Steel Industry to pivot to hydrogen in $278 Billion 'Green Push'

Hydrogen and recycling are key technologies to lower the emissions of steel

Steel production could be made with almost no carbon emissions through $278 billion of extra investment by 2050, according to a new report from research firm BloombergNEF (BNEF).

Hydrogen and recycling are likely to play a central role in reducing emissions from steel production. Steel is responsible for around 7% of man-made greenhouse gas emissions every year and is one of the world’s most polluting industries.

Government and corporate net-zero commitments are pushing the steel industry to cancel out its emissions by 2050. Efforts to decarbonize steel production are central to the net-zero aspirations of China, Japan, Korea and the European Union. The report “Decarbonizing Steel: A Net-Zero Pathway”, which was launched in time for the virtual BNEF Summit Shanghai, outlines the path to making profitable, low-emissions steel and describes how a combination of falling hydrogen costs, cheap clean power, and increased recycling could reduce emissions to net zero, even while total output increases.

By 2050, green hydrogen could be the cheapest production method for steel and capture 31% of the market. Another 45% could come from recycled material, and the rest from a combination of older, coal-fired plants fitted with carbon capture systems and innovative processes using electricity to refine iron ore into iron and steel. This would be a dramatic shift in the type of furnaces and fuels used to produce steel. Today, around 70% of steel is made in coal-fired blast furnaces, with 25% produced from scrap in electric furnaces, and 5% made in a newer, typically natural gas-fired process known as DRI, or direct reduced iron. Converting a significant portion of the fleet to hydrogen would require more DRI plants and more electric furnaces. Blast furnace production would fall to 18% of capacity in this scenario.

“The steel industry cannot afford to wait for the 2040s to start its transition,” said Julia Attwood, head of sustainable materials at BNEF and lead author of the report. “The next ten years could see a massive expansion of steel capacity to meet demand in growing economies, such as India. Today’s new plants are tomorrow’s retrofits. Commissioning natural gas-fired plants could set producers up to have some of the lowest-cost capacity by retrofitting them to burn hydrogen in the 2030s and 2040s. But continuing to build new coal-fired plants will leave producers with only bad options toward a net-zero future by 2050.”

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