Decarbonization is in sight among steel industry players, as many of them have declared their low-carbon emissions commitment. Steel decarbonization can be done by replacing fossil fuels in production and recycling the materials. Green hydrogen appears as the future of production methods in steelmaking industries that will help reduce CO2 emissions by approximately 95 percent.

Green hydrogen is produced from decomposing water called the electrolysis process and is powered by renewable energy; it reduces iron ore to direct-reduces-iron (DRI). According to BloombergNEF (BNEF), green hydrogen estimated to be the cheapest steel production method by 2050 and could take over the market for about 31 percent, while the other 45 percent come from recycled material and the rest are from other methods such as coal-fired fitted with the carbon-capture system.

However, the Hydrogen-based method for steelmaking might not be a practical option in some regions right now because hydrogen production itself is produced in limited capacities. The EPRS’ analysis further explains that the steel decarbonization production process causes two big challenges:

  •  To optimize hydrogen-based iron and steel production routes through pilot plants
  • Increase hydrogen production in a larger capacity and smaller costs for better efficiency
Decarbonization in Steelmaking | Steel Recycle
Scrap steel for recycling methods

Replacing fuel-fossil production with hydrogen-based might increase the steel price by about one-third, but this price disparity will likely change in the future. There are ways to fill the gap on this matter, by increasing the price of carbon emission, large-scale hydrogen-based production to roll down the electrolyser facilities and reducing renewable energy costs. Currently, European steelmaker companies are leading green hydrogen-based production by investing in pilots and large facilities to produce green steel.

Other than hydrogen-based production, the steelmaking industry could implement recycling as an immediate solution for now as BNEF stated that recycling is more cost-effective and using scrap on electric arc furnaces powered by clean electricity will cost cheaper. As the biggest steel producer, China focused on increasing steel decarbonization with recycling and energy efficiency before adopting early-stage technologies such as hydrogen and carbon capture.