BRUSSELS, Dec 19 (Reuters) - The European Union said on Tuesday it had approved the German government's plans for 2.6 billion euros ($2.84 billion) of state aid to support steelmaker Stahl-Holding-Saar (SHS) in its plans to make steel in a more environmentally-friendly way.

"The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU," said the European Commission in a statement.

Earlier this month, Germany had announced its plans to support steelmaker Stahl-Holding-Saar's (SHS) in its transformation towards greener production with the 2.6 billion euros of aid.

($1 = 0.9139 euros) (Reporting by Sudip Kar-Gupta; Editing by Benoit Van Overstraeten)