is all those three things together, I think can work.
Thank you. We'll move to the next caller in the queue. Dominic O'Kane from JP Morgan, your line is open.
Hello. Just a quick question on the funding strategy. You give us the EUR 1.5 billion for phase one. What's the scheduling of that spend? Then how should we think about that in the context of the, of the balance sheets? Do you lay out any thresholds that we should consider in terms of how you think that the optimal leverage for your balance sheet through this, through this capital-intensive phase?
Yeah. You have this. It's very roughly. You have this EUR 1.5 billion already EUR 200 million are spent for the pre-preparation. Pre-preparation piece is already digested. Let's assume we get EUR 100 million subsidies, then we are at EUR 1.2 billion and then divided by four years of implementation, then we have this EUR 300 million to distribute over these three years, maybe in 2026 and maybe in 2025 a bit more and the other years a bit less. Considering our depreciation of, I would say, EUR 850 or EUR 800. Let's start with EUR 850.
You can get a rough figure where how this CapEx is distributed. For the time being, we stick to our rules that gearing should not exceed this 50%. We are working on that net debt to EBITDA should not exceed two. That's in brief what we the framework where we work.
Thank you very much.
Moving next to Bastian Synagowitz from Deutsche Bank. Please go ahead.
Yes. Good afternoon. Good afternoon all. I've got a couple of questions. Maybe just firstly, to clarify the timeline for the second phase, could you please let us know whether you aim to have the additional EAF and the infrastructure related to this, the second phase up and running in 2030 already? That's my first question. Are you will like, will you start with phase 2 basically in 2030? Will you start construction or will the infrastructure be in place already by then?
I would say that, you know, we have the big buildings and there is a lot of infrastructure already available in phase 2. From our perspective, it will 2031-2032, we can implement this or even earlier, we can implement this second EAF in Linz and this upgrade of the EAF in Donawitz. For me, should be the time 2030-2032 that we phase out the second two blast furnaces. That means that we have to begin in the. Or should be in the implementation phase in 2030.
Okay, thanks. Thanks for that. My second question is again on, I guess, your choice of like how you operate, in terms of DRI, being on your plant or basically being procured outside. In contrast to obviously many of your European peers at least, you've been deciding against having a DRI operation next to your steelworks. I guess that's also an active decision against hot charging from the DRI mill into the electric arc. In other words, you're basically suggesting that producing in a location with really good conditions for green hydrogen would be cost-wise more favorable for you than producing DRI on your site and then hot charge it into the EAF. Could you just confirm whether we caught you correct on that point?
Maybe also explain a little bit more why you think different versus most of versus what most of your peers are doing? I.e., do you believe there's just potentially still a big step change on DRI OpEx coming with some of these new technologies you're looking into? Or why exactly are you really going a different route versus what at least most of your European peers are doing?
The positive thing is that we have already HBI for the first step and all the others not. They have to make a decision how can they get HBI as input material. This is at least from my perspective, in my perspective, the reason why they have to decide now to invest in an HBI plant. We have the choice or the possibility to wait another couple of years to make this final decision. Because of this unclear situation about where should we, where should we place a HBI plant and where is hydrogen coming from.
At least this is for us, or I consider that as a positive topic for us that we have no reason to make this decision now. You are totally to the point to say what is the key point. Is it OpEx? You know that most of these HBI plants are highly subsidized at the moment. I think it's OpEx is really the most important part. It's not to get the subsidy for CapEx. I think it's the most important part of this whole transformation is to come through till to come through this transformation part and staying profitable. The key point is supply. That's clear with the OpEx. The OpEx for us, it's not fully visible, where these hydrogen prices are going and where is the right place to place an HBI DRI plant.
Okay. Thanks for sharing your thoughts on it. Just following up also on the green steel premium, and I guess you're being very precise here actually. My understanding is you hosted a call with some of your clients in terms of the marketing of your new green products a couple of weeks ago. I'm wondering how the customer feedback has been on that front, and whether this 10%-20% green steel premium which you're putting out here is basically based on the feedback which you received from your customers at that point. My understanding was that the range of potential green premiums is actually still very wide, but you're being very precise here.
You know, this is what we are seeing at the moment for this time of 2027. I would say that the green steel premium now is even a bit higher, I would say. We are considering that over the years, we see a certain reduction also. As I mentioned before, we are sure that at least till 2030 or beyond 2030, there will be an undersupply for green steel. That's for us, I think we are investing in a positive market environment.
Okay, perfect. Thanks for clarifying, Mr. Eibensteiner .
Next, Maxime Kogge from ODDO BHF. Your line is open.
Yeah, good morning. I would have a first question on basically your procurement of raw materials in the first phase. I understand that you will not use or very little DRI reduced with hydrogen. You will use either scrap or DRI reduced with gas in the, in the, in the first phase. Given that DRI reduced with gas does not come with massive CO2 savings versus blast furnaces, I mean, should we understand that I mean, basically, you will feed your two EAFs predominantly with scrap in this first phase? That's, that's my first question. Actually, I understand that your procurement from the ArcelorMittal Texas HBI plant covers only a limited fraction of your needs during this first phase.
You're right. For this first phase, we follow a hybrid, I would say a hybrid model. We use scrap, we use HBI, and we use also crude steel from the remaining blast furnaces. Saying that, we have the chance to reduce a little bit the CO2 footprint even on the blast furnace production and all these things together, the mix in scrap HBI and also a little bit input from crude steel or even crude steel is then the CO2 reduction of this 30%.
Okay. The 30%.
Of this 30% of our emissions, because it has to do with the special features of our blast furnace.
Okay. The 30% objective that also, that will also come from optimization efforts from the blast furnace route, the remaining blast furnace route during the period.
Blast furnace route, HBI, scrap, this is 30%.
Okay. Okay. Now coming to electricity, is it possible to quantify very approximately your additional electricity needs by 2027 from 2027 onwards? What will be the mix actually of this additional electricity? Will it be 100% clean, predominantly clean, or just only to a certain extent clean, i.e., renewable?
The figure is very easy. It's roughly 1 terawatt hours additional electricity for this first step, and it's 100% green steel. You know, in Austria, we have 80% green energy production because of our water power. We have also even now secured green steel from wind plants and mostly wind plants, but also some photovoltaic. The mix is clear for us, and I think the whole transformation makes only sense when we switch to green energy.
Okay. The related CO2 emissions there will be basically zero.
They will go directly to the wind plants and buy energy.
Okay. Just last question, I mean, starting 2027, will there be a period, when both the former blast furnaces and the new EAF will run in parallel? How long will it last?
You know, as always, when you build such a plant, EAF, you have to do this startup work. I would say, a couple of months, half a year, I would say, it will run in parallel. Then, you know, because of also of the cost topics, we should stop the blast furnaces relatively early. Our expectation is that the blast furnace will be when the EAF is up and running and everything is okay, the blast furnace will be idled relatively quickly.
Okay. Okay. This means that probably 2027 will be, I mean, there will be some transition cost, I mean, in terms of OpEx that will be quite material. I mean, it's too far.
Yeah. You know, you have the chance to reduce the production of the blast furnace. I think, yes, it will be additional costs, but you cannot add the costs.
Okay. No, that's clear. Thank you.
Again, my name is Darwin, if you have a question or comment. We'll hear from Christian Obst from Baader Bank.
Yes. Good afternoon. Thank you. Most of the question, of course, now answered. Just a few are left. Do you see or are there any plans to change the HBI production in Texas to hydrogen currently? This is the first question.
You should ask this question to the ultimate owner. Yes, we know that there are plans for testing hydrogen in the plant, or at least we have these plans. You know, as we are a minor shareholder, we are not in the driver's seat. From my perspective, hydrogen will play a role in HBI production in the future.
Yeah, of course. Okay. Do you expect any kind of OpEx support in the coming years, be it from the EU or from Austria? Not only CapEx, but also OpEx support besides CBAM.
I would say at the moment we see a mix of everything. CBAM is a protection tool in, from my perspective. CapEx lowers the CapEx subsidies lowers the, you know, the exposure, I would say, and the risk. OpEx support is on the long run, I would say is only a sign for no market for this product. Yeah. That's why we think it's always good to get subsidies, and I think the higher the OpEx subsidies are, I think the risk of an investment is very high. When you get less, maybe CapEx support, the risk is lower.
This is, by the way, also the deeper sense of the rules and regulations for the European Union, because it. From our understanding in, of these rules is subsidies are generally not allowed with the exemption of. One exemption is that there is no market and there is a high risk of an investment, and then you get OpEx subsidies as well. What we expect in for our project is a CapEx support, not very high, as I mentioned before, between 5%, 6%, 7%, but this will be a CapEx support.
Okay. Thank you. On energy security or energy supply for your plant at Linz and Donawitz, do you see any kind of problems that you get the right connection until the date when you would like to start your new plants there? Or is everything there on time, on budget, more or less?
Yes. It was a concern to be very honest. At the moment we see everything is tight, but right on the schedule. Especially in Donawitz, it's totally clear that everything will be right. Even in Linz, where we had some concerns, we have now got the approval from the government to build these grids. We do expect that they are right on time when we will start up our plants.
Okay. The last one is on CO2 costs. What is the underlying assumption how CO2 emission rise, the cost of CO2 emission rise will develop until the end of this decade?
CO2 costs are higher. I think that's. I think that's clear. I'm not sure that I have the right figure. I would say, It's two, three times. Two, three times, compared to today's figures.
Yes. Christian, in our internal calculation figures, we foresee clearly a reduced amount of free allowance, free allowances for CO2 emissions, clearly starting from 2026. On the other hand, this will lead, in our opinion, to a much higher price level for CO2, for CO2 costs and for the certificates, for the CO2 certificates in the future.
You said at the end of 2030.
Yeah. Until the time, yeah.
Until this time. Okay. Will be higher. I can only. This is just above 100.
Okay. Thank you. Thank you very much for this presentation and for all of your plans. All the best.
At this time, there are no further questions on the queue. I'll just turn the conference back over to your host for any concluding remarks.
I think we have reached the end of our presentation and of our Q&A sessions regarding the decarbonization strategy. Thank you very much for the interesting questions you had. If further questions will come up during this presentation or near in the afternoon, please feel free to contact me on the phone. Goodbye from Linz.
Thank you very much again. I hope we will hear and see you soon again. I assume you have also in the future, a lot of, and more of these interesting questions. Thank you very much.