Among all possible green hydrogen applications, perhaps steel production, and other high-temperature industrial processes, makes the most sense
GREAT POTENTIAL
Carbon dioxide emissions can be almost entirely eliminated if hydrogen produced via renewable energy is used in the DRI steelmaking process.
SUPPORTIVE ENVIRONMENT
A combination of the right policy framework and demand for “green steel” means Europe is leading the way on low-carbon steel.
KEY QUOTE
Steel is a sector in which you can get the most climate bang for your buck from renewable hydrogen.
Swedish firm H2 Green Steel will ship its first steel produced with the use of green hydrogen to customers in early 2026 if all goes according to plan. A combination of Swedish hydropower and wind energy will provide the electricity needed for the giga-scale electrolyser to split water into hydrogen and oxygen at the steel plant’s site in Boden, Sweden. As a result, the company expects its steel will produce up to 95% less carbon emissions compared to traditional production methods.
The plant is slated to begin with annual production of 2.5 million tonnes of green steel before this is bumped up to some five million tonnes by the end of the decade. The power used to run the electrolyser will initially come from the Swedish grid, where the high share of cheap renewables also helps to bolster the business case. “We think we can run the electrolyser with a high utilisation of 8000 hours a year, bringing the levelised cost down,” says Kajsa Ryttberg-Wallgren of H2 Green Steel.
Construction of the first buildings at the Boden site is underway and H2 Green Steel has been busy checking off the boxes for the roughly €5.3 billion investment. These include sourcing iron ore for steel production; reaching green steel supply deals with automakers, construction product producers, white goods companies and other customers; raising €1.8 billion with investors and securing €3.5 billion in debt from banks.
MORE BANG FOR THE BUCK
About two billion tonnes of steel are produced globally each year, accounting for some 7-9% of global CO2 emissions. There is a growing consensus that renewable hydrogen used to heat individual buildings or to fuel passenger cars is a waste of limited resources—direct electrification is more efficient and cost-effective in those cases.
But decarbonising steel production represents a “no-regrets application”, says Julian Somers at Agora Industry, a think tank. “Steel is a sector in which you can get the most climate bang for your buck from renewable hydrogen,” he says.
About 70% of steel produced today is done through an emission-intensive process that involves blast furnaces and coking coal. In the blast furnace, coal is used as a heat source but also serves to “reduce” the iron ore, removing oxygen to produce molten iron. The carbon from the coal connects with the oxygen and “you get a huge amount of CO2,” says Ryttberg-Wallgren.
The molten iron that comes out of the blast furnace is then put into a basic oxygen furnace (BOF), where it is often mixed with some scrap metal and oxygen is injected to lower the carbon content to the required level for the steel grade produced.
GREEN SHOOTS The Hybrit site delivered its first green steel in 2021 to Volvo
HYDROGEN-BASED PROCESS
The most commercially advanced alternative for decarbonising primary steel production, and that which is being pursued at H2 Green Steel’s Boden plant, involves the use of green hydrogen in what is known as a direct reduced iron (DRI) process. DRI technology dates back decades and the process accounts for about 5% of the steel produced today, with the fuel and reducing agent of choice traditionally being either natural gas or coal.
However, DRI plants can also operate using hydrogen, offering a pathway for decarbonisation. When hydrogen is used instead of coking coal to reduce iron ore, the byproduct is water rather than carbon dioxide, meaning that CO2 emissions can be almost entirely eliminated if hydrogen produced via renewable energy is used, explains Somers.
DRI plants are frequently coupled with electric arc furnaces (EAF), as iron emerging from the DRI shaft is in a solid state and must be heated up to complete the steel production process. In Sweden, H2 Green Steel is “taking technology that is mature and scaling it up, so the issue is how to optimise it”, says Ryttberg-Wallgren.
“All the technologies needed to do 100% hydrogen DRI have been on the market since the 1970s, but nobody had combined them,” says Chris Bataille of Columbia University’s Center on Global Energy Policy. “It is not something you would have done [if] there was not a value in eliminating greenhouse gas emissions in steelmaking,” he adds.
THE HYDROGEN PUSH
Electric arc furnaces fed with scrap steel account for about 25% of total steel production. The production method comes with emissions that are a small fraction of traditional steelmaking and will continue to fall as the emissions intensity of grids decreases.
Bataille expects the share of steel production from electric arc furnaces using recycled scrap will roughly double, to about 45-50% of total production by mid-century, particularly as more scrap becomes available in fast-growing economies like India and China.
“There isn’t enough scrap to meet all demand for steel, so we need to decarbonise primary steel production,” says Jeffrey Rissman of Energy Innovation, a think tank. “This is behind the push for hydrogen-based DRI.”
In a sustainable development scenario laid out in its 2020 technology roadmap for iron and steel, the International Energy Agency (IEA) envisages one electrolytic hydrogen-based DRI plant will be built each month after the technology’s market introduction, forecast for 2030. In a faster innovative scenario, two 100% hydrogen-based DRI plants will be built each month following market introduction in 2026.
The IEA’s updated 2023 roadmap for net zero emissions sees hydrogen based-DRI and iron electrolysis, which is at an earlier stage of development, together accounting for 58% of primary steel production in 2050. A further 37% would be fossil-fuel-based production with carbon capture and storage (CCS), which means 95% of primary steel production will be “near-zero emission”.
Material efficiency, or producing the same products with less steel will also play a part in decarbonising the sector.
FUEL SUPPLY
A barrier to green steel is the lack of available green hydrogen (PHOTO: Norenko Andrey)
EUROPEAN LEADERS
The European Union is the world’s second-largest producer of steel behind China and the bloc’s steelmakers are leading efforts to produce steel using renewable hydrogen.
The phase-out of free European Union Emission Trading System (EU ETS) allowances for EU steelmakers by the mid-2030s along with the phase-in of the Carbon Border Adjustment Mechanism (CBAM)—essentially a carbon tax on imports that is designed to encourage decarbonisation beyond Europe—have made it clear to EU steelmakers that they need to decarbonise, says Somers.
“The whole policy package that is being developed in the EU—with Capex and Opex support for first movers, hydrogen strategies—as well as the creation of green steel demand is setting the right policy framework across the entire value chain,” he adds.
H2 Green Steel’s Swedish peer Hybrit—a joint venture of steel manufacturer SSAB, miner LKAB and power producer Vattenfall—delivered its first green steel in 2021 to Swedish automaker Volvo in a test run. SSAB also expects to bring its first fossil-free steel to a broader market in 2026.
Elsewhere, helped by €1 billion in federal and local German government subsidies, steelmaker Salzgitter has pledged to begin converting its steel production to green hydrogen-based technology in 2025.
In a July 2023 report, Bellona, an environmental NGO, identified at least 19 steel mills in Europe that expect to add a DRI plant to their portfolio until 2030. Other steel manufacturers with DRI plans in Europe include ThyssenKrupp, ArcelorMittal and Tata Steel.
Ryttberg-Wallgren is in charge of taking the blueprint from H2 Green Steel’s Boden plant and replicating it elsewhere. Key to identifying sites is the availability of baseload renewable energy supply and “excellent logistics” for receiving the necessary iron ore.
In Portugal, the company has signed a deal with Spanish energy giant Iberdrola for a green steel plant with an output of two million tonnes a year while projects are also planned in Canada, the US and Brazil.
GREEN AVAILABILITY
One possible hurdle for the development of green steel using hydrogen DRI is represented by a lack of green hydrogen, despite the pipeline of renewable hydrogen projects growing.
According to the European Commission’s Joint Research Centre, deploying renewable hydrogen-DRI to decarbonise steelmaking in the EU could require over 350 terawatt-hours (TWh) of renewable electricity, equivalent to over 35% of the EU’s total renewable electricity production in 2019.
A number of steelmakers have revealed plans for DRI technology that can use natural gas until green hydrogen becomes more readily available. “Even if some of the plants may initially run with natural gas, this would already result in significant emissions cut over coal-based steelmaking,” says Somers.
The Rocky Mountain Institute (RMI), a United States-based research group, argues that there is no need to wait until 100% renewable hydrogen is available before rolling out hydrogen-based DRI. In 2019, it pointed out that switching to hydrogen-based DRI using power from the grid would already reduce emissions by about 20% in the US and 40% in Europe compared to the traditional blast furnace production route. Given the dominance of coal on China’s power grid, however, emissions would increase, it noted.
RAMPING UP
Boston Metal’s Adam Rauwerdink believes the demand for green steel will grow quickly ( PHOTO
Boston Metal)
SECURING IRON ORE
Green hydrogen-based steel production via the DRI-EAF route also requires higher-grade iron than blast furnaces. “Since iron ore is reduced in a solid form rather than as a liquid, it’s not so easy to extract impurities,” explains Rissman. High-grade iron ore is less readily available, so Ryttberg-Wallgren believes that miners serious about cutting Scope 3 emissions should prioritise the delivery of this ore to green steel producers that need it.
Rissman says that securing sufficient quality iron ore does not represent an insurmountable problem, as there are also methods to upgrade it. Miners and steelmakers are also considering alternative technology combinations that would allow them to use lower-grade iron ore. For example, after iron ore is reduced in a DRI shaft, a melting stage can be added afterwards. Molten iron from the melter may then be placed into an existing basic oxygen furnace, which can use lower-grade iron. Thyssenkrupp and ArcelorMittal are among steelmakers pursuing this strategy.
POLICY SUPPORT
Rissman, meanwhile, believes the main obstacle to the use of green hydrogen in steelmaking is fuel costs. “It is currently cheaper to buy coal and coke than to buy or make clean hydrogen, so there’s an important role for policy,” he says. “The transition to clean steel won’t happen in a timely way without the support of lawmakers in helping to close some of these price gaps.”
There are a variety of policies that can be used, Rissman notes, including carbon pricing systems like that put in place in Europe, subsidies and tax credits for green steel, energy efficiency and emissions standards and green public procurement. In its “Buy Clean” programme, for instance, the state of California has set emissions standards for materials used in public projects that are above market standards.
Bataille suggests the possibility of introducing Contracts for Difference (CfDs) for green iron or steel, along with other low-carbon basic materials, to cover their incremental costs compared to the emissions-intensive incumbents. “We have done these direct subsidies for CCS and hydrogen, but in the end what we really need is steel and clinker [for cement],” he says.
GREEN IRON TRADE
Steel mills have traditionally been sited near sources of coal or near ports where it is delivered, but as fossil fuels are increasingly removed from the equation, the geographical logic of steelmaking could also change.
In places where high shares of renewable energy are lacking, Ryttberg-Wallgren says that importing green hydrogen along with iron ore does not make sense. Instead of building green hydrogen DRI units, a wiser strategy would be to “focus on electric arc furnaces and buy green iron from places where you can do that at a lower cost and with a higher efficiency”, she suggests. “Why would you install electrolysers that are only operating 50-60% of the time?” Korean steelmaker POSCO has announced plans to import green iron ore from Australia. Japan’s Nippon Steel also intends to purchase green iron from abroad.
“The global steel sector is considering a future that involves shipping green iron rather than shipping both green hydrogen and iron ore,” the Institute for Energy Economics and Financial Analysis (IEEFA) notes. “The cost of shipping green hydrogen means it should be used at the place of production whenever possible,” it adds.
IEFFA highlights the potential for Brazil, the Middle East and Africa to produce green hydrogen-reduced iron, as well as the opportunity for Australia—currently the world’s largest iron ore exporter—to “shift towards onshore processing of iron ore using green hydrogen to produce low-carbon iron for export”.
POWER-TO-IRON
As green hydrogen-based steelmaking becomes reality, some companies are looking into technologies involving the direct electrolysis of iron ore, sometimes known as power-to-iron. The two main technologies involved high-temperature molten oxide electrolysis (MOE) and low-temperature aqueous alkaline electrolysis.
As is the case with hydrogen-based DRI, electricity needs are significant but there are no CO2 emissions if the electricity used to power the electrolyser is carbon-free.
Boston Metal, which was spun off from the Massachusetts Institute of Technology (MIT) a decade ago, aims to make its MOE technology available to the steel industry later this decade. The company plans to license its technology rather than produce steel itself.
Within an electrochemical cell about the size of a school bus, an inert anode is immersed in an electrolyte containing iron ore and other oxides and then electrified. Once the cell heats to 1600°C, electrons split the iron ore into oxygen and molten iron that can be sent straight to downstream steelmaking without reheating.
Adam Rauwerdink of Boston Metal says the technology comes with the advantage that it does not require carbon capture or hydrogen storage and can run on mid or low-grade iron ores. The modular nature of the technology also means that production can be scaled up incrementally and maintenance can be carried out without shutting down the entire steel plant, he says.
Fresh from a $262 million round of funding in August 2023, the company is focusing on optimising the energy efficiency, production efficiency and lifetime of its MOE technology, and “putting the system in the field so that it can be used in a cost-effective manner”, says Rauwerdink.
Rauwerdink says Boston Metal has been talking to steel manufacturers, automakers and other companies about its technology, which it aims to commercialise in 2026. “The interest is there, and the market pull [for green steel] is coming pretty quickly.”
He notes that the MOE technology is more energy efficient than the traditional way of steelmaking, requiring about four megawatt-hours (MWh) of electricity versus the equivalent of 5-6 MWh for conventional steelmaking. For a two million-tonne-a-year steel plant, that still adds up to about one gigawatt (GW) in baseload capacity. “Since 100% of the energy will be for electricity, it’s important that the electricity be clean,” says Rauwerdink.
Steel giant ArcelorMittal and John Cockerill, a Belgian engineering and technology firm, instead announced plans in 2023 to construct what they say will be the world’s first low-temperature industrial-scale iron electrolysis plant.
The aim is for the facility to start production in 2027 with an initial annual capacity of 40,000 to 80,000 tonnes a year. Once the technology has been proven at scale, the companies say they intend to expand annual capacity to between 300,000 and one million tonnes.
The technology being used was developed by Siderwin, a consortium of universities and companies led by ArcelorMittal. The iron electrolysis process takes place at a temperature of 110°C. Iron plates created during electrolysis are then processed into steel in an electric arc furnace.
The American startup Electra is also pursuing a low-temperature iron electrolysis process, although its technology operates at about 60°C. “Direct electrolysis would be transformative,” says Bataille, but he believes it is premature to rely on it for decarbonising the steel sector. “The question is does (this technology) show up in 2030, 2035, 2040 or just doesn’t show up at all.” •
TEXT Heather O’Brian