Steel production accounts for 8-10% of total global CO2 emission. It has been estimated zero-CO2 emission steel production can be achieved by 2050 with investment of ~US$280bn. This includes capacity enhancement and low emission retrofitting.
Steel production utilising green
hydrogen could be the cheapest production method by 2050 and could capture
30-35% of the global market. The cost of green hydrogen production is expected
to fall by 60% between 2020 and 2030.
Competitive steel production with
green hydrogen could be achieved with availability of green hydrogen at less
than US$2/kg. This is estimated to keep the rise in overall steel production
cost within 14-18%.

Decarbonising the steel industry
could require 60Mtpa of green hydrogen, requiring development of electrolyser
capacity of 600-650GW by 2050. This is a more than 450-fold increase in global
installed electrolysers, which sits 1,400MW in 2022. For the operation of these
electrolysers, up to 1,850GW of renewable energy is required to produce green
hydrogen.
48-56kWh is required to produce
1kg of hydrogen, and 50-52kg of hydrogen is currently required to produce 1t of
steel. In the case of Germany (the EU's largest steel producer), it would
require ~102TWh of renewable energy to fully decarbonise the country’s annual
production of 43Mt of steel. This 102TWh of additional electricity demand would
correspond to a 18-22% increase in the total demand for electricity in Germany.
Demand for low carbon steel is
expected to increase by 240% by 2030 from 83Mt in 2021.
Demonstrating the demand for
low-carbon steel, Ford in Europe has signed a MOU with Salzgitter Flachstahl
GmbH, ThyssenKrupp Steel Europe AG and Tata Steel Nederland B.V. to secure
supply of low carbon steel. Ford targets to use low carbon steel in its
all-new, medium-sized crossover to be built at the Cologne Electrification
Center in Germany starting from 2023.
Ford previously committed to a 10% use of
carbon neutral steel by 2030 by joining the First Movers Coalition earlier this
year. The First Movers Coalition is a global initiative harnessing the
purchasing power of companies to decarbonize industrial sectors that currently
account for 30% of global emissions.
The BMW group has signed an
agreement with Salzgitter AG for delivery of low-CO2 steel, BMW plans to use
the steel in the Group’s European plants from 2026 onwards. The group has also
signed a delivery contract with H2 Green Steel for CO2-reduced steel.

The Green Steel Tracker gathers
public announcements on low-carbon investments in the steel industry. The
Tracker currently presents 47 projects across 17 countries across a range of
different decarbonisation technologies. About two thirds of the projects are in
Europe where the largest investments are occurring.
Swedish companies have announced
the largest share of investment across 6 projects (US$37bn), followed by a
South Korean company (US$8.8bn) and 11 projects announced by German firms
(US$0.8bn). The five largest steel producing companies (ArcelorMittal, Baowu,
Nippon, HBIS and POSCO) have at least one project on the Tracker’s list.
Swedish companies have announced
the largest share of investment across 6 projects (US$37bn), followed by a
South Korean company (US$8.8bn) and 11 projects announced by German firms
(US$0.8bn). The five largest steel producing companies (ArcelorMittal, Baowu,
Nippon, HBIS and POSCO) have at least one project on the Tracker’s list.
Sweden
H2 Green Steel is leading Swedish
green steel manufacturing. It has signed a 14TWh power purchase agreement (PPA)
with Norwegian Statkraft, for an 800MW electrolyser at its Boden site in
Sweden. The PPA will provide 2TWhpa of renewable electricity from 2026 to 2032.
2TWhpa is 30% of the 800MW electrolyser’s power requirements.
The electrolyser will provide
hydrogen for steelmaking. The Boden plant will produce 2.5Mtpa of green steel
from 2024 and 5Mtpa by 2030. The company targets a production process with up
to 95% less CO2 emissions than traditional blast furnace steelmaking.
Demonstrating interest in
hydrogen-based Green Steel developments, H2 Green closed its series A equity
round of US$84m in May 2021 and announced the first close of its series B round
of US$184.7m in August 2022. The final close of the series B round added
US$68.4m from Hitachi Energy, Kobe Steel and Kinnevik.
H2 Green
Steel also announced that it has received support from leading European
financial institutions for its US$3.46bn debt financing. It has completed conditional commitment
letters for US$3.26bn in senior debt with AB Svensk Exportkredit (SEK) and
commercial banks BNP Paribas, ING, UniCredit, Societe Generale and KfW IPEX-Bank.
European Investment Bank has provided board’s approval for US$740.41m of senior
debt funding for the project. Export credit agencies, including Euler Hermes
and the Swedish National Debt Office have also issued letters of intent to
provide export credit-linked guarantees of US$1.48bn and a green credit
guarantee of US$0.99bn respectively for H2 Green Steel’s senior debt.
Germany
German conglomerate Thyssenkrupp
is investing over US$2bn to accelerate its green transformation. The company
will construct a hydrogen-powered direct reduction plant in Duisburg, Germany.
The hydrogen-powered plants will replace coal-based blast furnaces.
The DRI
plant will have a production capacity of 2.5Mt. Iron will be directly reduced
with hydrogen. The plant will avoid up to 3.5Mt of CO2 emissions. Awarding of the
contract for the construction of the DRI plant is expected by the end of 2022.
Production of DRI will start in 2026.
Salzgitter, a steel manufacturer
based in Germany, received approval for US$990m from the European Commission
for its SALCOS program. Salzgitter will receive US$691m from the German federal
government and US$296m from the Federal State of Lower Saxony. Along with this,
Salzgitter already approved US$714m for the first stage development.
The company’s SALCOS program is
focussed on steel production in three stages until 2033. The first stage of
steel production will start with a capacity of 1.9Mtpa by the end of 2025. Two
direct reduction plants and three electric arc furnaces will sequentially
substitute the blast furnaces and converters. The hydrogen-based path will
replace the existing coal-based steel production. In the process around 95% of
current carbon emissions, 8Mtpa, will be eliminated.
Additionally, Salzgitter and
Sunfire successfully completed the EU-funded ‘GrlnHy2.0’ project by producing
100t of green hydrogen to produce green steel. Since 2019, the project partners
have been operating a high-temperature electrolyser with an electrical
connected load of 720kW on the premises of Salzgitter Flachstahl. The green
hydrogen produced is fed directly to the hydrogen grid of Salzgitter
Flachstahl.
South Korea
POSCO Holding has announced its
plan to invest US$14bn in green steel technologies. POSCO plans to produce
2Mtpa green hydrogen by 2040 and 5Mtpa by 2050. POSCO aims to achieve green
hydrogen sales of KRW30tn (US$23.1bn) by 2050.
POSCO plans to build two electric
arc furnaces in 2025 and 2027. Hydrogen-based steel making is expected to start
with a demonstration plant of 1tpa capacity by 2028.