Steelmakers from countries outside the EU will have to decarbonise if they do not want to pay CO2 charges when supplying Europe in the near future, SSAB vice president of sustainable business Thomas Hörnfeldt said at the Kallanish Europe Steel Markets virtual conference on Wednesday.
“This will also help Asian companies; especially in China, we already see a strong political push for more green steel industry,” agreed Tenova chief executive Stefano Maggiolino. The technology maker is constructing for HBIS the first direct reduced iron plant in China, which will use 70% green hydrogen, scheduled for commissioning in 2022, he added.
More than 80% of China’s steel production is done through blast furnaces and mills there are now looking to a transition to electrification, Maggiolino continued.
Russia meanwhile has the huge advantage of enormous resources of natural gas, and its steelmakers can halve CO2 emissions if they produce hydrogen, he added. Tenova is building with OMK and Danieli a green DRI plant of 2.5 million tonnes/year capacity.
“The energy transition will lead to a higher cost in Europe and other countries due to use of hydrogen, but this gap will be closed over the years because the cost of CO2 emissions continues to go up, from €5/tonne in 2018 to €50/t today,” Hörnfeldtd said. “We believe that the switch to green steelmaking will not only be good for the environment, but it will also produce commercial competitive products.”
Due to the dynamics of the market and the reducing cost of natural gas, flexibility is key, noted Maggiolino. “And soon we will see that the cost of hydrogen will be lower and lower,” he added.
“The supply of electricity is a major question and the goal is to produce as much as possible, also with the help of wind parks and other renewable sources,” noted Hörnfeldt. “Our customers are showing great interest in fossil free steel and they are not disturbed that the costs of steelmaking will increase. Clean energy is a necessity in Europe and other countries, so we believe that the future is hydrogen.”
The steel industry needs to change and adapt to the future, and decarbonisation is the way, Hörnfeldt concluded.
Svetoslav Abrossimov Bulgaria