European steelmakers remain concerned over green hydrogen cost

European steelmakers are concerned by the high costs of green hydrogen and how these could slow down or jeopardise the transition towards low- or zero-emission steelmaking, Kallanish notes.

ArcelorMittal Europe chief executive Geert van Poelvoorde reiterated this point by confirming that the use of green hydrogen – especially produced in Europe – would make steelmaking uncompetitive. In an interview this week with Belgian magazine Trends the executive said that using green hydrogen in the short term would push steelmakers out of the market for being uncompetitive. European green hydrogen production is still too expensive and imports from Africa, for example, still incur a high freight cost.

The view echoes the official position of ArcelorMittal reported in its climate action report published in July 2021.

Green hydrogen-based direct reduced iron production would increase the cost of steel production by $150-250/tonne compared to natural gas-based DRI, the report stated. “On a like-for-like basis (excluding CO2 costs), hydrogen would need to fall below $1/kg to compete with natural gas DRI in Europe, and below $0.7/kg to compete in the USA,” the firm said.

ArcelorMittal anticipated that green hydrogen costs could drop to $1.5/kg by 2030 if renewable energy costs drop further – on a global level.

As a result of the issues related to high costs of green hydrogen, European steelmakers might focus their attention in the short term on electric arc furnace-based steel production rather than building captive DRI plants. A solution in the medium term could be finding other sources of DRI beyond Europe, where hydrogen production costs are lower.

Emanuele Norsa Italy