Steel industry relies on hydrogen to decarbonize

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In recent weeks, there has been a rush of announcements regarding the manufacturing of “green steel” utilizing green hydrogen.

While pilot project results continue to be announced, a series of new initiatives and corporate commitments are in keeping with the accelerated expansion Rethink Energy anticipated a year ago.

Monday saw the signing of an MOU between Thyssenkrupp Steel and BP concerning the long-term supply of hydrogen for steel manufacturing. Using power purchase agreements with BP, Germany’s largest steel producer will now seek both green and blue hydrogen, as well as wind and solar electricity.

Thyssenkrupp is now responsible for 2.5% of Germany’s total carbon emissions, with the majority of these emissions originating from its blast furnaces at its Duisburg site. Here, coal-fired blast furnaces may emit up to 1.8 tons of CO2 every ton of steel produced, although at other facilities across the world, this number can reach 2.4 tons.

Thus, steel is responsible for between 8 and 11 percent of worldwide CO2 emissions. As a vital material for the automotive and construction industries, demand is projected to increase by 50 percent between now and 2050, despite a decline in demand per capita.

Along with the majority of the steel sector, the business confronts an uphill struggle to attain its net zero goals. While four of the top five major global steelmakers have already committed to reaching net zero emissions by 2050, Thyssenkrupp Steel has set a goal date of 2045, with low carbon electricity and hydrogen playing a key part.

The business aims to generate 400,000 tons of CO2-reduced steel by 2025, and 30 percent less CO2 emissions by 2030, out of the 11 million tons of crude steel it produces annually.

Despite the fact that this initial step accounts for less than 5 percent of Thyssenkrupp’s steel production, it is crucial to emphasize that – even in 2025 – this will be among the first ‘green’ steel produced, as an increasing number of firms strive to do the same.

Also in Germany, RWE struck a similar agreement with the world’s largest steelmaker, ArcelorMittal, to create offshore wind farms and hydrogen facilities that would supply the renewable energy and green hydrogen necessary to produce low-emissions steel. This will begin with an electrolyzer capacity of 70 MW in Eisenhüttenstadt and Bremen in 2026, when a prototype plant will go into operation.

A group of European steel buyers have partnered with hydrogen developers to invest €2.2 billion in the GravitHy consortium, which plans to construct its first direct-reduced-iron (DRI) plant in Fos sur Mer, France, in 2027, producing 2 million tons per year of the hydrogen-reduced iron for use in green steel production on-site, or for export as hot-briquetted iron (HBI). With Plug Power and Engie as founders, building is scheduled to begin in 2024, with a target to produce 650 MW of electrolysis capacity.

The astounding aspect of all of these agreements is how rapidly the steel industry is coalescing on this strategy of using DRI created from hydrogen as a tool to cut emissions from steel manufacture. Currently, only 7.2% of the world’s steel is manufactured using DRI, which uses just natural gas as a fuel to convert iron ore to sponge iron. This sponge iron is then combined with scrap steel in an electric arc furnace to generate raw steel for consumption.

In a recent report headlined Renewables to Unlock $2.2 Trillion Green Steel Monster, Rethink Energy describes how the introduction of hydrogen-based primary production technologies in the late 2020s would result in an 82% decrease in emissions between 1990 and 2050. In spite of the current dispute between proponents of hydrogen and biofuel-plus-CCUS for the decarbonization of steelmaking, the latter’s problems with capture rates and excessive land usage will likely prove intractable. Ones technologies that have repeatedly failed to effectively capture CO2 emissions will be replaced by those that completely avoid them.

However, there may be room for innovation from Other firms, such as Boston Metals, which is developing technology to create steel from molten oxides using electricity, albeit at an early stage of research.

With the completion of early pilot projects in China, Sweden, and Germany in 2024, a hydrogen-based approach to the direct reduction of iron (DRI) and the utilization of electric arc furnaces (EAFs) provide the possibility of a totally “fossil-free” steelmaking process.

Hydrogen-ready facilities utilizing natural gas will become popular in decarbonization roadmaps and will be developed during the 2020s, before green hydrogen can completely supplant fossil fuels over the following decades, reaching commercial status in 2029. Rethink Energy forecasts that by 2050, a manufacturing chain utilizing hydrogen-based DRI and renewable energy-powered EAFs will account for 34% of world output.

The transformation will not occur magically, but the move to green steel presents enormous opportunity for those working upstream and downstream of the world’s steelmakers. For the hydrogen-based DRI process to be completely carbon neutral, approximately 500 GW of continuous electrolysis will be required to create 61 million tons of “green” hydrogen. This, as well as the 255 percent rise in electricity demand for EAFs by 2050, will have to be fueled by renewable generation to the tune of 4,500 TWh per year – more than 70 percent of the power produced by wind, solar, and hydropower in 2020.

Given the logistical challenges of producing and transporting renewable electricity and then safely disseminating hydrogen, the Energy Transitions Commission recently identified a trend of DRI production being relocated to regions where renewable energy and green hydrogen production is most cost-effective.

It will also depend on the capacity to store this hydrogen, another area where significant progress has been made. The Swedish Hybrit consortium, perhaps the pioneers of H2-DRI-based steelmaking, has formally launched its new pilot plant in Lulea, northern Sweden, marking the first time a lined rock cavern has been utilized for underground H2 storage.

According to Hybrit, the storage capacity for the trial project is just 100 cubic meters, but this could be raised to 120,000 cubic meters, or roughly 3,000 tons, or enough to feed a full-scale sponge iron production for three to four days.

Nedim Husomanovic

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