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Steel, Hydrogen and Swedish GHG emissions

A previous article in JTZC compared GHG emissions in Australia with those of Sweden (1).  Sweden has a relatively low per capita GHG emissions of 5.1 tonnes of CO2(eq)/year while Australia’s 22.0 tonnes CO2 (eq)/year is among the highest in the developed world. To understand the reasons for this wide difference check out the original post (1).  

Sweden is looking to further reduce their emissions announcing an ambitious project aimed at eliminating emissions from their domestic steel industry.  Steel production is responsible for 10% of Swedish emissions and obviously these need to be eliminated if Sweden is to reach net zero by 2050.  Conventional steel making uses coke, produced from metallurgical coal, to “reduce” iron oxide into metal.  As shown in the reaction below, converting iron oxide (Fe2O3) to metallic iron (Fe) produces CO2 as a by-product. 

2Fe2O3 + 3C = 4Fe + 3CO2

Replacing coke with hydrogen allows iron to be produced without generating CO2.  

Fe2O3 + 3H2 =2Fe + 3H20

Swedish steel maker SSAB (Svenskt Stål Aktiebolag or Swedish Steel Corporation) has announced that it intends to switch from a coke based process to a hydrogen based process as outlined in Figure 1 below

Figure 1 Schematic of the “direct reduction” of iron ore using hydrogen (2)

Note that the hydrogen will be “green”, produced by the electrolysis of water using zero carbon electricity from Hydro and Nuclear plants (3).  The sponge iron produced from this  process is combined with steel scrap and melted in an arc furnace.  As is the case with many decarbonisation pathways,  Swedish green steel relies on electrifying as much of the process as possible and using green hydrogen produced from electricity where necessary.

All of this sounds very encouraging but the accompanying timeline from the green hydrogen consortium is a bit sobering.  SSAB is targeting 2045 as the year when all of its steel production will be fossil fuel free.  That’s before 2050, but not by much

SSAB only produces 8.8 million tonnes of steel, a tiny fraction of the annual global output of 1.8 billion tonnes but the timeline outlined above suggests converting to hydrogen based smelting won’t necessarily happen quickly or easily.  Hopefully other steelmakers have started to plan similar work – the production of steel is responsible for about 7% of global GHG emissions and net zero won’t be possible without a major shift away from conventional steel making to green/hydrogen based processes.  

Herein lies a source of the angst for climate advocates.  While using hydrogen is the obvious  decarbonisation pathway for steel production, at an industrial scale no-one is really doing anything to actually reduce emissions.  This reflects the fact that the cost and effort needed to go through the pilot plant operations, development and troubleshooting, customer trials and qualification steps as well as the construction of major plant and equipment is significant and without a forcing mechanism steel makers have no incentive to make this step.  They all know that output from first generation green steel smelters is not going to be cost competitive with that from massive conventional blast furnaces in Japan, Korea and especially China.  Not without significant subsidy and support.

Japan may provide some cause for optimism, it is very committed to hydrogen production and is perhaps the most likely of the steel majors to convert some of its conventional blast furnace capacity to hydrogen.  Even for the Japanese, however, this will be difficult without some guarantee that low emissions steel can be economic – i.e. sold at a price that covers costs.  Will carbon tariffs provide this guarantee or will climate sensitive customers commit to only sourcing steel produced without metallurgical coal?  

From an Australian perspective, the Swedish announcement won’t come as a surprise or obvious good news.  As a major supplier of metallurgical coal the announcement is an early warning that the industry is in decline.  Not this year or even next decade but probably starting the decade after that if the SSAB timeline is to be believed.  Australia, like Sweden, has a small domestic steel making industry so has the option of also taking the hydrogen route or simply shutting its smelters and importing iron and steel from overseas.  One wonders if being completely reliant on imports for such an important  commodity as steel will be politically acceptable in twenty years?  If so then our steel makers have some work to do – starting perhaps by lobbying governments for subsidies and support.

Australia has another potential angle, some climate commentators including former Chief Scientist Alan Finkel (3) have highlighted that Australia has the wind and solar potential to be a major green hydrogen producer meaning it could switch from being the major global metallurgical coal supplier to a major hydrogen supplier particularly for existing asian customers.  Finkel, in fact, wants Australia to kick start hydrogen exports by using coal and natural gas to produce “blue” hydrogen before converting to green hydrogen when enough wind and solar have been installed.

The SSAB announcement highlights that for a country like Sweden with relatively low GHG emissions further reductions need to come from sectors where reductions will be difficult and require major technical innovation and expenditure.  Importantly, Sweden is at the point where converting to renewables is no longer the pathway to meaningful reductions.  Australia, on the other hand, can get major emission reductions by decarbonising its power sector and encouraging a significant roll out of electric vehicles.  

It will be interesting to see if green steel is a curse or a blessing for Australia.  While it will clearly be challenging for coal miners and their communities, technical leaders such as Finkel want Australia to start developing the infrastructure for hydrogen exports as soon as possible to capture early market share as the use of hydrogen grows.  There are others, however, who want to focus on a rapid roll out of wind and solar power generation that guarantees 100% “green” hydrogen (4).  

Decarbonisation and positioning corporate and national interests to prosper in a zero carbon world will require long term planning and inevitably massive investments in new processing capability.  Often this will mean discounting much of the short term rhetoric that can dominate the climate debate.  Sweden has taken an important step on its journey to zero carbon, what this means for Australia is not yet clear.

  1. https://journeytozerocarbon.com/?p=375
  2. SSAB-Investor-presentation-May-2020.pdf
  3. https://journeytozerocarbon.com/?p=442
  4. https://www.boilingcold.com.au/blue-hydrogen-a-risky-path-for-australia-in-global-clean-fuel-race/
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