We Could Be Making Steel From Green Hydrogen, Using Less Coal
Posted on 29 January 2021
Now that Australia’s richest man is saying that his country should get in the business of making “green steel” from hydrogen and renewable energy, it is ruffling some feathers in the coal-rich nation. Just how real is it to shed metallurgical coal in the energy-intensive steel-making process?
It’s possible if the cost of producing green hydrogen continues to fall. And if the global community puts a price on each ton of CO2 emitted. It would then overcome the chief obstacle: cost, which would encourage steel makers to join in.
Almost all steel is now produced using iron oxide and “met” coal. That coal is put in ovens at temperatures of 1100 degrees Celsius to remove water and other chemicals. In the end, it produces a pure-carbon source called coke that is ultimately used to make steel. Can renewable energy work instead?
“It’s clear that there are alternatives to coal for each of the three important roles it plays in steel production. (This) would require the steel industry to invest massively in new infrastructure, like on-site renewable electrolysis plants,” writes Noah Beecher Kelk, in Front Line Action on Coal.
In Australia’s case, Andrew Forrest, chairman of Fortescue Metals, is challenging the nation to make carbon-free steel. The company now mines iron ore and exports that, much of which goes to China that makes the steel and ships it right back to Australia. But Dr. Forrest wants to start a demo project this year to make steel using green hydrogen as an energy source. If successful, it would mean thousands of new jobs.
Dr. Forrest said that the creation of zero-carbon steel is not impractical. In a speech referenced by Financial Review, he said that Thyssenkrupp in Germany and Japan’s Nippon Steel are already working hard to make it happen. Instead of burning “met” coal at high temperatures, his company would use green hydrogen, whereby solar panels or wind could produce electricity that is put through an electrolyzer to create pure hydrogen gas.
Last fall, the Swedish steel company SSAB began its pursuit of making fossil-free steel. The goal is to replace “met” coal, also referred to as coking coal, with electricity from renewable energy and hydrogen and to have a fossil-free steel-making process by 2035. It wants to bring carbon-free steel to market in five years. It is partnering with LKAB and Vattenfall, which are Europe’s largest iron-ore producer and electricity generators, respectively.
“We believe that by taking the lead and showing that it is possible to decarbonize the steel industry, others will follow,” SSAB says. “The potential is enormous.”
Rough Road Ahead
Steel production will expand exponentially, given that cities are growing and the product is used to make everything from roads and bridges to automobiles and buildings. The steel industry accounts for 8% of CO2 emissions globally, says consulting firm McKinsey, which adds that 14% of all steel companies could see their values eroded unless they decarbonize.
To be sure, the International Energy Agency says that by 2050, steel produced from green hydrogen will total less than 10%. The steel sector relies on coal. Even more compelling is that the cost of green hydrogen as an energy source would tack on 20%-30% more to the cost of steel production in the early years.
Government support is thus necessary. The good news is that the cost of producing green hydrogen is dropping: wind and solar prices are falling while the electrolyzers are getting better and cheaper. Within two decades, it could be competitive.
“Surging carbon dioxide prices and decreasing hydrogen prices are crucial to ensuring the economic viability (according to cash cost) of pure hydrogen-based steel production,” says the McKinsey report. “(C)onventional steel production still retains a cash cost advantage. However, this scenario changes as soon as hydrogen prices drop (driven by the cost of electricity) or carbon dioxide prices increase.
“Following this logic, pure hydrogen-based steel production is expected to be cash cost-competitive between 2030 and 2040 in Europe,” the report concludes.
Back to Australia’s interest in fossil-free steel making and whether that will come to pass: surely, the country would love to have a brand new steel-making industry with all of the associated benefits. But Australia, like the United States, has an incumbent coal sector that provides jobs and wealth to its citizens. A zero-carbon steel-making endeavor would not supplant “met” coal. But it would be a deep cut.
“Australia is in an absolutely unique position to scale green steel. Our neighbors and customers want to phase out carbon pollution by 2050, and coal – the most carbon-intensive of the fossil fuels – will be phased out, too,” says Dr. Forrest, of Fortescue Metals, in the Financial Review.
Right now, it is technically feasible to produce steel from non-carbon energy sources, although it is an expensive option. But that could change if the stars align: green hydrogen production costs would need to fall while carbon emissions would have to come with a price. Ultimately, though, the steel industry has to buy-in.Source : Forbes