In one of the most consequential decarbonization moves by a European steelmaker, Tata Steel is preparing to shut down key coal-based assets at its IJmuiden plant in the Netherlands and replace them with low-emission technologies.
The transition—part of the Heracless project—will see Blast Furnace 7 and Coke and Gas Plant 2 permanently retired and replaced by a €1.5 billion Direct Reduced Iron (DRI) plant and Electric Arc Furnace (EAF) configuration. The project is expected to cut CO₂ emissions by 5 million tonnes per year by 2030, or over 35% of the site’s current emissions footprint.
The shift is emblematic of a broader trend across Europe’s hard-to-abate sectors: deep process innovation backed by conditional flexibility. Tata’s new setup will initially operate using natural gas as a reductant, allowing for near-term emissions reductions without waiting for hydrogen infrastructure to mature. But according to sources familiar with the plans, the DRI plant will be hydrogen-ready from day one—signaling alignment with the Netherlands’ national hydrogen backbone, the HNS project, currently under development by Gasunie.
This two-stage approach—natural gas as a transitional fuel, hydrogen as the long-term solution—mirrors decarbonisation pathways adopted in other industrial clusters across Europe, including Germany’s Salzgitter and Sweden’s HYBRIT initiatives. It acknowledges the physical and economic limitations of waiting for green hydrogen at scale, while locking in future-proof investments.
The strategic implications of this transition are significant. IJmuiden is one of Europe’s most emissions-intensive steel plants, emitting roughly 12 million tonnes of CO₂ annually. Phasing out blast furnaces—which rely on coking coal and are structurally carbon-heavy—addresses a systemic bottleneck in decarbonising steel. According to Eurofer, replacing blast furnaces with DRI-EAF setups could reduce direct emissions by up to 90% when operated on green hydrogen.
However, several technical and market challenges remain. Natural gas-based DRI already offers a 50–60% reduction in emissions versus blast furnace-basic oxygen furnace (BF-BOF) routes, but it remains a fossil-based pathway. Without a timely and scalable switch to hydrogen, the project risks becoming locked into a ‘transitional trap’, particularly if hydrogen supply costs remain high or infrastructure delays extend beyond 2030.
The plant’s future competitiveness will hinge on access to abundant, affordable low-carbon hydrogen. The Netherlands’ national hydrogen network aims to deliver hydrogen from coastal import hubs and offshore wind to industrial users, including Tata Steel. However, the first phase of HNS is only expected to be operational by 2027–2028, and early capacity may be constrained. Coordination between infrastructure rollout and industrial conversion will be critical to prevent supply-demand mismatches.
Moreover, cost competitiveness remains unresolved. According to McKinsey, green hydrogen DRI-EAF steel remains up to 60% more expensive than conventional production. Without policy support—through carbon pricing, contracts for difference, or green procurement mandates—first movers like Tata face significant margin compression.
Stay updated on the latest in energy! Follow us on LinkedIn, Facebook, and X for real-time news and insights. Don’t miss out on exclusive interviews and webinars—subscribe to our YouTube channel today! Join our community and be part of the conversation shaping the future of energy.
