Lower cost European green hydrogen supplies and higher steel prices may be key to Europe’s road to low-emissions steelmaking as the European Commission highlighted Sweden for being quick off the mark.
One year after Ovako and Linde installed hydrogen-based steel reheating into a Swedish mill, and miner LKAB invested into biofuel-fired iron ore pellets to help enable low-emissions DRI production at the HYBRIT joint venture pilot plant, Sweden’s hydrogen projects won praise from EC President Ursula von der Leyen.
New hydrogen direct reduction iron (DRI) plants in northern Sweden may be Europe’s anchor for cutting steel sector carbon emissions to zero, from renewable energy such as hydroelectric power abundant in Scandinavia.
“The steel industry is responsible for up to 9% of global emissions, and companies in Sweden have to and want to bring down their carbon footprint to zero – with water vapor the only by-product,” von der Leyen said on March 16 at an energy conference in Berlin. “Their way to achieve this is clean hydrogen. Hydrogen, derived from renewable energy, such as hydroelectric power. A resource that is as abundant in Scandinavia as high-quality iron ore.”
For blast furnace-based steel producers in Sweden and across Europe, many are targeting commissioning DRI plants and electric arc furnace (EAF) mills to make steel, helping lower emissions. State-owned miner LKAB, which supplies iron ore pellets to several steel groups operating in Europe, wants to eventually deploy direct reduction of iron ore into iron through new DRI plants, and transition from pelletizing over the next two decades.
For DRI plants seeking hydrogen as the primary energy feed, the availability of electrolyzers and renewable power is a concern for the industry built on plentiful and cheap natural gas supplies.
Green steel costs
The EC expects green steel to cost around Eur100/mt ($119/mt) more to produce, and this may be addressed by new taxes such as the Carbon Border Adjustment Mechanism, and investments, incentivizing them through broadening the scope of the EU’s Emissions Trading System to include more sectors. The reference December 2021 EU Allowance carbon futures exceeded Eur40/mt in trading this year, building on a price recovery in late-2020.
“Green steel costs around Eur100/mt than traditionally carbon-heavy produced steel. So clearly, we have to prevent cheap products from abroad from undermining our efforts,” von der Leyen said. “Carbon must have its price – because nature cannot pay the price anymore.”
A 1 million mt/year DRI plant with green hydrogen would require around 54,000 mt of hydrogen and 1.9 million btu of natural gas for heating the hydrogen, based on estimates by S&P Global Platts.
“Expansion of steelmaking based on DRI produced with natural gas is ideal, as it can transition to hydrogen gradually by increasing the proportion,” said Joachim von Scheele, global director of commercialization at Linde, in an interview.
New investments at steel mills, such as coke oven gas and hydrogen injection into blast furnaces, and adapting industrial heating systems to use hydrogen may be more easy to finance.
Industrial gas supplier Linde, in a world’s first, supplied green hydrogen and oxygen to ferrous scrap-based producer Ovako’s Hofors mill for heating steel bar for rolling. The hydrogen replaced LPG in industrial trials started in March 2020, helping Ovako cut product emissions.
“There are multiple processes in the steel mills where hydrogen can be used, and the steelmakers should evaluate these across the production chain,” von Scheele said. “What is viable might differ dependent location and size, and over time. The same is true for hydrogen supply – what is right for one, is not necessarily right for everyone.”
Fossil fuel cuts
The steel industry will likely first try to reduce fossil fuel consumption, before adopting hydrogen to any greater extent, von Scheele said.
Linde is working on projects for large Proton Exchange Membrane (PEM) electrolyzers, expected to have a capacity far exceeding its 24MW PEM electrolyzer and green hydrogen pipeline supply project at the Leuna Chemical Complex in Germany. This plant is set to start in the second half of 2022.
The company is in talks with multiple steel producers. Linde supplies hydrogen to German steelmaker Salzgitter’s main integrated plant for annealing and hot-dip galvanizing, and is a partner in the WindH2 wind power project with E.ON and Salzgitter. The initiative started this month generates green hydrogen from two 1.25 MW capacity PEM electrolyzers, with hydrogen replacing carbon in iron ore smelting.
Other companies with major future investments in hydrogen and green steel include Thyssenkrupp Steel and SHS Group with projects in Germany, and Liberty Steel, which plans to install DRI and EAF plants in Romania and Czech Republic, respectively.
The EU has an annual production capacity target for green renewables-based hydrogen of 1 million mt by 2024 and 10 million mt by 2030.
The commission has set a goal by 2050 for renewable hydrogen technologies to be deployed at scale to reach all hard-to-decarbonize sectors in the economy.
“We want European companies to heavily invest in expensive technologies to make steel green,” von der Leyen said.
Costs for green hydrogen for DRI remains high, based on electrolyzer efficiencies and securing renewable power, while blue hydrogen, using natural gas and carbon capture and storage (CCS), is more competitive with natural gas DRI. The ability to sequester carbon depends on location and policies, with the EC supporting green hydrogen import projects to build up future volumes.
”Price and availability of green hydrogen depends on availability of green power. Unfortunately, this is an issue at many places, which hopefully will be resolved over time,” said Pravin Mathur, Linde’s executive director for metals, combustion and energy, in an interview. “Linde is developing both green and blue hydrogen options. Blue hydrogen CCS is very location specific, not every steel mill will have the opportunity to sequester based on their location.”
— Hector Forster