Net-zero steel production would require 52 million tonnes
of green H2 annually by 2050 — and 2,000GW of renewable energy — says
consultancy Wood Mackenzie
Getting the carbon-intensive sector to net zero would require an
astonishing 52 million tonnes of green H2 by 2050 — around three quarters of
all hydrogen produced across the world today, according to the WoodMac report, Pedal to the metal: Iron and steel’s $1.4 trillion shot
at decarbonisation. Most of that hydrogen would be used
as a reducing agent to extract “direct-reduced iron” (DRI) from iron ore.
That volume would
represent a more than 2,000-fold increase in global installed electrolyser
capacity, which sits at 257MW today (according to Norwegian analyst Rystad
Energy) — and would require 1,100-1,800GW of renewable energy, depending on
location, technology and electrolyser utilisation, Recharge estimates.
Green hydrogen’s role
would only be assured if it can be provided “competitively” at around $2/kg,
which would contribute to the overall production cost of green steel rising by
15-20% to around $100/tonne. This would be recouped via green premiums on
decarbonised steel, the UK-based consultancy believes.
In total, WoodMac
envisages that steel plants would be powered by 2,000GW of dedicated renewables
capacity — equivalent to two thirds of today’s global clean-energy generation
and more than double that of the world's current installed wind and solar
capacity. That would include power supply for electric arc furnaces and other
power needs as well as electrolysers, the company tells Recharge.
Price tag
The development of this
hydrogen ecosystem for green steel production would come with a price tag of up
to $176bn — around 44% of the $400bn WoodMac says would be required to switch
over steelmakers to DRI technology — although it is not clear whether this
includes the cost of building and operating dedicated renewables power. WoodMac
had not clarified this point at the time of writing.