Decarbonizing Steel: Contrasting Coal-based and Hydrogen-based Production Methods

Coal-based versus hydrogen-based steel making

The three steel production technologies at the centre of this article

 

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The benefits of carbon capture and storage

Carbon emissions can be captured and stored underground (CCS) or used in other parts of the economy (carbon capture utilisation and storage, or CCUS). With the use of this kind of technology, 75% to 90% of emissions do not enter the atmosphere and therefore do not contribute to global warming.

Carbon capture and storage is a relatively cost-effective technology in the fight against global warming. End of pipe CO₂ concentrations are often very high, which makes it reasonably easy and cheap to capture them. CCS costs in steel production range from €60-€100 per ton of carbon. This is much cheaper than technology such as electric vehicles, home renovations and hydrogen-based solutions, which costs hundreds of euro per ton of carbon that is reduced.

Even so, CCS has not been applied a lot in steelmaking yet as it is not mandatory, and carbon is often not priced sufficiently across the globe. The European carbon price of around €85 per ton CO₂ starts to bite – but steel producers still enjoy a number of free allowances, and prices have seen a recent increase, while investments in CCS take years to materialise.

 

The transformative hydrogen route

Hydrogen provides the possibility to completely redesign the process of steelmaking. The magic of hydrogen is that it can make the entire process almost carbon-free!

By reacting hydrogen directly with iron ore, iron and water are produced in place of iron and CO₂. This process is called Direct Reduced Iron (DRI) and is already being used with natural gas instead of hydrogen. An additional benefit of DRI steelmaking is that the main reaction runs at a lower temperature and therefore requires less energy.

The reduction of iron ore takes place in a shaft furnace at a relatively low temperature of about 1,000°C. The reduced iron is then further processed into liquid hot metal in an electric furnace. As in other sectors, electrification is an important strategy for greening the steel sector, through both the production of green hydrogen with electricity and the electrification of furnaces.

DRI technology offers many advantages and can significantly reduce CO₂ emissions. Scrap or recycled steel can also be used in the process, which enhances circularity. Production with DRI technology also offers increased flexibility, as the process is easier to start and stop. DRI technology can produce high-quality steel, so it also offers a green pathway to steel plants that focus on the higher end of the steel market. Energy plants can also run on hydrogen instead of coal. While CO₂ is formed when coal is burnt, hydrogen turns into water when it reacts with oxygen. Finally, since iron ore can be reduced at lower temperatures (about 1,000°C instead of 1,500°C), the process still requires lots of energy, but less than it would otherwise.

The graphic below shows the carbon emissions of a kilogram of steel for different steelmaking technologies.