The world’s largest steelmaker has shelved plans to begin introducing green hydrogen into the industry, amid volatility in cost estimates and the future of the clean fuel in Europe.
According to the hydrogen sector updates of the Washington-based energy platform, ArcelorMittal had prepared a package of projects aimed at reducing carbon from its portfolio, including direct reduction plants that run on green hydrogen as a fuel.
Ahead of making final investment decisions on these projects, the company announced that they would be postponed from their previously scheduled date of next year, 2025.
The application of direct reduction technology for iron based on hydrogen fuel is the only available option for the industry to decarbonize, especially with its integration into furnaces and smelters powered by renewable electricity.
The world’s largest iron and steel company has based its decarbonization plan on integrating green hydrogen into the industry on three key factors that together facilitate investment: policies, technologies, and market developments.
Looking at the three factors of ArcelorMittal’s plan, policymakers have a desire for producers to use renewable hydrogen to produce green steel, but the estimated cost of producing the clean fuel in Europe will push up steel prices.
In detail, green hydrogen prices in Europe exceed €5 ($5.29)/kg, and covering this cost would require the buyer to pay more financial burdens.
Green steel producers are seeking this in order to reduce carbon, which is estimated to be between 7 and 8% of total global emissions.
In traditional methods known for high pollution levels, iron is produced by burning carbon-rich coke in blast furnaces to generate high heat that is used to extract iron and separate it from iron oxide ore.
As for clean production, it is based on the use of green hydrogen in direct iron reduction facilities and installations, which allows the production of steam (the high temperature needed to separate iron from the ore) from the reaction of hydrogen with oxygen.
Three years ago, ArcelorMittal targeted operating direct iron reduction plants with hydrogen fuel by next year 2025 in: France, Spain, Germany and Belgium, in preparation for starting operations the following year.
The company expected at the time that the cost of green hydrogen would fall from $ 3.5-5 / kilogram, to $ 1.5 / kilogram by 2030.
Despite the low cost that the company expected per kilogram of hydrogen at the end of the decade, it made this conditional on companies and producers receiving support to reduce the price per kilogram to $ 1, and it began receiving government grants.
However, the company acknowledged that current European policies and the energy market do not match its previous expectations, with green hydrogen being seen as a viable fuel for commercial and industrial uses slowing down.
The world’s largest iron and steel company estimated that cost and policy challenges have reduced its ability to meet its carbon reduction targets by 25% by the end of the decade.
Developers have floated the possibility of using natural gas in the direct reduction process of iron instead of the more expensive green hydrogen, but this option has also been questioned by ArcelorMittal.
These doubts are due to the extent to which the transitional fuel is competitive in the European market, which creates uncertainty about its reliability.
On the other hand, the European market is witnessing a slowdown in the seriousness of its adoption as an alternative clean fuel, according to the Hydrogen Insights website.
ArcelorMittal expects 2025 to witness several developments, including carbon reviews and the future of the iron, steel and metals market, according to an update published on its website.
It indicates that the results of these reviews could be transformed into an initiative with commercially applicable standards, during the phase of decarbonization of heavy and energy-intensive industries.
The company stressed the need for a comprehensive vision before making final investment decisions for projects to integrate hydrogen fuel into steel plants and direct reduction of iron, in order to ensure the competitiveness of the European steel industry.
