Steelmaker Uses Hydrogen Instead Of Coal

The steel industry accounts for some 5-8% of the world’s carbon dioxide emissions, as well as around 10-15% of its total coal demand.

So far, however, the steel-making process has withstood engineers’ best efforts to clean it up: there are simply too few low-cost replacements of key inputs such as coking coal and coke.

Swedish company HYBRIT took a step toward changing that on Monday, August 31st. At an event attended by Sweden’s Prime Minister Stefan Löfven, HYBRIT — which is owned by steelmaker SSAB, state-owned utility Vattenfall and miner LKAB — began test operations at a pilot “fossil-free” steel-making plant.

By substituting hydrogen and zero-carbon electricity for coking coal and other fossil fuels traditionally used to make steel, the firm says it could have the first fossil-free steel on the market by 2026, even if commercial production wouldn’t come until later. Its pilot plant in Lulea, Sweden, will produce sponge iron, a crucial ingredient for its steel-making process, while carrying out tests between 2020 and 2024 to see which production processes are most efficient.

A number of Europe’s steel companies, as well as several ventures in the U.S., Canada and elsewhere, are testing methods to decarbonize steel, demand for which is set to rise around the world, potentially drastically. But HYBRIT is arguably the leader in the space: company executives are eager not to be castigated by millions of Swedes if their belching steel plants are the reason Sweden fails to meet its 2045 deadline to achieve carbon neutrality.

“With HYBRIT technology, we will eliminate carbon dioxide emissions in steel production,” said Martin Lindqvist, President and C.E.O. of SSAB. “We have the opportunity to revolutionize an entire industry and show that net zero emissions are possible. We must take that chance.”

It will be no picnic. In an earlier study, HYBRIT concluded that fossil-free steel, given current prices of electricity, coal and carbon dioxide emissions, would be 20-30% more expensive than steel made the usual way. Partly that is because the hydrogen production process will consume an enormous amount of Sweden’s electricity, which may be virtually free of fossils but still costs roughly as much as in many other European countries.

Nevertheless, as environmental regulations steadily make carbon-intensive industries more and more expensive, prices for fossil-free steel will eventually fall to competitive levels, HYBRIT believes.

Experts agree that, policy changes aside, it will be years before even the most innovative companies manage to bring prices of low or zero-carbon steel production down far enough to compete with traditional steel. In one analysis of potential ways to achieve the feat, consultants at McKinsey said that pure hydrogen-based steel production might become “cash cost competitive” sometime between 2030 and 2040 in Europe. But even in cases where cost competitiveness is eventually achieved, the report noted: “Only if customers value carbon-reduced/neutral products, and are willing to pay for decarbonization, can this shift in production technologies happen.”

Previously published in Forbes.