Green Steel Ramping Up

December 3, 2020

Rocky Mountain Institute:

A recent announcement by Europe’s largest iron ore producer, LKAB, may seem like a technical detail only relevant for metallurgists and steel nerds. However, the company’s plan to invest up to 400 billion kronor (US$46 billion) over the next 15–20 years to expand into an emissions-free iron process being piloted in Northern Sweden is big news for Sweden, the global steel industry, and future generations around the world.

From a climate change perspective, steelmaking is considered one of the “hard-to-abate” sectors. Given that the industry contributes directly to 7 percent of all global greenhouse gas emissions, it is impossible to ignore it. But in contrast to other areas of our society—such as automobiles or power generation—technical solutions to replace conventional methods have seemed either quite expensive or simply unknown. However, this view has rapidly changed over the course of only a few years, and Swedish industry has played a pivotal role in this shift.

In 2016, the HYBRIT project was launched as a joint venture between the utility Vattenfall, iron ore producer LKAB and steel maker SSAB. Both Vattenfall and LKAB are owned by the Swedish state, while SSAB was privatized in 1994. And with the political backing and de-risking of the early stage of the HYBRIT project, it can be argued that HYBRIT is the outcome of a long-standing political intent to ensure a competitive basic industry sector in Sweden. Looking forward, with customers, investors and policymakers increasing pressure to adhere to the Paris Agreement, reducing greenhouse gas emissions is a critical element of maintaining competitiveness.

The process that HYBRIT is currently piloting in Luleå, a small town in northern Sweden, holds the key to unlocking dramatic CO2-emissions reduction for steelmaking. By using hydrogen instead of coal as a “reduction agent”—to remove the oxygen from the iron in iron ore—the most critical step in the steel value chain becomes virtually free of carbon emissions. These steel plants can replace polluting blast furnaces with a process that emits water vapor instead of CO2.

On November 23, LKAB announced that it intends to integrate forward in the steel supply chain and start producing “sponge iron” as a value-added product from its current pellet product, using the HYBRIT process. This pivot in business strategy has major significance for the global steel industry.

There are three reasons LKAB’s announcement is big news for the global steel industry as well as the economy at large:

  1. LKAB will single-handedly contribute to greenhouse gas reductions corresponding to more than 50 percent of Sweden’s total footprint by obviating the need for blast furnaces—many of which are located in other nations
  2. The hydrogen required will significantly contribute to bringing down the cost of this zero-carbon fuel, which in turn can help the economy to address emissions from other sectors such as aviation or shipping
  3. While the process trials are still ongoing (the pilot plant is producing sponge iron, but its scaffolding has hardly been taken down) the confidence demonstrated by this announcement clears up any questions as to whether this technology will be commercially scalable

In the big picture, while this constitutes a significant step towards a decarbonized steel industry, the impact corresponds to less than 1 percent of the emissions from the global steel industry. But even though it’s unrealistic to expect that the whole steel industry will turn upside down to adopt this new technology given the scale of investment in existing blast furnaces, other iron ore companies can of course replicate LKAB’s forward integration.

The main iron ore sources in the world, in Australia, South Africa, and Latin America, have access to drastically cheaper renewable energy than Sweden. This makes for an even more competitive product using this highly electrified process. Indeed, in these locations zero-carbon steel can be competitive with blast furnaces completely without subsidies.

While this kind of technology is promising, producing enough “green” hydrogen to supply uses like this, as well as, potentially, replacing fossil gas when needed as a source of dispatchable electricity, will be challenging.

Rocky Mountain Institute:

While H2 is less dense than methane (the main component of natural gas) measured in weight per cubic foot, it produces more energy per unit of weight, with about 125 MMbtu/ton compared with approximately 50 MMbtu/kg for natural gas. Therefore, a transition to 100 percent hydrogen in all US gas turbines currently installed would require a whopping 88 million metric tons of H2. This can be compared with the current total US hydrogen market—which is mostly for petrochemical and fertilizer end-uses—of 10 million metric tons.

But more importantly, the majority of the existing hydrogen is produced from natural gas without carbon capture, effectively not providing any decarbonization at all to power generation. The production capacity for clean hydrogen (“green” or “blue”) is much smaller. A recent study by the Institute for Energy Economics and Financial Analysis suggests that all the hydrogen electrolysis projects currently planned in the United States will be able to produce 126,000 metric tons of hydrogen per year.

Substituting only 15 percent of the current capacity of US gas plants with hydrogen as a fuel would mean demand for 13 million metric tons of hydrogen annually—assuming comparable turbine efficiencies. This would translate to roughly 100X the capacity of hydrogen electrolysis that is currently being built.

6 Responses to “Green Steel Ramping Up”

  1. mboli Says:

    Use electricity to make hydrogen, then use the hydrogen to generate electricity, most of the original electricity is gone. That’s why batteries have become popular. The round-trip efficiency of batteries is much higher.

    I hate it when I read articles positing that hydrogen could be used for electrical generation.

    But using hydrogen for reducing iron ore is a different story that makes more sense.

    Reduced carbon is found in nature as coal, it is oxidized to CO2 in processing the ore into metal. Truly sustainable operation would mean not capture and storage, but reducing the CO2 back to carbon. An interesting mental exercise, nobody will ever require that.

  2. Majura Wombat Says:

    it produces more energy per unit of weight, with about 125 MMbtu/ton compared with approximately 50 MMbtu/kg for natural gas.

    This does not make sense as it currently stands. 125MMbtu/ton comes out at 0.125MMbtu/kg which is much less that 50 MMbtu/kg – either “more” should be “less” or one of the units is wrong.

    • Keith McClary Says:

      They probably meant “tonne”, so both could be wrong (and that doesn’t even count the wrongness of mixing BTUs and metric).

      I found: “Hydrogen (H2), 120-142 MJ/kg. Methane (CH4), 50-55 MJ/kg”

  3. doldrom Says:

    I thought they had tons of hydro electricity up there?

  4. Keith McClary Says:

    Here in the southern Alberta Rockies there are three companies proposing metallurgical coal mines. It will take a few years to get their permits and get up and running, and then twenty years to get their investment back and make a profit. I wonder if HYBRIT has them re-thinking their plans?

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