Steelmakers are increasingly turning to hydrogen as a potential way to decarbonise, but it is often the most expensive option and should be weighed against at least four other viable ways to reduce emissions, says Michael Liebreich, CEO of Liebreich Associates.

Multiple steelmakers are exploring the use of low-carbon hydrogen as a replacement for coking coal in the reduction of iron ore. Green steel and iron production could account for 40pc of total industrial hydrogen demand by 2050, oil major BP says in its latest Energy Outlook report.

But the steel industry should also consider the use of CCS, carbon offsets, direct electric reduction and “biochar”—coking coal from biological sources—Liebreich told the International Energy Week conference in London.

200–300mn t/yr – Liebreich’s 2050 hydrogen demand estimate

“When we jump to saying hydrogen has to be the answer, then I think we are already doing ourselves a great disservice because very often hydrogen is the most expensive answer of all of the ones that you might look at,” he says. “We have got to be very careful. There are actually five ways of decarbonising steel. We've all latched on to hydrogen. It sounds marvellous, right? But you can actually do it in different ways.”

Martin Lambert, head of hydrogen at the Oxford Institute for Energy Studies, says hydrogen use in the steel industry “could be huge”, although he acknowledges the potential to produce more using scrap in electric arc furnaces. Hydrogen should be deployed in industries where electrification is not possible, as a “guiding principle”, he says.

Scaling up

The first wave of green and blue hydrogen production should be aimed at replacing grey hydrogen in existing applications such as refining and petrochemicals, Lambert says. But even when it comes to displacing grey hydrogen, the challenge of scaling up green hydrogen is vast, especially in terms of the volume of renewable power required at a time when other sectors need power to electrify.

Based on existing global hydrogen demand of c.90mn t/yr, current European demand equates to about 10mn t/yr, Lambert says. To meet that demand with green hydrogen would require c.500TWh, which is roughly equivalent to Europe’s renewable power generation in 2020, he says. “So there is a very long way to go. We need to build a huge amount of renewable power.”

The challenge in scaling up electrolyser capacity, more or less from a standing start, is equally large. Based on a slightly lower estimate of current global demand of 70mn t\yr, meeting that with green hydrogen would require 600GW of electrolyser capacity, says Graham Cooley, former CEO of UK-based electrolyser manufacturer ITM Power. “This is a huge amount of electrolysis. It is an incredible challenge even scaling to that level,” Cooley says.

Liebreich also highlights the scale of the electrolyser challenge. “The biggest green electrolysis plant in the world right now is being built in China,” he says. “It is going to cost $850mn and it is going to require 720MW of renewables, and it is going to produce three hundredths of 1pc of the current hydrogen demand.”

Liebreich says the consensus view that global demand could be more than 600mn t/yr by 2050 overplays hydrogen’s potential. He projects demand in 2050 or 2060 of 200–300mn t/yr.

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Author: Stuart Penson