By Vijay Jayaraj
Steel is essential in modern society, providing us with homes, factories, bridges, vehicles and all manner of other machines and infrastructure. Since 2001, global crude steel production has doubled and the demand will continue to rise in the coming decades.
In the climate obsessed’s rush to “decarbonize” heavy industry, hydrogen-based steel manufacturing is being touted as a “clean” alternative to the traditional coal-based process for steelmaking. With seemingly little thought being applied, policymakers, environmentalists, and some industry leaders are promoting hydrogen-fueled manufacturing with an enthusiasm once reserved for solar panels.
However, a shift towards hydrogen steelmaking risks undoing a century of progress in efficient production. The high costs, technological challenges, and limited scalability of hydrogen-based processes are guaranteed to render it less viable than steelmaking relying on coal.
The Evolution of Steelmaking Efficiency
The steel industry has been a cornerstone of industrial development, and its evolution is a testament to human ingenuity and technological advancement. In the early 20th century, the introduction of the basic oxygen furnace revolutionized steel production.
Over the decades, continuous improvements in blast furnace technology, process control and energy recovery have led to significant gains in productivity and energy efficiency. China continues to dominate in production capacity and exports, with industry giants like Baowu Group at the forefront. Other significant steel producers include Japan’s Nippon Steel & Sumitomo Metal Corp., India’s Tata Steel, South Korea’s POSCO and Europe’s ArcelorMittal.
Today’s integrated steel mills are marvels of engineering, capable of producing millions of tons annually with remarkable efficiency. The best-performing blast furnaces can achieve energy efficiencies of up to 70%, a figure that seemed unattainable just a few decades ago. The risk of abandoning this tried-and-true method for a relatively untested hydrogen-based process cannot be overstated.
The Perils of Hydrogen Steelmaking
Hydrogen-based steel production, particularly the direct reduced iron process 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 suggest that hydrogen-based steel production could be 20-30% more costly than traditional methods. This cost differential is not trivial in an industry with tight margins and intense global competition.
The increased costs would ripple through the economy, affecting construction, automotive manufacturing, and countless other industries that rely on affordable steel.
Rystad Energy says “green” steel can be made competitive only by imposing heavy taxes on coal-based steel or by allocating huge subsidies to steel makers.
Moreover, hydrogen made through electrolysis is energy intensive. To produce enough to meet the steel industry’s needs would require a massive expansion of renewable energy capacity, far beyond current projections.
While pilot green hydrogen projects exist, it has not been proven at industrial scales. In contrast, one of the most significant advantages of coal-based steelmaking is its ability to operate at massive scales.
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 crucial for meeting global steel demand, which stood at 1.95 billion tons in 2021 and is projected to grow.
Coal’s abundance and established supply chains make possible this sustained level of production. Capable of supplying the steel sector with the approximately one billion tons of coal annually, the industry’s infrastructure for mining, transporting and utilizing coal in steelmaking has been developed and refined over more than a century.
On the other hand, hydrogen-based steelmaking is one more absurd proposal of those fearmongering about global warming that would have virtually no effect on Earth’s temperature but would slow the economic growth and infrastructure development of our modern world.
This commentary was first published at RealClearMarkets on August 23, 2024.
Vijay Jayaraj is a Research and Science Associate at the CO2 Coalition, Arlington, Virginia. He holds a master’s degree in environmental sciences from the University of East Anglia, U.K., and a postgraduate degree in energy management from Robert Gordon University, U.K.
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