The steel industry is emerging as an early mover in the deployment of hydrogen to cut emissions, with commercial-scale production of green steel possible by 2030, according to speakers at the First Element hydrogen conference.

Net-zero policies and rising carbon prices are driving steel companies to develop strategies to decarbonise—mainly by replacing coking coal with hydrogen.

And the size of investments in green steel pilot production already announced confirm the industry’s commitment to making the switch, speakers told a panel discussion.

“It does feel like [steel] is the industrial sector that has already moved furthest. And I think what you will find is that steel is where the economics work more clearly,” says Sean McLoughlin, head of EMEA industrials research for bank HSBC.

He cited a project led by Sweden’s SSAB, which delivered its first green steel to vehicle manufacturer Volvo last month and will produce 5mn t/yr of the material by 2030.

€150-200mn/yr – Costs faced by average steelmaker under EU ETS

“If they stick to their targets, by 2030 we could realistically already be looking at proper commercial-scale production of steel,” says McLoughlin.

Rising carbon prices in Europe are forcing steelmakers to make strategic decisions about investments, according to Alexander Fleischanderl, technology officer for Primetals Technologies.

At current carbon prices, an average steel producer with an output of about 6mn t/yr is now facing an annual cost of €150-200mn to buy allowances under the EU’s Emissions Trading System.

Technology choices

Companies face the choice of being a first mover in decarbonising or waiting to invest at a later stage, he notes.

“But if you miss that train then the consequence is that you will be out of the game. Hydrogen will play a major role when it comes to decarbonising the steel sector,” he says.

Steelmakers planning new investments will need to make technology choices over the next couple of years but will try to build new processes that give them the flexibility to use natural gas initially before switching to low-carbon hydrogen.

One strategic option to make the economics of hydrogen work could be to place the upstream production of direct reduced iron in locations near cheap renewables and green hydrogen production—as well as iron ore—Fleischanderl adds.

Australia would be one example of a suitable location. The green iron would then be shipped to existing production sites in Europe, where companies would add value and differentiate their products.

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Author: Stuart Penson