Steelmakers are making efforts to shift away from traditional coal-based production methods, which contribute significantly to global carbon emissions.
While green hydrogen is a promising solution for the future of steelmaking, its high cost and deployment challenges limit its potential as a near-term alternative to coal.
The steel industry is exploring alternative solutions to reduce its carbon footprint, such as switching from coal-based production to gas or recycling “scrap,” a transitional step toward green hydrogen.
Gas-based steelmaking could cut emissions by 75%, but it would prolong dependence on fossil fuels, according to a report seen by the Washington-based Energy Research Unit.
While recycling steel scrap could reduce emissions from steelmaking, it also has cost benefits, but it could ultimately hamper production quality.
Why gas-based steelmaking?
The steel industry is reluctant to embrace zero-emissions production plans due to uncertainty surrounding the green hydrogen market, so the industry is looking for low-emission alternatives as a transitional solution for green steel production.
While some steelmakers are confirming a future transition to green hydrogen, they are less transparent about their gas-based plans for at least 15 years, according to a report by Dutch investment bank ING.
While gas and hydrogen are similar in reducing iron ore to pure iron for different types of steel, gas is still a cheaper option than green hydrogen.
The cost of making steel using gas is €0.7 ($0.8) per kilogram in Europe, which is more than €1 ($1.12) per kilogram lower than the estimated cost of steel based on green hydrogen.
While gas-based steel production is more expensive than coal, the price gap is smaller compared to other alternatives to coal, and gas is supported by more established technologies and infrastructure than green hydrogen.
Gas as a transitional stage
The availability and lower cost of natural gas makes it a viable transitional stage to green hydrogen-based steelmaking.
Modern gas-based steel plants are designed to be flexible and dual-fuel, so they can switch to green hydrogen when it becomes widely available and affordable, which is expected to happen between 2035 and 2040, according to the Energy Research Unit.
Switching steelmaking from coal to gas could cut emissions from 1.9kg to 0.4kg of CO2e per kilogram of steel produced.
While this shift is climate-friendly and supports Europe’s move away from coal in particular, it increases the region’s reliance on gas, so green hydrogen would be a more sustainable solution.
Quality a hurdle to scrap recycling
Using scrap recycling in steelmaking would reduce the sector’s emissions, while electrifying scrap steel smelting operations could help reduce the carbon footprint.
Compared to coal-based steel production, which generates 1.9kg of CO2e per kilogram of steel, recycled steel produces just 0.1kg.
While recycling “scrap” can be as effective a way to reduce steelmaking emissions as green hydrogen, the presence of impurities – such as copper, zinc and chromium – can compromise the quality of the steel produced.
As a result, recycled steel is well-suited for applications such as railway track construction, but not for high-demand applications such as cars and precision machinery.
The UK is planning to phase out coal-based steelmaking, replacing it with electric furnaces using “scrap”, but this approach has yet to gain traction in Europe.
European steelmakers are reluctant to adopt this strategy, as competition in lower-quality steel markets is fierce, so they are prioritising maintaining product quality.
