The Dutch government has signed a letter of intent with Tata Steel to make its IJmuiden steelworks more sustainable, a project that will cost between €4 billion and €6.5 billion. The state will contribute €2 billion, caretaker climate minister Sophie Hermans has told MPs.

The agreement follows years of negotiations but is not yet final and will be put out to public consultation shortly. Nevertheless, Hermans described it as “an important step towards a definitive deal,” which she hopes to conclude within a year.

Under the plan, one of the site’s two coal-fired plants will be replaced with a gas-powered installation, cutting around five megatonnes of CO2 emissions. Tata Steel also intends to capture and store CO2 underground.

The gas plant is a temporary step, with the eventual goal of switching to biomethane or hydrogen. By the middle of the next decade, Tata aims to cut its CO2 emissions by 40%, equivalent to 5% of the Netherlands’ total. Wind screens and coverings are also planned to reduce particulate matter, nitrogen and noise pollution.

Tata Steel Nederland chief executive Hans van den Berg welcomed the deal, calling it “a great day” that would lead to “a clean, green and circular steel company.”

Hermans, meanwhile, told NOS that the agreement includes safeguards to ensure Tata keeps its commitments, with “constructions to reclaim money if Tata does not comply.”

However, two expert groups appointed by the cabinet warned there are still “insufficient guarantees for health improvements”, and say the plans lack clear targets for cutting toxic substances and ultrafine pollution particles.

The groups, which include doctors, professors and legal experts, also highlighted the long-running mistrust in the region, where public health council research has linked the factory to shorter lifespans and more illness.

“This distrust is fuelled by years of broken promises and permit violations,” the report said. The advisers want firm deadlines, including an earlier closure of a controversial coke-fired plant, which under current plans will stay open until at least 2029.