Industry association France Hydrogène is recommending that green steel used in the European automotive sector be defined as produced from direct reduced iron (DRI) using a high share of renewable or low-carbon hydrogen, with strict emissions thresholds enforced by the EU.
The association argues that hydrogen-based DRI combined with electric arc furnace (EAF) technology is the essential production route for Europe to maintain competitive steel production in the medium and long term. Replacing blast furnaces with EAFs without securing European DRI production would risk relocating a major part of the steel value chain outside the continent.
European H2-DRI projects already exist, France Hydrogène says in a note seen by Kallanish. The regulatory framework must now reflect the importance of this production route, it warns.
The Corporate Average Fuel Economy (CAFE) norms, the EU regulations setting CO2 emissions targets for carmakers, are currently under revision and include a steel flexibility mechanism letting carmakers offset their emissions targets with their green steel purchases.
France Hydrogène says this represents a unique opportunity to drive demand for low-carbon steel, but warns that it depends on how it is designed. “Depending on how this flexibility is sized and designed, it could equip the European steel base for reinvestment and transformation,” the note states.
The association wants the Ecodesign regulation (ESPR) to lower the emissions ceiling for Class A eligibility to 0.7 tonnes of CO2/t of finished hot rolled coil, and the CAFE regulation to specify that only Class A steel qualifies for the automotive pilot market. It also recommends that DRI production must take place in Europe for steel to qualify as “Made in EU” under Article 7 of the Industrial Accelerator Act.
France Hydrogène calls for the steel flexibility in the automotive pilot market to be maintained at 7% and for the pilot market to be brought forward to 2030, starting at 2% flexibility and rising progressively to 7% by 2035, accelerating demand for hydrogen-based green steel.
The steel industry, however, tends to view hydrogen sceptically as a reliable and cost-effective energy source. Last year, Alain Le Grix de la Salle, ArcelorMittal France chief said the company is suspending its DRI and hydrogen plant to decarbonise the Dunkirk site. During a hearing at the Senate in Paris he noted that hydrogen produced via electrolysis derives approximately 70% of its cost from electricity. For hydrogen to be economically viable in DRI-based steelmaking, the target price is €2/kg, compared to current market levels of around €7/kg.
Achieving this would require electricity prices to reach around €25/MWh. Meanwhile, wire specialist Bekaert announced a production halt of green hydrogen electrolyser components at its Bekintex site in Wetteren, Belgium, due to slower-than-expected hydrogen market development (see Kallanish passim).
