FfE Discussion Paper: European Steel with Hydrogen
The medium-term defossilisation of the steel industry is a basic prerequisite for achieving the European „Green Deal“ aim of net zero emissions in 2050. The following analysis addresses the question of what regionally resolved, energy-related changes result from a 100% conversion of coke-based to hydrogen-based steel production in Europe. The main focus is on the additional hydrogen consumption arising from the transformation of Europe’s steel industry. The analysis shows that the 100% switch of the steel industry from blast oxygen furnace (BOF) to direct reduction of iron (DRI) with subsequent smelting in an electric arc furnace (EAF) is accompanied by an increase in hydrogen consumption of 288 TWh. Comparable studies include significantly lower hydrogen consumption. The direct and indirect electrification (hydrogen) of the steel industry raised the European electricity consumption by about 510 TWh an increase of the European electricity consumption in 2018 (~2800 TWh) of about 18%. The regional analysis points out that especially in northwestern Europe the high additional hydrogen consumption of about 140 TWh meets an already partly existing hydrogen infrastructure in France, Belgium, the Netherlands and Germany. Accordingly, it can be assumed that the north-western part of Europe is a major driver of hydrogen consumption in Europe due to the local steel industry. Numerous previous research studies confirm that from a technical point of view DRI with EAF enables an almost climate‑neutral steel industry.
Figure 1 shows the regionally resolved primary steel production of Europe in 2018. As the analysis examines the shift from BOF to DRI with EAF and the resulting prospective hydrogen consumption, the primary steel plant in Hamburg (Germany), which is already equipped with a direct reduction, is excluded. The Hamburg plant still uses natural gas instead of hydrogen in the direct reduction facilities. The production capacity is around 6 000 kt .
Figure 2 shows that the hydrogen consumption will increase by about 288 TWh in 2050 in the European Union if steel production is completely switched to DRI with EAF. This corresponds to about 86% (339 TWh) of the current hydrogen consumption of the European Union (2018). However, the electrolysis capacity of 40 GW (333 TWh, 8 325 full-load hours) planned by the EU in 2030 could already more than cover hydrogen consumption if steel production is completely converted to DRI with EAF. Another option is the import of hydrogen from countries close to the EU such as Russia and the Ukraine. The combined goals of the two countries target a green hydrogen production of about 200 TWh per year from 2030, and both show willingness to export their production.
The regionally resolved production volumes in Figure 3 already suggest that the European Northwest (France, Belgium, the Netherlands, and Germany) would prospectively require significant amounts of hydrogen. Figure 3 confirms the initial assumption.
The North-West European steel industry requires about 140 TWh for the 100% switch of the steel industry to DRI with EAF, or almost half of the hydrogen consumption of the European steel industry. The first hydrogen transport grids are already in place to transport the prospective hydrogen consumption in the region. Belgium, the Netherlands and France in particular are already connected via a hydrogen pipeline. The connection of German hydrogen infrastructure in the German “Ruhrgebiet” could strengthen the cross-border exchange. A connection of Duisburg would mean an additional transport volume of about 50 TWh hydrogen in the 100% scenario.
As a result of the European steel industry’s extensive conversion to DRI with EAF, the prospective hydrogen consumption will increase significantly. With the National and European hydrogen strategies, first steps have already been taken to ensure the ramp-up of a European hydrogen economy. The supply of hydrogen represents a challenge that the whole of Europe will have to address in the future. Numerous previous research studies confirm that from a technical point of view DRI with EAF makes a climate-neutral steel industry possible. The practical implementation is also imminent: Steel companies in Sweden (1x), Germany (3x), Romania (1x) and Italy (1x) are either already planning DRI pilot or demonstration plants or are preparing concrete strategies to produce DRI steel on an industrial scale before 2030 (AGORA 2020).
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