By Vijay Jayaraj
Steel is essential in modern society, providing homes, factories, bridges, vehicles and all kinds of machinery and other infrastructure. Since 2001, global crude steel production has doubled and demand will continue to rise in the coming decades.
In a climate eager to rush to “decarbonize” heavy industry, hydrogen-based steel manufacturing is being touted as a “clean” alternative to traditional coal-based processes for steelmaking. With seemingly little forethought, policy makers, environmentalists, and some industry leaders are promoting hydrogen fuel manufacturing with the same fervor they’ve reserved for solar panels.
However, the shift to hydrogen steelmaking risks undoing centuries of progress in efficient production. The high cost, technological challenges, and limited scalability of hydrogen-based processes are guaranteed to make them less viable than coal-based steelmaking.
The Evolution of Steelmaking Efficiency
The steel industry has been the cornerstone of industrial development, and its evolution is a testament to human ingenuity and technological progress. At the beginning of the 20th century, the introduction of the basic oxygen furnace revolutionized the production of steel.
Over the decades, continuous improvements in blast furnace technology, process control and energy recovery have resulted in significant improvements in productivity and energy efficiency. China continues to dominate production and export capacity, with industrial giants like the Baowu Group at the forefront. Other important steel producers include Nippon Steel & Sumitomo Metal Corp. Japan, India’s Tata Steel, South Korea’s POSCO and Europe’s ArcelorMittal.
Today’s integrated steel plant is a remarkable technique, capable of producing millions of tons per year with incredible efficiency. The best blast furnaces can achieve energy efficiency of up to 70%, a figure that seemed unattainable just a few decades ago. The risk of rejecting this tried-and-tested method for a relatively untested hydrogen-based process cannot be underestimated.
Risks of Hydrogen Steelmaking
The production of hydrogen-based steel, especially the direct process of reduced iron using hydrogen, is presented as a solution to climate change. But the production of so-called green hydrogen, which is produced with “renewable” energy, can cost twice as much as coal.
Conservative estimates indicate that the production of hydrogen-based steel can be 20-30% more expensive than traditional methods. These cost differences are insignificant in industries with tight margins and strong global competition.
The increased cost will ripple through the economy, affecting construction, automotive manufacturing, and countless other industries that rely on affordable steel.
Rystad Energy said “green” steel can be made competitive only by imposing heavy taxes on coal-based steel or by allocating huge subsidies to steel producers.
Additionally, hydrogen created through electrolysis requires energy. To produce enough to meet the needs of the steel industry will require a massive expansion of renewable energy capacity, beyond current projections.
While pilot green hydrogen projects exist, they have not been proven on an industrial scale. In contrast, one of the most significant advantages of coal-based steel is the ability to operate on a massive scale.
Modern blast furnaces can produce up to 400 tons of steel per hour, operating continuously for years between major maintenance periods. This scale of production is essential to meet global steel demand, which will reach 1.95 billion tons in 2021 and is expected to grow.
An abundance of coal and an established supply chain enable this steady level of production. Capable of supplying the steel sector with approximately one billion tons of coal per year, the industrial infrastructure for mining, transporting and using coal in steelmaking has been developed and refined for more than a century.
On the other hand, the creation of hydrogen-based steel is one of the most absurd proposals for those who fear global warming, which will have almost no effect on the temperature of the earth, but will slow down economic growth and infrastructure development in our modern world.
This comment was first published on RealClearMarkets on August 23, 2024.
Vijay Jayaraj as a Research and Science Associate CO2 CoalitionArlington, Virginia. He holds a master’s degree in environmental science from the University of East Anglia, England, and a postgraduate degree in energy management from Robert Gordon University, England.
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