3.1.2 Demonstration and early deployment of new hydrogen processes in the iron and steel sector
The steelmaking and metal processing industry uses a limited injection of hydrogen (5%-7%) and nitrogen in annealing furnaces as an inert protective atmosphere.98 Green or blue hydrogen can play a role as a new feedstock in the decarbonisation of the steelmaking industry, which has limited alternatives for decarbonisation. Two main processes exist to decarbonise steelmaking with low-carbon hydrogen:2
- Direct injection of hydrogen into the blast furnace instead of coal, which reduces GHG intensity of emissions between 20% and 40%.
- Direct reduction of iron ore (DRI) through an entirely new H2-based steelmaking process where hydrogen is used as a reducing agent for the direct reduction of iron ore. This process can achieve emission reductions of more than 95%.
These new hydrogen applications are in demonstration or early commercial stages in the H2FUTURE, HYBRIT, and GrInHy 2.0 projects, among others.119 These applications require significant installation costs that exceed €100 million per technology installation.2 These investment costs are similar to the investment costs of conventional installations. The main difference with conventional installations is the operational costs; operational costs depend on the electricity price for green hydrogen production. With industrial investment cycles around 30 years or more, investments in these new applications should be planned carefully to prevent lock-in of conventional technologies.2 It is important to invest in technologies that are compatible with long-term decarbonisation goals. The Gas for Climate pathways study showed that few conventional installations will be replaced by 2030 in Europe. Most installations will be replaced after 2030. Guidehouse analysis shows that about one-quarter of European steelmaking plants could have a natural reinvestment moment by the mid- 2030s (based on an average investment cycle of 30 years).