While many of the technologies needed to transition heavy industry toward net zero emissions exist today, developing business models that consider circularity and expanding clean energy sources are still hurdles to overcome, according to presenters at Reuters’ Industry Transition conference, held Sept. 12-13 in Pittsburgh.
“The structure of industry has to change to a certain extent as a result of a lot of this circularity,” said John Bissell, CEO of Origin Materials, which turns carbon found in biomass into useful materials. “Often the discussion is around price and cost, which is totally appropriate, but the value that you’re getting may not be perfectly tied to price in the way that it used to be.”
As industries transition toward more sustainable production, the vale chain needs to be built out from the start, Bissell said, otherwise it makes it more challenging economically.
Rich Fruehauf, chief strategy and sustainability officer at US Steel, said when looking at sustainability goals for 30 years down the line, there is not only the assumption that the technology will be available, but also the business models.
“When you think about for example, hydrogen, electrolyzer technology exists today,” he said. “We know how to make hydrogen, it’s the business model of making it cost effectively.”
Cleaning up steel production
For steel, which accounts for roughly 8% of global greenhouse gas emissions, the industry can get to a place close to near-zero emissions steelmaking between electric arc furnaces, non-GHG emitting power sources and direct-reduced iron made using green hydrogen,” Fruehauf said.
“The challenge here for us…will there be enough hydrogen at scale? Will it be cost-effective compared with natural gas?” he said, adding the industry also needs more low-carbon emitting electricity sources.
Michael Ducker, senior vice president and head of hydrogen infrastructure at Mitsubishi Power Americas, said some industries use hydrogen today or are looking at using hydrogen in the future, but they are using traditional forms of producing hydrogen which have a high carbon intensity.
However, layering in the Inflation Reduction Act tax credits, you start to see opportunities for parity or even cheaper green hydrogen compared to traditional production methods, but it requires commitments from end users to drive greater expansion of availability.
“When we’re developing projects, we’re looking at how we make sure that the cost and the carbon intensity is as low as possible,” he said. “When we bring that together, those are the first movers. But still, I think we’re seeing an evolving market where it’s not really taking off together with the demand side.”
H2 Green Steel, which is constructing a 5 million mt/year steel plant in Sweden which will use renewable hydrogen to replace coal in the steel production process, has applied a “founder model,” bringing in investment from customers across the value chain to fund construction, said chief technology officer Maria Persson Gulda.
To date, H2 has sold more than 1 million mt of steel to customers across Europe throughout various industries that will be 95% abated compared with green steel products available today in the market in Europe, Gulda said. The company also is charging a premium of 20%-30% compared with “brown steels.”
“That price tag will only increase due to CO2 carbon prices but also due to circularity because the more circular you are, the more the customers would like to have your product,” she said.
Author: Justine Coyne