Hydrogen and Decarbonization of Steel Production

Hydrogen and Decarbonization of Steel Production

The main drivers for a sustainable energy future centre around the need to (i) reduce global carbon dioxide (CO2) emissions and improve the air quality, (ii) ensure security of energy supply and move towards the use of sustainable energy resources, and (iii) create a new industrial and technological energy base, crucial for the future economy. All modern-day assessments of global energy futures take the view that the growth in demand is to be met increasingly by a diverse energy mix which includes renewable or sustainable energy sources.

The growth of tangible environmental concerns is providing one of the major driving forces towards sustainable energy development. Leading among these concerns is the issue of the release and accumulation into the atmosphere of CO2 and other climate-changing gases. These emissions are now indisputably far above pre-industrial levels and are deemed to be responsible for raising the global (average) temperature through the greenhouse gas (GHG) effect. Unless there are drastic reductions in the amount of CO2 released in the environment through various activities, there are going to be potentially disastrous consequences for the global climate. Such concerns are undoubtedly transforming the way the energy and its carriers are being assessed and used, shifting the balance away from the traditional hydrocarbon base towards renewable or sustainable sources of energy.

Hydrogen is an attractive alternative fuel. However, unlike coal, gas or oil, it is not a primary energy source. Rather, its role mirrors more closely that of electricity as a secondary ‘energy carrier’, which is first to be produced using energy from another source and then transported for future use where its latent chemical energy can be fully realized.

Hydrogen holds out the promise of a truly sustainable global energy future. Interest in hydrogen as a way of delivering energy services has been growing in recent years in response to the increasing concerns about the environmental impact of energy use and worries about the security of fossil-fuel supplies. Hydrogen is a well-known, versatile, and clean energy carrier which is widely used in the industry. Most of the technologies related to hydrogen have a long history. The industry track record using hydrogen as well as the present use of hydrogen for several applications demonstrates its safety. Hydrogen offers several options for production, distribution, and use. Its present usage can be expanded safely to other usages.

Hydrogen, as an energy carrier, can in principle replace all forms of final energy which are in use today. It can provide energy services to all sectors of the economy. It has the potential environmental advantages over fossil fuels. At the point of use, hydrogen can be burned in such a way as to produce no harmful emissions. If hydrogen is produced without emitting any CO2, then it can form the basis of a truly sustainable energy system which is known as the hydrogen economy.

Hydrogen has experienced cycles of high expectations followed by impractical realities. The decrease in prices of renewable energy, and stringent regulatory requirements due to the climate change is leading to the paradigm shift which is presently taking place from carbon economy to hydrogen economy around the world. However, the transition to the hydrogen economy is not going to happen overnight since it needs a dedicated strategy and efforts.

Hydrogen is the first element in the periodic table. It is the lightest, most abundant, and one of the oldest chemical elements in the universe. On earth, hydrogen is found in more complex molecules, such as water or hydrocarbons. Hydrogen, for its use in its pure form, has to be extracted. A hydrogen flame is colourless and odourless. It needs the addition of colorants and odorants in order to make it visible and detectable. Further, hydrogen has a smaller molecule than natural gas, hence can leak more easily. This characteristic of hydrogen can be a particular issue where a leak of hydrogen can cause a build-up of hydrogen concentration in the enclosed space.

Hydrogen can play a crucial role play in global industrial decarbonization. In the present day situation, the hydrogen economy is a priority. Net-zero CO2 emissions need a full fossil fuel phase-out. The climate impact of hydrogen depends entirely on how it is made. For the control of global climate change, hydrogen produced from the electrolysis of water powered by renewable energy is indispensable to climate neutrality. However, the transition to a hydrogen economy need huge amount of investment in new infrastructure to produce, transport, store and deliver hydrogen to end users.

There is growing consensus which recognizes the need to target net-zero emissions by 2050 in order to limit a global temperature increase of 1.5 deg C above pre-industrial levels. To get there, it is necessary to find a way to replace the fossil fuels which presently meets four fifths of the global energy requirements. In order to restrict the temperature increases at 1.5 deg C due to global warming, hydrogen consistently plays a central role as an energy carrier. Hydrogen as energy carrier plays a role comparable to the one now played by coal, oil, or gas in the carbon economy. The industrial processes used in the production of steel, cement, glass, and chemicals all need high temperature heat. Presently, this heat is produced by burning fossil fuels. For these hard-to reduce CO2 industrial sectors, there is essentially no way to reach net-zero emissions at the scale needed without the use of hydrogen.

The failure to decarbonize the economy is not an option which is presently available. In the long term, hydrogen along with renewable generated power has the capabilities to provide a solution to decarbonize hard-to-abate sectors like steel sector. However, there exist several challenges which are required to be overcome.

Hydrogen is a highly versatile basic chemical which can be used both as an energy source and as a feedstock for industrial processes, such as ammonia production for fertilizer, in refining as well as for the food, electronics, glass, and metal industries. However, use of hydrogen as energy source is of great importance for the decarbonizing of the economy. New evidence indicates that hydrogen has an important potential role to play in reducing emissions from industrial heat, especially where the flame (and subsequent combustion gases) needs to come into direct contact with the material or product being produced (e.g. in furnaces and kilns).

Hydrogen has a number of helpful characteristics. It can be produced in a range of low-carbon ways and its use, whether through combustion or an electro-chemical reaction in a fuel cell, produces no GHG emissions. In the fuel cell, use of hydrogen produces no air pollutant emissions since the only by-product is water. This significantly improves the air quality compared to the fossil fuels which it displaces.

Combustion of hydrogen can generate high temperatures, meaning that it can be used as a replacement for fossil fuels where higher-temperature heat is needed, as an example in industrial applications. However, since hydrogen burns at a higher temperature, nitrogen oxides (NOx), which are a harmful pollutant, can be a problem.

Although hydrogen is significantly less energy-dense than fossil fuels, when compressed, it has a significant high energy density. It can be stored in large volumes, at quantities which can last for months rather than hours or days. Further, as a compressible gas, hydrogen can be delivered at a high rate through pipelines.

Hydrogen, as an energy carrier, is in some ways similar to electricity. Both have to be generated rather than occurring in a useful, extractable form as for fossil fuels. It can be produced in a range of low-carbon methods either through electrolysis based on low-carbon electricity or through application of carbon capture and storage or utilization (CCS/U) combined with gasification or reformation of hydrocarbons (e.g. biomass, natural gas).

Hydrogen can be stored and distributed in several ways. Hydrogen has a high (gravimetric) energy density. Transport options are comparable to those of fossil energy carriers and include gaseous / liquefied truck transport, ship transport, and pumping of gaseous hydrogen through pipelines. Blending into the existing natural gas grid is also possible, and can become important, especially during the transition period. There are several storage options some of which are still in development stage.

The shift to sustainable hydrogen production methods for industrial processes largely depends on the growing recognition of green fuels as well as a suitable pricing for green industrial products, which can materialize through an adequate carbon price and regulatory framework. The use of green hydrogen in industrial processes also presents the advantage of contributing to large-scale hydrogen demand and consequently lower cost of production, which in turn can positively impact other sectors such as mobility.

Hydrogen is not a source of energy but an energy carrier. It is to be produced and stored before use. The molecule of hydrogen gas which stores energy can restore it either by combusting it or through a fuel cell. The combustion of one kilogram of hydrogen releases three times more energy than a kilogram of gasoline and produces only water. In case of fuel cell, the chemical energy of hydrogen and oxygen is converted into electricity through a pair of redox (reduction-oxidation) reactions. The waste product of the reactions is water.

The CO2 reduction impact of hydrogen is determined by the combination of the CO2 footprint of how it is produced and the emissions from the activity in which the hydrogen is being used. The CO2 emissions associated with producing hydrogen are closely linked to the technology used and the structure of the electricity grid providing power to the process. Decarbonization of the current hydrogen production is challenging, but is going to have a positive impact on CO2 emissions and can play an important role in realizing cost declines. Also, hydrogen production cost from electrolysis of renewables is expected to decrease.

There are basically two categories of hydrogen production processes. One is which extracts the hydrogen from water with electricity (i.e. electrolysis), and the second is which leverages fossil fuels as a source of energy and / or hydrogen. When extracting hydrogen with or from a fossil fuel, such as natural gas, oil or coal, the CO2 emissions are anchored in the chemical reaction that is being catalyzed. In the case when electricity is used to run an electrolysis process, the associated emissions are caused by the CO2 intensity of the electricity source.

The source of energy used and the method used for the production of hydrogen define whether it is informally considered grey, blue, or green hydrogen. Presently around 96 % of hydrogen is being produced from fossil fuels through carbon intensive processes. The hydrogen produced by these processes is known as grey hydrogen. The two main processes are the reforming of methane with steam and coal gasification. When carbon dioxide emitted during the production of hydrogen by these two processes is sequestered through carbon capture and storage or utilization (CCS/U) then the produced hydrogen is known as blue hydrogen. CCS/U on hydrogen assets has a capture rate range of as high as 90 % and this makes this production route quite effective from a green-house gas perspective.

Low or zero-emission hydrogen produced by the electrolysis process using electrical energy generated with renewable resources is known as green hydrogen. There is another colour code. Hydrogen, when produced by electrolyzers supplied by electricity from nuclear power plants is known as yellow (or purple) hydrogen. Hydrogen production using water electrolysis is minimal presently, since it needs large amounts of electricity, which is expensive. This technology is normally used only to produce hydrogen of very high purity.

An additional issue related to electrolysis is water consumption. Pure water consumption is generally in the range of 10 litres to 15 litres per kilogram of hydrogen output, and input water needs to be deionized. In the absence of freshwater sources, option includes seawater desalination or wastewater recovery.

The three main pathways to produce zero-emission hydrogen are (i) through steam methane reforming (SMR), using bio-methane, or combined with CCS/U, (ii) through electrolysis using electricity generated by renewables, and (iii) through gasification of biomass. While SMR and electrolysis are mature technologies, gasification of biomass and SMR with CCS/U are still under development. Presently, almost the entire production of hydrogen is through fossil fuel reforming, since it is presently the most economic pathway.

As regards to blue hydrogen pathways, water consumption is an aspect which is frequently overlooked. Blue hydrogen pathways consume a significant amount of water, and in some cases even higher than the electrolysis process. When comparing embodied water following a life cycle inventory, results show that water consumption per kilogram of hydrogen can be as high as 24 litres for SMR process and 38 litres for coal gasification process.

An additional pathway which is sometimes referred as turquoise (greenish blue) hydrogen is still at a TRL (technology readiness level) stage. It consists of the pyrolysis of methane. Different technological solutions are presently under development in several locations worldwide. In the process, natural gas is used as feedstock, while the energy consumption comes from electricity, presumably from low-carbon sources. Methane is split at high temperatures into hydrogen and solid carbon (also called carbon black). Fig 1 shows identification of hydrogen generation pathways with colour representation.

Fig 1 Identification of hydrogen generation pathways with colour representation

With regards to water electrolysis process of hydrogen, the alkaline electrolyzers represent the state of the art process. Other processes which are under development are proton exchange membrane (PEM) technologies which are in a demonstration phase, while solid oxide electrolyzers are still in research and development stage. PEM electrolyzers can provide a range of advantages for comparable energy consumption, including higher output pressures, a better partial load range, and quicker startup and load variations.

Presently, hydrogen is almost entirely supplied from natural gas and coal. Hydrogen is already deployed at the industrial scale across the globe, but its production is responsible for annual CO2 emissions. Production of hydrogen from low-carbon energy is costly. Presently green hydrogen is an expensive gas. However, the cost of producing hydrogen from renewable electricity is falling rapidly.

While production of hydrogen through electrolysis from ‘surplus’ renewables and / or nuclear can be a cost-effective alternative, the size of this opportunity is small in comparison to potential demands for hydrogen. Producing hydrogen in bulk from electrolysis is presently much more expensive and entails extremely challenging build rates for electricity generation capacity. Green hydrogen, produced with renewable electricity, is projected to grow rapidly in the coming years. Many ongoing and planned projects point in this direction.

Green hydrogen from renewable power is technically viable and is approaching very fast the economic competitiveness. The rising interest in this supply option is driven by the falling costs of renewable power and by systems integration challenges due to rising shares of variable renewable power supply. The present focus is on deployment and learning-by-doing to reduce electrolyzer costs and supply chain logistics.

Three main parameters are crucial for the economic viability of hydrogen production from renewables. These are (i) the electrolyzer capital expenditure, (ii) the cost of the renewable electricity to be used in the process (levelized cost of electricity, LCOE) and the number of operating hours (load factor) on a yearly basis. The higher the electrolyzer load factor, the cheaper the cost of one unit of hydrogen, once fixed investments are diluted by a higher quantity of product output. The load factor of the electrolyzer normally is to exceed 50 % at the present investment cost levels, but nearly optimal hydrogen costs start being achieved at over 35 %. The electrolyzer capacity for green hydrogen, however, has grown exponentially in recent years.

The scaling up of the electrolyzers is taking place very fast. The scaling up is from megawatt (MW) scale to gigawatt (GW) scale, as the technology is continuing to evolve. Progress is gradual, with no radical breakthroughs expected. The cost of the electrolyzers are projected to halve by 2040 to 2050, while renewable electricity costs is also expected to continue to fall as well. Renewable hydrogen is likely to soon become the cheapest clean hydrogen supply option for many green field applications in coming future.

In the global energy transition with the major thrust of decarbonization happening between now and 2050, the need is to replace the present electricity production of 24,000 TWh (tera watt hour) with renewable energy. Further, the expected growth in population and improvements in the living standards are going to create the need of additional 23,000 TWh which is to be generated from renewable energy sources. This means essentially that the global electricity consumption is going to be doubled in the next 30 years even without hydrogen. Successfully growing the green hydrogen economy is going to need another 20,000 TWh. This is a big challenge which is being faced for the switch over to the hydrogen economy.

Hydrogen storage can give benefits from an electricity sourcing / pricing perspective, but it is not as such critical for the process concept. Today, the most cost efficient alternative for hydrogen storage is the underground pressurized storing, where there exists the most cost efficient alternatives for storing in the underground salt formations. This storage technology for hydrogen storage has been tested on an industrial scale. Other solutions attracting a lot of interest presently include utilizing natural gas pipelines and conversion to ammonia or hydrocarbons as intermediate hydrogen storage. Initial evaluation of the Lined Rock Cavern (LRC) technology used currently in Sweden for natural gas is considered to be promising also. Other alternative methods for hydrogen storage under development are storage in metal hydrides and in porous materials.

Several investments in hydrogen need a long horizon of 10 years to 20 years. Especially in the early years, infrastructure investments are needed before consumer demand increases. The lack of clear and binding emission reduction targets or stimuli for specific sectors discourages potential investors from taking on the long-term risk.

The predominant demand for hydrogen today is its use as an industrial feedstock. However, hydrogen used in these processes does not presently come from low-carbon sources. Major future industrial heating applications include the production of steel for which presently steel industry now uses coal. The stoichiometric consumption of hydrogen for reducing the hematite ore (Fe2O3) is 54 kg per ton of iron. Hence, one million tons per annum year steel plant based on hydrogen reduction is going to need a hydrogen plant capacity of as much as 70,000 cubic meters at STP (standard temperature and pressure) of hydrogen per hour.

Switching steel industry dependence from coal to hydrogen is not just a technological and financial challenge. It can also impact the way the steel industry is organized at national, regional, and global level. Historically, the ease of access to coal was an important aspect in determining the location of steel plants. Steel plants were thus frequently set up in close proximity to domestic coal fields, or for steel plants relying on imported coal near the port facilities.

Using hydrogen for steel production is a technology which is presently in the development stage. The objective is to replace the blast oxygen furnace (BOF) process, which is the prevailing technology for primary steelmaking and uses coking coal as both a source of heat and to reduce oxygen from the iron ore, with a process called direct reduction of iron (DRI) where hydrogen is source of heat as well as a reducing agent.

The idea of using hydrogen as a reducing agent is primarily related to the issue of climate change. Decarbonization of the ironmaking process needs replacing carbon / carbon monoxide in the reduction reaction with another gas which can lead to lower or zero carbon emissions. This gas can be methane or hydrogen. The use of methane (CH4), a chemical compound containing both carbon and hydrogen allows a reduction in CO2 emissions, partially replacing them with water vapour (H2O) but not completely. The use of hydrogen makes it possible to completely decarbonize the process, since it only produces water vapour as chemical by-product.

Both alternatives are technically well understood. Methane is the main component of natural gas and is thus available in great quantities. It is already used to a limited degree in steel production, but more widespread use allows for a partial decarbonization of the processes. Hydrogen, on the other hand, makes it possible to completely decarbonize the steelmaking processes. Hydrogen, however, is so far only being produced in limited quantities, and its use for steel production still needs to be further fine-tuned for industrial-scale production.

Hence, decarbonization of steel production processes poses two major challenges namely (i) optimizing and scaling-up the hydrogen-based route of iron and steel production through pilot plants, and (ii) scaling up the production of hydrogen, producing greater quantities at lower cost with higher efficiency. Sooner or later, switching over to hydrogen in steel production is going to need setting up new hydrogen production facilities at unprecedented scale. The success of the efforts towards hydrogen-based steel production, hence, crucially depend on making large amounts of hydrogen available as widely as possible at the lowest possible cost.

There are generally two ways to use (green) hydrogen in steel production. First, it can be used as an alternative injection material to PCI (pulverized coal injection), to improve the performance of conventional blast furnaces. Although the use of PCI is common, the first pilot plants using hydrogen injection have recently been set up to assess decarbonization potential. However, while the injection of (green) hydrogen into blast furnaces can reduce carbon emissions by upto 20 %, this does not offer carbon-neutral steel production since regular coking coal is still a necessary reductant agent in the blast furnace.

Second, hydrogen can be used as an alternative reductant to produce DRI which can be further processed into steel using an EAF (electric arc furnace). Using hydrogen as the reductant releases only water (i.e., it does not produce carbon emissions). The DRI / EAF route is a proven production process which is presently applied using natural gas as a reductant. However, the direct reduction process can also be performed with hydrogen. Based on the use of green hydrogen as well as renewable electricity from wind, solar, or water, a DRI / EAF set-up enables nearly carbon-neutral steel production. Swedish and German organizations have been experimenting with ‘green steel’, heated using clean hydrogen, with the first successful trial occurring in the year 2020 in Sweden.

The green hydrogen-based DRI and scrap in combination with EAFs replaces fossil fuels in the DRI production stage with hydrogen produced with renewable energy. It represents a technically proven production method which enables nearly emission-free steel production. All major European steel players are currently building or already testing hydrogen-based steel production processes, either using hydrogen as a PCI replacement or using hydrogen-based direct reduction.

However, the capital requirements for the setup of pure hydrogen-based steel production (DRI plus EAF) in combination with the required hydrogen transport and storage is quite significant. Fig 2 shows typical flowsheet of hydrogen direct reduction process.

Fig 2 Typical flowsheet of hydrogen direct reduction process

Direct reduction of iron is presently used for around 8 % of global iron production is produced by direct reduction. Presently direct reduction of iron uses a reducing gas derived from natural gas or coal. In 2016, three Swedish companies (SSAB, LKAB, and Vattenfall AB) announced their plans to develop a method to decarbonize iron production process known as ‘direct reduction’, by using hydrogen as the reducing gas. Their concept is called Hydrogen Breakthrough Ironmaking Technology (HYBRIT). HYBRIT is based on hydrogen as the sole reducing gas, which produce water as a by-product instead of CO2. The resulting ‘direct reduced iron’ (DRI) can then be made into steel using electric arc furnace, in the same way as traditional DRI is used. Fig 3 shows principle flowsheet of HYBRIT process.

Fig 3 Principle flowsheet of HYBRIT process

The main characteristics of the HYBRIT process are (i) non fossil fuels are used in pellet production, (ii) hydrogen is produced with electrolysis using fossil-free electricity, (iii) storage of hydrogen in a specially designed unit is used as a buffer to the grid, (iv) a shaft furnace is used for iron ore reduction, (v) tailor-made pellets are used as iron ore feed, (vi) the reduction gas / gas mixture is preheated before injection into the shaft, (viii) the product can either be DRI or HBI (hot briquetted iron), and (ix) the DRI/HBI is melted together with recycled scrap in the EAF.

HYBRIT process has been assessed the end-to-end energy consumption associated with both the new supply chain setup and the reference case of a blast furnace. The analysis also includes the mining activities to extract the iron ore from the ground. According to this analysis, a blast furnace emits 1,600 kg CO2 from the combustion of coking coal and oil to produce one ton of crude steel. The DRI route only emits 25 kg CO2 while consuming around 50 kg of hydrogen, in turn using 2,633 kWh of power. This suggests an emission reduction effectiveness of 32 kg CO2 per kg H2.

While this is an accurate calculation of achieved emission reduction for the consumed hydrogen, the DRI process creates an interim sponge iron product which is required to be processed in an electric arc furnace (EAF) to produce crude steel, the end product of BOF. To normalize the comparison with other end uses of hydrogen, the electricity consumption in the EAF of 855 kWh per ton of crude steel could have used to produce another 16 kg of hydrogen, implying a normalized effectiveness of 24 kgCO2 per kg H2. Fig 4 shows a comparison of BF-BOF steelmaking with HYBRIT process.

Fig 4 Comparison of BF-BOF steelmaking with HYBRIT process

Now hydrogen-based steel production using an EAF is technically feasible and already considered to be part of a potential long-term solution for decarbonizing the steel industry on a large scale. The question is not whether but when and to what extent this transformation can happen. However, there are a variety of interdependent factors which determines when the decarbonization tipping point can occur in the steel industry. There are some external factors which are going to shape the future development and time to adoption of green hydrogen-based steel.

The shift toward hydrogen-based steel cannot happen overnight. Further presently, there is only one key production technology available which can be leveraged to achieve a carbon-neutral steel industry. Future availability of cheap energy from renewables and regulatory issues are going to be the two key drivers for the adoption of hydrogen-based steel. Despite the goal of becoming carbon neutral still being around 28 years in the future, it is crucial to act now. Industrial sites have lifetimes exceeding 50 years and investment planning horizons of 10 to 15 years. Asset and footprint decisions need to be made now and are to follow a clear decarbonization road map. The road map itself is to combine long-term goals with actionable quick wins to allow for a gradual shift toward decarbonization which keeps all stake holders on board.

Overall, a timely switchover from carbon to hydrogen in the steelmaking processes needs coordinated political action in a wide range of fields, driving up the price of carbon at the same time as driving down the price of hydrogen. In turn, reduction of the price of hydrogen needs development of broad and coordinated set of measures. The measures are essential for promoting both the demand for hydrogen and the ramping up of supply capacities as part of a coherent push towards the hydrogen economy.

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