The use of hydrogen a saving solution to reduce CO2 emissions

The steel industry is responsible for more than 10% of total CO2 emissions.

S&P Global Ratings believes that steel producers must first plan the efficiency of raw materials and production processes, helped by technologies such as EAF. But due to years of low profitability, few can afford the very high investment bills.

China, the largest steel producer in the world. It aims to increase the percentage of production with the help of EAF from a low level of 10% to 20% by 2025. The USA is well ahead, having 67% of steel produced through EAF, compared to 41.5% in the EU.

A switch to electric arc furnace (EAF) technology would allow a major reduction in emissions. But it requires huge investments that steel producers cannot afford at the moment.

The use of hydrogen can be part of a future solution. But the huge cost to achieve a fully decarbonized process is not feasible for steelmakers this decade.

There are several pilot projects using hydrogen being tested by European steel producers SSAB, ThyssenKrupp and ArcelorMittal. It’s just that the probability of a large-scale launch remains low.

The European steel industry must evolve faster to reduce CO2 emissions

European steel producers are at a disadvantage compared to their colleagues in the USA. Because of the stricter regulations and the older and more polluting furnace technology. Oxygen-based furnaces (BOF) representing 59% of the total. The EU’s initiatives to reduce carbon dioxide (CO2) emissions by 50% by 2030, compared to 1990 levels, and to achieve net zero emissions in Europe by 2050, will put European players to the test.

We expect the changes to include the consolidation of small companies, along with the closure of old and less competitive facilities.

Using the typical BOF process requires nearly 2,000 kWh for each ton of steel produced, while the EAF process requires approximately 450 kWh.

China is far from Europe in the race to reduce emissions

China has one of the highest percentages of using BOF for steel production. That is, approximately 90% of crude steel production uses this process.

The existence of a „cleaner” steel industry is essential for China to achieve its goals of maximum carbon emissions by 2030 and net zero emissions by 2060. The Chinese government’s goals include increasing the percentage of EAF use to 20% by 2025.

The reduced availability of scrap metal in certain countries, such as China and India, could slow down the transition to more efficient EAF.