Steel decarbonisation to lag other sectors: BMI

Decarbonisation in the global steel industry will gain momentum out to 2030, aided by hydrogen-based production methods and increased use of renewable energy. However, the immaturity of hydrogen-based technology means that progress towards net zero in steel will continue to lag other sectors, says research group BMI.

Steel firms will implement a three-pronged approach to reduce emissions from steel production. Incorporating hydrogen into the steelmaking process is the most promising new technology being adopted by mining firms, as it makes net-zero steel feasible, BMI says.

The second popular approach will be the increased use of electric arc furnaces, particularly with scrap. The third will be the installation of carbon capture, utilisation and storage (CCUS) technology in traditional blast furnaces.

However, limited availability of green hydrogen will be the biggest constraint on the adoption of hydrogen-based steel production, BMI continues. According to the International Energy Agency, low-emission production accounted for less than 1% of total hydrogen production in 2022. The vast majority of hydrogen production currently relies on fossil fuels.

“The relatively high cost of producing green hydrogen relative to grey hydrogen will slow the construction of steelmaking facilities relying on green hydrogen as feedstock,” the research group says in a report seen by Kallanish.

Adoption of EAFs has meanwhile been held back by the need for higher-quality iron ores, reliable electricity supply and the large amounts of scrap required as feedstock. Traditionally, the development of substantial EAF capacity in China has been constrained by the limited availability of scrap, but this is changing as a significant scrap market is developing in the country, BMI observes.

CCUS meanwhile has a weak track record in economically reducing carbon emissions in steel production, it continues. There are no fully operational large-scale CCUS facilities in blast furnace steelmaking operations, but there are a few pilot projects either in progress or in the planning stages.

“Ultimately, the huge pipeline of blast furnaces existing and set to come online in East, South and South East Asia over the next decade means carbon capture will inevitably play a significant role in reducing emissions from the steel sector over the next decade,” BMI opines.

European and Chinese firms will lead the development of green steel, while blast furnaces will still dominate in 2030, but their share will decline, BMI concludes.

Adam Smith Poland