H2 Green Steel is on schedule to produce its first low-carbon steel made using hydrogen by the end of 2025 or the beginning 2026, before ramping up output, in a process that could cut carbon dioxide emissions by 95%, the company’s Chief Financial Officer Joel Ridderstrom told S&P Global Commodity Insights on the sidelines of the Resourcing Tomorrow Conference in London this week.
The global steel industry is one of the world’s largest emitters of CO2, representing approximately 7-8% of global emissions.
H2 Green Steel’s project, located in the Boden-Lulea region in northern Sweden, includes a giga-scale green hydrogen plant as an integrated part of the steel production facility.
Use of hydrogen rather than coal in the production of steel represents one of the main routes for the industry to reduce its CO2 emissions, with H2 Green Steel pioneering the technology in Europe.
“In northern Sweden we really rely on the hydropower backbone. So Sweden and Norway, the northern parts of those countries, it’s really now a natural resource comparable to oil. It’s just a massive battery that exists in those locations. So I mean, there’s no coincidence that we’re located in the Arctic Circle,” Ridderstrom said during the conference, adding that not only will this lower the costs of hydrogen production, but it will also eliminate intermittent power.
“You have the power available and you have the hydropower backbone to support continuous production,” he said.
During a panel discussion at the event, industry participants agreed that the industry is moving away from a reliance on fossil fuels, but they underlined the expense of this.
According to CRU analyst Paul Butterwork, constructing a hydrogen direct reduced iron facility would cost around $1.3 billion, compared with about $800-850 million for a more traditional blast furnace with its own power station, or $400-420 million for an electric arc furnace with its own power station.
“So that’s a big, big shift,” he added.
Ridderstrom agreed that low-carbon steel adds a cost premium, putting this at around Eur150/mt, but said that the industry is already evolving.
He added that companies including carmakers, white goods manufacturers and constructors are already closing offtake supply agreements to secure low carbon production.
Demand for low carbon steel is increasing. Platts, part of S&P Global, launched its own low steel carbon assessments in May this year.
Platts assessed Northwest European hot-rolled carbon-accounted coil up Eur5/mt on the day at Eur770/mt ($840.147/mt) ex-works Ruhr Nov. 30.
The assessment was calculated in line with the sum of the Platts daily carbon-accounted steel premium (CASP) assessment and Platts daily hot-rolled coil price assessment in Northwest Europe.
Author: Annalisa Villa
