Swedish green steel startup H2 Green Steel (H2GS) has signed a memorandum of understanding with Norwegian low-carbon energy firm Hydro Havrand to jointly explore large-scale green hydrogen development for use in steelmaking in Brazil and the Nordic countries.

Brazil’s existing high renewables capacity—dominated primarily by hydropower—has made it increasingly attractive as a base for green hydrogen production and as a potential exporter of the gas or its products to Europe.

The partners anticipate a Brazilian project could produce c.5mn t/yr of green steel through direct iron reduction in a plant owned by H2GS, abating approximately 9.5mn t/yr of CO₂. Both the hydrogen plant and direct-reduced iron facility are pending successful feasibility studies and have not obtained regulatory clearance.

25-30pc – Green steel premium

Hydro Havrand and H2GS aim to start the projects in the second half of this decade.

However, European exports could depend on how the EU regulates ‘renewable’ hydrogen and its derivatives. The final steel product “will be very green—so we will not be penalised”, said Kajsa Ryttberg-Wallgren, head of H2GS's hydrogen business unit, at the recent World Hydrogen Congress.

H2GS has already signed offtake agreements for 1.5mn of t/yr green steel from 2025 of a targeted 2.5mn t/yr production capacity by that year, at a premium of 25-30pc compared with grey steel, according to Ryttberg-Wallgren.

A second Bolsonaro term?

The recent first round in the Brazilian presidential election saw a higher-than-expected vote for incumbent president Jair Bolsonaro, with the possibility that he could win the runoff on 30 October against former president Luiz Inacio Lula da Silva. But a victory for either would not stymie the project.

The private sector has been active in advancing projects under the Bolsonaro administration. Brazilian chemicals firm Unigel installed 60MW of electrolyser capacity this summer to produce an initial 10,000t/yr of green hydrogen from 2023 as feedstock for ammonia production.

Brazil published its National Hydrogen Program in 2021, and ministerial sources indicate a more comprehensive action plan could be published at the start of next year.

The country also published its regulatory framework for offshore wind development at the beginning of the year, with developers such as Norway’s Equinor, Brazilian Iberdrola subsidiary Neoenergia and Shell applying for environmental licences totalling more than 57GW of capacity.

Victory for Lula may result in little change to the status quo. Bolsonaro’s Liberal Party and a coalition of right-wing allies have majorities in both houses of Brazil’s legislature, posing a potential roadblock to any significant energy policy changes.

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Author: Polly Martin