Transforming Steel Production: Harnessing Hydrogen for a Greener Future

Hydrogen sparks change for the future of green steel production

Steel might exist as a crucial product in modern societies, but it's also a major source of CO2 emissions. So what kind of a role could green steel play in the path towards net zero? While it's currently twice as expensive as less climate-friendly alternatives, it brings a multitude of benefits – and only a small price increase for steel-heavy products.

 

Steel's sustainability dilemmas

Here’s the dilemma: steel is a key material in modern societies. It provides us with houses, bridges, modes of transport and essential equipment and products. It isn't simply a relic of the old industrial revolution – steel is also crucial in a low-carbon economy. Green modes of transportation like electric vehicles, electric buses and trains require vast amounts of steel, as do wind turbines and electrolysers. So it is a pity that steel production is also a major source of global greenhouse gas emissions.

Greener alternatives still have to prove themselves and are often viewed as prohibitively expensive in a highly competitive market. Thoroughly transforming production processes takes years, so change is often desperately slow.

 

Steel is an integral part of our modern society

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Steelmaking is a very energy intensive process and the current technology is mostly based on coal. Today, it accounts for 2.7 billion tons of CO₂ every year, which represents 7% of yearly emissions globally. The shares are roughly doubled to 15%, 14% and 12% for China, South Korea and Japan respectively.

With the consensus view of a rising global population and increased prosperity, steel demand is expected to grow by 35% by 2050, according to Bloomberg New Energy Finance. While the sector is improving in terms of energy efficiency, emissions are likely to increase if steel continues to be produced predominantly with coal.

That's not exactly in line with the goal of creating a net zero economy. So, we’re going to look at the business case of possible technology fixes to reduce carbon emissions in the steel sector. We’ll assess where we are right now and the various pressures that companies are currently under to meet net zero targets. We'll also examine which alternative fuels could prove frontrunners in technology as science improves and adapts.

 

There are three main strategies for reducing emissions:

 

1. Tempering the demand for steel

A difficult task, given the consensus view of rising demand towards 2050 and alternatives for steel like aluminium and concrete which are also very carbon intensive. Substituting steel for another product that emits a lot of carbon isn't exactly a big step forward in helping the climate.

 

2. Improving the energy efficiency of existing steel plants

This is especially helpful for old coal-based steel plants where emissions can be reduced by up to 30% using higher grade ores, or more efficient technologies to inject coal into the furnace. Material efficiency can also be improved by using more recycled steel – but with 85% of used steel being recycled globally, recycling rates are already high. Most steel products also remain in use for decades before they can be recycled. As a result, there's not enough recycled steel to meet growing demand and the world continues to need large volumes of ‘primary steel’.

 

3. Applying technology fixes to the process of steelmaking

For example, by electrifying parts of the process with electric arc furnaces that run on clean electricity, or by capturing and storing the carbon emissions from conventional coal-based steel production. This technology is called carbon capture and storage (CCS) and leaves the current coal-based process intact, while it can reduce emissions by 75-90%. The replacement of coal with a synthetic fuel like hydrogen is another technology fix, which can greatly reduce carbon emissions. If the hydrogen is produced in a clean way (that is with blue hydrogen or green hydrogen from low carbon power sources such as solar panels, wind turbines, hydro power or nuclear power). While technology fixes are an important enabler of the transition to a net zero economy they run the risk of rebound effects and the Jevons paradox: demand for steel might go up once its climate impact is reduced.

 

Given the limitations of demand reduction and improved energy efficiency – and despite the Jevons paradox – we believe that CCS and hydrogen are likely to play a crucial role in the transition pathway of the steel sector to a net-zero economy.

Hydrogen coupled with electrification is the ultimate form of green steelmaking in a net zero economy. CCS is a key way to drastically lower carbon emissions from the many existing coal-based steel mills across the globe, especially the younger ones that are likely to stay in business for many years to come.

Note that we haven’t explored gas-based steelmaking for two reasons. Firstly, gas is generally seen as a transition fuel only, not as a major energy source in a net zero economy. That role is generally attributed to synthetic fuels like hydrogen. Secondly, we had to limit the modelling options for practical reasons as they are fairly complex. It then makes sense to focus on coal-based routes, which account for about 70% of global steel production, as well as taking a look into the ultimate form of green steel production.

However, we do believe that gas-based steelmaking will act as an intermediate technology and could be a stepping stone towards hydrogen-based steelmaking. In fact, the latest gas-based steel mills are often dual fuel plants which can switch from gas to hydrogen easily once green hydrogen is abundantly available in the future. Experts believe that this could be the case from 2035 onwards.

 

Could CCS and hydrogen provide a magic fix?

Steel is made from iron, one of the most familiar metals. It has been in use since ancient times and historians have even named a 650-year period to the use of iron (the Iron Age, dating back to 1.200-550 BC). The industrial revolution made it possible to turn iron into high quality steel and that triggered the many steel applications of our modern societies.

Steelmaking consists of two steps, beginning with the reduction of iron oxide (mined from the earth) into pure iron, which then is turned into steel. There are hundreds of different forms of steel, but all are made from iron.

The process of turning iron ore into iron and subsequently steel requires very high temperatures and an energy source is therefore needed to generate the heat. In the conventional process, coal is both used as a feedstock to reduce iron ore to iron and as an energy source to generate heat.

The first step of turning iron ore into iron is by far the most energy and carbon-intensive stage and accounts for roughly 80% of the carbon emissions in the case of coal-based steelmaking.