According to the IEA, the global steel industry’s CO2 emissions leaped from approximately one billion tons in 2000 to two billion tons in 2018. This is because the steel sector’s share grew from 20% to 25% between those years and the plants use fossil fuels to power production.
Japan’s Mitsubishi Heavy Industries hopes to improve the situation. It’s almost done with constructing the world’s largest net-zero carbon emissions steel plant in Austria. The pilot project will be part of Austrian steelmaker Voestalpine’s complex and run by a British unit of Mitsubishi Heavy. The trial will begin this year. It will produce 250,000 tons of steel product a year.
The plant’s next-generation equipment will use hydrogen instead of coal in the reduction process for iron ore. Most of the CO2 emissions in steelmaking are generated during iron ore reduction.
Mitsubishi Heavy’s plant adopts a hydrogen-consuming reduction process called direct reduced iron (DRI). DRI equipment produces less steel than blast furnaces typically used, and they require half the investment (approximately $4.8 billion vs. $9.6 billion). However, since DRI produces less steel, low-cost hydrogen will be essential for attaining the same level of cost-competitiveness as blast furnaces.
The current market costs for hydrogen stand at about 100 yen per standard cubic meter. The government plans to reduce the cost to 30 yen per standard cubic meter through mass production by 2030. Unfortunately, that may not be enough. An executive at a large steelmaker says the level needs to go below 10 yen for DRI to be viable in the steel industry.
Nevertheless, other companies are perusing the hydrogen-fueled steelmaking process. The world’s leading supplier of steelmaking equipment, Germany’s SMS, and runner-up Danieli of Italy are among them. Also, Luxembourg-based steelmaker ArcelorMittal plans to build a German pilot hydrogen steel plant this year, and Germany’s Thyssenkrupp and Salzgitter are investing in DRI.
Mitsubishi Heavy, coming in as the world’s third-largest steelmaking equipment supplier, is taking it a step further by securing a hydrogen supply chain. It has already purchased a stake in a Norwegian outfit that makes hydrogen-producing equipment and plans to acquire stakes in hydrogen producers in Australia, among other places. The company will oversee equipment engineering and construction and the supply of hydrogen once operational. In doing so, it will capture the steel industry’s demand for hydrogen as it decarbonizes.
Over the summer of 2020, the European Union announced an initiative to invest $572 billion (470 billion euros) in hydrogen by 2050. Hydrogen steel plants are expected to receive support along with the growing number of businesses in Europe that deal in hydrogen.
