Steel Giant ArcelorMittal is making the transition from coal to green hydrogen, saving millions of tons of CO2 each year.
Over 1.8 billion tons of steel are produced annually worldwide, releasing nearly double that in carbon dioxide into the atmosphere. As a result, the industry accounts for 7% to 8% of global carbon emissions per year. But the world can’t get by without this ever-present metal anymore. Hence, it’s a key target in the race to net-zero by 2050.
The problem with steelmaking is that about 75% of the energy used to make it comes from coal. For example, the world produced about 1,864 million tons of steel in 2020. Each of those tons sent about 1.9 tons of CO2 into the atmosphere. So naturally, decarbonization plans involve addressing this issue – and green hydrogen is a primary candidate. The gas is emissions-free and likely to be a cost-competitive alternative within a decade.
Multinational steel giant ArcelorMittal, who’d been the world’s biggest steel producer for over a decade until it got knocked down to the world’s second-largest steel manufacturer last year, is leaping to make the transition from coal to green hydrogen. It produced approximately 5% of the world’s steel supply in 2019.
ArcelorMittal announced plans to build a full-scale zero carbon emissions steel plant. It recently dealt with the Spanish government, signing an MoU on a billion-Euro joint investment to build the new project. It’s expected to make around 1.6 million tons of high-quality zero-emissions steel by 2025.
The plant will decarbonize two critical carbon-emitting steps in the steelmaking process. One; green hydrogen will be used instead of coke (baked coal) in the iron reduction process. Two; a renewable-powered hybrid electric furnace will replace the typically coal-fired blast furnace. These changes create a steel production pipeline that’s entirely emissions-free.
However, if green hydrogen isn’t available at competitive rates by 2025, ArcelorMittal will use natural gas to power the DRI furnace (where the reduction of iron takes place). Even so, it would save about 4 million tons of CO2 emissions annually – which is almost as much as the 4.8 million tons expected with hydrogen.
Other projects under development to green the steel industry are the H2 Green Steel plant in northern Sweden and another by Mitsubishi Heavy Industries in Austria. The one in Sweden will contribute 5 million tons of high-quality zero-emissions steel annually by 2030 and boasts a budget of around US$3 billion.
Unfortunately, these two projects combined will still only produce less than 0.4% of today’s total global steel output. That shows you the magnitude of the challenge this industry faces over the next three decades.
Hopefully, these new projects will be a resounding success, and many more will follow. And like all hydrogen-based initiatives, the price of green hydrogen has to drop dramatically for such projects to realize their full potential.
Nevertheless, These projects are an encouraging indication of the increased appetite major investors have for decarbonization initiatives, which typically involve a longer wait for a return on investment and more risk than other places they could put their money.