Steelmaking was once considered difficult, if not impossible, to decarbonize because a key step in the process was entirely dependent on coal or natural gas. Well, that was then. With the support of green hydrogen, the world's first and largest full-scale green steelworks is being built in Sweden. This means that around 1,000 steel mills worldwide still need to be decarbonized, but it is at least a start.
Green hydrogen calms Steel's carbon demon
It's no secret that steel is a carbon demon. According to one widely cited estimate, steel production accounts for 11% of all greenhouse gas emissions worldwide, in part because gas or coal must be involved.
It's certainly not easy to take fossil energy out of this equation. But it's not impossible either. The factor that makes this possible is green hydrogen, i.e. hydrogen that is pressed from water in an electrolysis plant.
The sticky gate is the power source for operating the electrolysers. From the perspective of saving the planet, water electrolysis makes no sense if fossil fuel power plants are the source. However, renewable resources are now available. As the cost of wind and solar energy continues to fall, both the economic and climate arguments for green hydrogen are beginning to emerge.
Green hydrogen for green steel
Access to steel through fossil energy occurs at various points along the way, most notably in the DRI (short for Direct Reduced Ironmaking) step, which involves producing metallic iron from iron ore along with a carbon-rich gas. Here is a statement from the World Steel Association:
“Direct reduction of iron is the chemical removal (reduction) of oxygen from iron ore in solid form. The iron used in the steelmaking process is currently chemically reduced from iron ore through the use of fossil resources – natural gas or coal.”
Replacing gas and coal with green hydrogen is a big step in the right direction, although the WSA points out that it will be a long journey. In 2022, they note, about 76% of the world's hydrogen supply currently comes from natural gas and 23% from coal, with green hydrogen barely playing a role at less than 0.1%.
In a fact sheet from June 2022, they cite an International Energy Agency model that assumes that by 2050 only 8% of total steel production will rely on green hydrogen to reduce iron ore.
A major bottleneck is the availability of renewable energy to generate the electricity needed for entirely new fleets of electrolyzers. The WSA also notes that the hydrogen transmission network still needs some work before it reaches the A team.
“There are almost 5,000 km of hydrogen pipelines worldwide today, compared to around 3 million km of natural gas transport pipelines,” explains WSA. “Existing high-pressure natural gas transmission pipelines could be converted to deliver pure hydrogen in the future when they are no longer used for natural gas. However, their suitability must be assessed on a case-by-case basis and will depend on the type of steel used in the pipeline and the purity of the hydrogen transported.”
“Another challenge is that it requires three times more volume to provide the same amount of energy as natural gas,” they add.
The H2 Green Steel solution
However, steelmakers don't just have to wait for green hydrogen. They can overcome the pipeline hurdle by producing their own green hydrogen locally, and they can pay renewable energy developers in advance to ensure an adequate supply of clean kilowatts to electrolyzers.
That's the plan of startup H2 Green Steel, which is building a new plant billed as “the world's first large-scale green steel plant in northern Sweden.”
H2 Green Steel has already raised millions for the new steelworks since it went into operation in 2020. The latest news came on January 22, when the company announced new funding increases, including a €250 million grant from the EU Innovation Fund, bringing the total to €6.5 billion, or about $7 billion. Dollar.
H2 Green estimates that its steel is produced with green hydrogen in the mix with 95% lower CO2 emissions compared to coke-fired blast furnaces, leading the company to describe itself as “powering one of the largest climate initiatives in the world.”
“The construction of the flagship green steel plant in Boden with integrated production of green hydrogen and green iron is in full swing,” they note, with plans to start in 2025.
“Much of the electricity required was secured through long-term power purchase agreements, and half of the initial annual volumes of 2.5 million tonnes of near-zero steel were sold in binding customer contracts lasting five to seven years,” they add.
Renewable energy it is
This reference to a “large part of the electricity” sounds rather vague, but in a summary of the project last fall, H2 Green made it clear that it involves renewable energy. Here is the company's statement (breaks have been added for readability):
“H2 Green Steel’s plant in Boden, Sweden, will be the first of its kind to combine the production of green hydrogen, green iron and green steel in a single flow, using renewable electricity throughout the entire production process.
“Europe’s largest electrolyser will produce the hydrogen used in the direct reduction reactor process. The majority of the emissions reduction is achieved in the direct reduction step.
“A hot sponge iron product is then processed together with steel scrap through an electric arc furnace to form a homogeneous melt of liquid steel and then continuously cast, rolled and refined.”
The Boden plant is just the beginning. H2 Green is already planning to “exponentially accelerate its decarbonization impact,” with “new industries using green hydrogen” playing a big role.
The Exponential Roadmap
Speaking of exponential, H2 Green is part of an initiative called the Exponential Roadmap Initiative, which aims to accelerate the decarbonization of hard-to-decarbonize industries. ERI was launched in 2018 and has since expanded its network. It describes itself as an “accredited partner of the UN High-Level Climate Change Champions’ Race To Zero and a founding partner of the 1.5°C Supply Chain Leaders and the SME Climate Hub.”
The goal is to scale up high-impact climate solutions and close a gap in carbon accounting systems that has left some clean tech startups out in the cold.
“Established companies can set ambitious goals for reducing greenhouse gas emissions for their operations. For an industrial cleantech company building an operation from scratch, other goals are more relevant,” explains H2 Green. “The Exponential Roadmap Initiative provides a framework within which a cleantech company can review and validate its ambition and ability to scale climate solutions exponentially.”
The idea is to provide the investment community with solid, science-based guidelines for investing in new, planet-saving technologies. So stay tuned to know more about it.
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Image: Local production of green hydrogen will help address a bottleneck in the green steel industry (courtesy of H2 Green Steel).
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