Importing green hydrogen-based sponge iron from renewable-rich countries could reduce shipping volumes by nearly 75% compared to producing it locally with imported hydrogen and iron ore, according to new SteelWatch analysis.
The steel decarbonisation advocacy group said that local direct reduced iron (DRI) production in regions like northern Europe would take around four times more shipping capacity for hydrogen and iron ore than shipping the end product.
It said the inputs for a local 2.5 million tonne per annum (mtpa) direct reduced iron (DRI) plant total of 3.5 million cubic metres of hydrogen and iron ore would need to be imported.
In stark contrast, it estimates shipping 2.5 mtpa of green sponge iron from an overseas DRI plant, with locally available hydrogen and iron ore, involves moving just 0.75-1 million cubic metres of material.
Furthermore, it suggests beyond shipping, renewables-abundant nations like Australia, Canada, South Africa, Spain and Brazil will need fewer renewable energy production assets to generate the same capacity.
“RMI estimates cost savings of around 30% per tonne of steel, compared to producing DRI in the UK for example,” the analysis reads.
“The costs of building DRI plants and securing electrolysers will be pricey in any country, but as the unavoidable transformation from dirty coal-based production to fossil-free steel accelerates, steelmakers have to be smart about where to find savings,” said SteelWatch Executive Director, Caroline Ashley.
“Importing green iron from our trading partners and allies to supplement the feed to UK and EU electric arc furnaces is the most obvious opportunity that is simply not getting publicly discussed.”
Europe has been keen to develop local hydrogen-based steelmaking as a way to futureproof its steel industry and create jobs. The EU is due to release its Clean Industrial Deal on Wednesday (February 26), which will act as a blueprint for the bloc’s competitiveness and decarbonisation.
However, SteelWatch believes green DRI imports can go hand in hand with those desires.
“Companies and policymakers alike need to work out how much green iron can be produced ‘at home’ and start building partnerships to import the rest,” Ashely said.
“To ensure this critical industry supports European economies with quality steel and decent jobs, we need to get out of a country-by-country mindset and embrace a unified, end-to-end approach.”
The analysis follows several high-level backtracking on European green hydrogen DRI plans, which have raised questions about the pathway’s commercial viability.
ArcelorMittal in November froze final investment decisions (FIDs) on its decarbonisation projects, including European hydrogen DRI plants for which it secured €3.5bn in subsidies.
Citing high green hydrogen costs and a lack of availability, as well as slow policy progress, the world’s second-largest steelmaker said there was “limited willingness” to pay for low-emissions steel.
Read more:ArcelorMittal freezes green hydrogen DRI projects, blaming slow policy progress
And despite the incumbent government seeing green hydrogen as a way to revive its steel industry, Germany’s Chancellor-in-waiting Fredrich Merz, during his election campaign said he did not believe the “rapid switch to hydrogen-powered steelworks will be successful.”
Despite those setbacks, Sweden’s Stegra is powering ahead in constructing its inaugural 5 mtpa green DRI-based steel plant with 700MW of onsite electrolysis – having secured offtake agreements with automotive majors.
Will DRI be key to producing sustainable steel?
Steel production accounts for 8% of global carbon dioxide (CO2) emissions1, making it one of the most polluting industries. With around 1.4 tonnes of CO2 emissions per tonne of steel produced2, against a backdrop of increasing environmental concerns, the need to clean up the process that produces a vitally important material only continues to grow.
Steel, in the most basic sense, is made by mixing carbon and iron at temperatures above 1,400˚C. Primary steelmaking uses a product dubbed Pig Iron – smelted iron from ore, which contains more carbon than needed for steel.
Steelmakers can use a system that bubbles oxygen through molten pig iron, creating equal oxidisation throughout the metal, in doing so, removing excess carbon, while also vaporising or binding impurities made up of elements such as silicon, phosphorus and manganese.
The systems, known as blast furnace-basic oxygen furnaces (BF-BOF), are one of the leading contributors to CO2 emissions from steelmaking. The direct emissions from integrated BOF plants typically amount to 1.8-3.0 tonnes of CO2 per tonne of steel when coal-fired, and 0.7-1.2 tonnes of CO2 per tonne of steel if gas-fired3.
However, a system first industrialised in the 1960s that uses fuels to react with oxygen in iron oxide pellets to produce highly metallised reduced iron for steelmaking, looks set to benefit from green hydrogen, leaving just steam as the residual, and potentially reducing CO2 emissions by over 95% – the direct reduction of iron – DRI…
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