Forging ahead: harnessing hydrogen for greener steel
Finding green steel solutions is a critical piece of the greenhouse gas reductions puzzle. Steelmaking is an energy intensive industry that accounts for 6% of the global GHG emissions. An important decarbonization solution is the use of hydrogen as a heat source and reducing agent. SEP’s research shows that growth in green steel could drive a 20% increase in demand for hydrogen for all steel applications.
A VERY SHORT PRIMER
Steel production requires both the production of iron as the input to the steelmaking process, and the production of the steel itself.
BF (blast furnace) and DRI (direct reduction) are the two primary ironmaking processes. Using scrap can replace or supplement these processes.
BOF (basic oxygen furnace) and EAF (electric arc furnace) are the two primary steelmaking processes.
Common production options are to use a blast furnace with a basic oxygen furnace (BF-BOF), the more conventional process, or an electric arc furnace with direct reduction (DRI-EAF). Energy is required both as a heat source and as a reducing agent to remove oxygen from iron ore to extract pure iron metal.
HOW HYDROGEN HELPS
Steel is a great application for hydrogen because it is difficult to electrify, unlike some other applications such as passenger vehicles. Steelmaking requires high temperatures, chemical reductions, and energy density, all of which are challenging to achieve with electrical energy sources. That’s where hydrogen comes in.
As the graph below shows, using electric-arc furnace (DRI-EAF) production versus blast furnace (BF-BOF) production has an immediate emission reduction impact, as well as greater potential for additional reductions. Using hydrogen-rich fuels can drop emissions down substantially, and utilizing “green” hydrogen from renewable sources rather than the higher-carbon “blue” or “gray” hydrogen cuts out over 90% of CO2 emissions.
IMPACTS AT SCALE
The US is dramatically ahead of other countries in its transition to EAFs. Globally, over 70% of steel production occurs in BF-BOF facilities. This ratio is flipped in the US steel industry, where 70% of production is via EAF facilities and only 30% via BF-BOF production. As a result, the US has lower CO2 emissions intensity compared to other major steel producing countries.
As a side note, the shift toward EAFs actually occurred not for the sake of decarbonization but because EAFs lend themselves to smaller production sites or “mini-mills,” for which the start-up costs and overall economics were more favorable.
DRIVING HYDROGEN DEMAND
The map below shows EAF mills in red, BF mills in blue, and hybrid mills in purple. EAFs clearly dominate. The size of the dots indicates the total potential hydrogen demand in each location.
SEP North American Hydrogen Market Model database, May 2024
SEP’s modeling drills into each plant to determine the amount of hydrogen that could be used to displace a fossil fuel used either as a heat source or reducing agent. This is helpful from a project development perspective, not only to get a sense of the current demand landscape, but also to project what it might look like 5, 10, or even 20 years out.
The big picture is impressive. If all North American plants used hydrogen as a replacement for fossil fuels for heat or as a reducing agent, that would equate to nearly 3.8 million tons of hydrogen per year. This would have substantial climate benefits, especially if the hydrogen were all clean hydrogen as opposed to gray. For context, the total North American hydrogen market is 15.2 million tons, so the 3.8 million tons of potential use for steel could increase hydrogen demand by over 20%.
Meanwhile, SEP has also identified 68 startup and growth companies working on green steel processes. The majority of them are working on scrap management, EAF techniques, hydrogen, and waste recycling. As these technological advances move forward, they should help advance the efficiency and emissions reduction potential of green hydrogen.
Learn more about green steel developments by downloading our Green Steel Market & Technology executive summary, or the full report. You can also learn about our Hydrogen Practice Area, including the hydrogen market data systems, membership in the Hydrogen Consortium, and our analysis work.