The decarbonisation of the steel industry is proving to be a major challenge. The production of steel accounts for around 7% of human greenhouse gas (GHG) emissions, yet much uncertainty remains around the best path(s) forward to fully decarbonise an industry that is showing no signs of slowing down.
Hydrogen (H2) has often been considered a key solution for decarbonising iron and steel production, much like its role in other industries. While the hydrogen-based direct reduction process (H2-DRI, where DRI stands for direct reduced iron) offers a low environmental impact, it faces two significant challenges: i) the high cost and limited availability of large volumes of green hydrogen, particularly in regions lacking access to inexpensive renewable electricity for hydrogen production, and ii) the need for high-grade iron ore suitable for the process.
So if hydrogen-based technologies are only a part of the answer, what options do we have? Let’s take a step back to look at how steel is actually produced as well as the technological pathways that are on the table right now.
Incumbent technologies and pathways
A massive 1.9 billion tonnes of steel were produced in 2023, with China accounting for more than half of global production. Steel is derived from iron (Fe), which, chemically speaking, is obtained through the reduction of iron ore (i.e. iron oxides, such as Fe2O3 and Fe3O4, mixed with gangue or impurities). This is facilitated by a reducing agent/reductant, such as coke (C), coal (C), natural gas (CH4), synthesis gas (H2/CO), hydrogen (H2) or even ammonia (NH3), which strips the oxygen from the iron. The resulting iron often has a relatively high carbon content of up to around 4.5%. To get to crude steel, the carbon content is adjusted, often to levels below 1%.
Back in 2022, Sightline Climate (CTVC) published an excellent overview of how steel is made. In summary, there are three different production processes that are currently established at scale:
Blast furnace (BF) + blast oxygen furnace (BOF) - ∼70% market share, primary steel/route
Direct reduction (DRI) + electric arc furnace (EAF) - ∼5% market share
Steel recycling via electric arc furnace (EAF) - ∼25% market share, secondary steel/route
All operate at relatively high temperatures in the range of 1500-1800°C (i.e. the temperature of the molten iron/steel). While the heat in an EAF is produced by electrical arcing, fossil coke serves as a fuel and therefore source of heat in the BF-BOF process.
Source: CTVC by Sightline Climate, 2022.
Interestingly, ironmaking accounts for 90% of the total emissions of conventional steel production (BF-BOF). So the question that really needs answering is: How can we effectively decarbonise the process of ironmaking?
Novel and emerging technologies
Thankfully, we do have options. Multiple approaches are being pursued to optimise, and in some cases, revolutionise the way we produce iron or steel. The sourcing and production of iron ore pellets (e.g. via sintering, agglomeration) and the post-processing of crude steel (casting, hot rolling, forming, post-modifications such as coatings, etc.) have been neglected for now to really focus on the core processes for iron and steel production, which account for a majority of energy usage and emissions.
Alternative reductants: Greener reductants to replace fossil-derived coke. Please note that these reductants need to be used in combination with an iron- or steelmaking process.
Biocarbon: Processes such as carbonisation and torrefaction are used to convert biomass into biocarbon.
Example(s): Perpetual Next, NextFuel, BioCarbon, Airex Energy (and many others)
Synthesis gas: Synthesis gas is a mixture of hydrogen (H2) and carbon monoxide (CO), which can be sourced from waste biomass, plastics or CO2 (+H2O) via a variety of processes (thermochemical, electrochemical, plasma, etc.).
Example(s): DOPS Recycling Technologies, Spark e-Fuels, Lydian, Twelve, SeeO2 Energy, enaDyne (and many others)
Carbon monoxide: Carbon monoxide (CO) can be won from the carbon dioxide (CO2) produced in an iron- or steelmaking processing using a plasma to break down CO2 into CO and oxygen (O2) or via thermochemical technology based on perovskite materials.
Example(s): D-CRBN, University of Birmingham
Hydrogen: Hydrogen (H2) can be produced from water (H2O) using various different electrolysers (AEL, PEM, AEM, SOEC; ‘green hydrogen’) or via methane (CH4) pyrolysis (’turquoise hydrogen’).
Example(s): Electric Hydrogen, Hysata, Enapter, Molten, Monolith, C-Zero, Modern Hydrogen (and many others)
Synthetic natural gas: Synthetic natural gas or methane (CH4) can be produced from carbon dioxide (CO2) and hydrogen (H2) or water (H2O) via thermochemical or electrochemical pathways.
Example(s): TURN2X, Terraform Industries
Ammonia: Green ammonia (NH3) could either be directly used in a DRI process or cracked on-site to produce hydrogen.
Example(s): Max Planck Institute
Novel thermochemical reduction processes: New processes to reduce iron oxide to iron or even directly produce steel.
Hydrogen-based direct reduction (H2-DRI): This process uses hydrogen (H2), instead of natural gas (CH4), as a fuel and reductant in the direct reduction furnace (usually a shaft furnace or fluidised bed reactor system depending on whether pellets or finer powders are used).
Example(s): Stegra (formerly known as H2 Green Steel), MIDREX, Tenova, HYBRIT project (SSAB, LKAB, Vattenfal), GravitHy, GreenIron, BLASTR, Vulcan Green Steel, Hydnum Steel, POSCO, Metso, Calix, Ferrum Technologies
Fine ore reduction: Although similar to Direct Reduced Iron (DRI), this technique can process fine powder iron ore, eliminating the briquetting or pelletisation process. Natural gas (methane, CH4) or hydrogen (H2) is used to reduce the iron ore concentrate in a high-temperature reactor.
Example(s): Primetals Technologies, University of Utah
Hydrogen plasma-based reduction: A hydrogen plasma is used to simultaneously reduce iron ore and smelt it into crude steel in e.g. a special electric arc furnace (EAF) or a microwave-powered rotary kiln.
Example(s): SuSteel project (Voestalpine), Argonne National Laboratory, Hertha Metals
Laser-based reduction: Laser heating is used to drive the thermal decomposition of iron ore into iron metal and oxygen, thereby limiting the use of chemical reducing agents, such as carbon or hydrogen.
Example(s): Limelight Steel
Chemical reduction with sodium oxide: In this process, sodium oxide is used to reduce both high and low grade iron ores at temperatures of 250-350°C.
Example(s): Helios
Electrification of high-temperature industrial heat: Technologies delivering low carbon heat to reduce the amount of carbon (coke) in the high-temperature iron- and steelmaking processes (BF-BOF, EAF).
Thermal energy systems (TES): Thermal energy systems, such as thermal or heat batteries, are being designed to reach temperatures of up to 2000°C. The hot air generated by these systems can often be directly fed into iron- or steelmaking processes.
Example(s): Electrified Thermal Solutions, Antora Energy, Rondo Energy, HyperHeat, Kraftblock, Exergy3 (and many others)
RotoDynamic heating: This technology is based on a rapidly-rotating shaft connected to a series of rotor blades, similar to those used in gas turbines. The rotor blade-induced kinetic energy of the gas is converted into thermal energy by rapidly slowing the velocity of the gas in a so called diffuser. The technology is expected to be able to deliver temperatures of up to 1700°C.
Example(s): Coolbrook
Novel electrochemical processes: Emerging electrochemical technologies to unlock low-grade iron ores. The resulting purified iron (Fe) can be supplied to EAFs.
Molten oxide electrolysis: In this process, electricity-generated heat (1600 °C) melts the iron ore, which dissociates into pure oxygen gas (O2) and liquid iron (Fe). Example(s): Boston Metal
Acidic aqueous electrolysis (electrowinning): A low-temperature electrochemical-hydrometallurgical process (60°C) to solubilise and purify low-grade iron ores in an acidic aqueous solution, yielding gangue-free iron metal (Fe) by means of electro-extraction. Example(s): Electra
Alkaline aqueous electrolysis (electrowinning): A low-temperature electrolysis (110°C) that uses an aqueous alkaline electrolyte to solubilise iron ore. Electro-extraction yields pure iron (Fe) and oxygen (O2) gas.
Example(s): Siderwin project (ArcelorMittal)
Non-aqueous electrolysis (electrowinning): A pathway to dissolve and chemically convert iron ore in a non-aqueous electrolyte (e.g. ionic liquids). Upon dissolution, the iron oxide is selectively electro-reduced, resulting in fine iron (Fe) particles.
Example(s): Element Zero, Fortescue
Optimised electric arc furnace (EAF) processes: Several new innovations are emerging that are centred around the flux and the slag that it forms in EAF processes.
Flux replacements: The flux in an EAF can be replaced with end-of-life cement, which is regenerated in the EAF. Flux (CaO·MgO, CaO) is either sourced naturally or, in the case of CaO, produced by the calcination of limestone (CaCO3), releasing large amounts of CO2.
Example(s): Cambridge Electric Cement
Slag re-use and upgrading: Slag that is formed during EAF operation can be used to bind CO2 and/or produce value-added products for the construction industry (e.g. concrete, SCMs, additional steel, etc.).
Example(s): Cocoon, CarbiCrete, MCi Carbon, Magsort, Ferrum Technologies (and many others)
Novel carbon capture technologies: Several new approaches are being explored to capture carbon dioxide from point sources in heavy industries such as the steel industry.
Example(s): Mantel, KC8 Capture Technologies, Mitsubishi Heavy Industries (and many others)
Overview of different technologies that can be used to decarbonise the production of iron and/or steel. The market map is not exhaustive and based on publicly available information. Digital technologies have not been included. Source: Zero Carbon Capital.
Paths forward
To decarbonise the steel industry effectively, it is becoming increasingly clear that will have to rely on both pragmatic short-term solutions, such as sustainable drop-in replacements for the reductant (fossil coke) and industrial heat technologies, and more medium- and long-term orientated solutions, such as new or redesigned iron- and steelmaking processes.
A widespread adoption of emerging technologies is only guaranteed if they deliver iron or steel at attractive unit economics at commercial scales. This is easier said than done, considering the massive scale of global steel production and the direct dependency of several iron- and steel production routes on the price of electricity.
Following measures could be effective in tackling our emissions. Please note that this list is not exhaustive. In fact, we are constantly looking for new input from our network.
Increase steel production via the EAF route: The production of steel in electric arc furnaces (EAF) is already fully electrified. Provided that iron can be sourced sustainably via DRI or new ironmaking processes, the emissions of steelmaking can be lowered significantly by shifting to EAFs. Steel recycling (’Scrap-EAF’ in figure below) is even more beneficial in terms of emissions. While the steel from EAFs represent as much as 70% of the total steel production in certain geographies (e.g. US, Turkey), major improvements can still be made in most other countries to significantly lower the overall footprint of the steel industry.
Source: Midrex, Impact of Hydrogen DRI on EAF Steelmaking, 2021.
Geographically decouple iron and steel production: To ensure the economic viability of hydrogen DRI processes for iron production, renewable energy needs to be abundant and cheap. Since steelmakers are not always favourably located to access or deploy renewable assets, it may be necessary to produce iron in more favourable geographies, e.g. the MENA region.
Replace coke as a reductant in iron- and steelmaking: As far as this is technically feasible, fossil-based coke needs to be replaced with other reductants, such as biocarbon, in combination with sustainably sourced synthesis gas, carbon monoxide or hydrogen (if economical). Given that steel is produced in huge quantities, the processes for the production of the reductants also need to be highly scalable.
Work with electrified high-temperature industrial heat: As mentioned above, high-temperature heat from electrified thermal batteries or RotoDynamic heaters could reduce the amount of fuel required to drive the traditional high-temperature iron- and steelmaking processes (i.e. limit the amount of coke or other reductants to the minimum amount that is required for the chemical reduction of iron oxide to iron).
Redesign and retrofit existing iron- and steelmaking processes: Process efficiency improvements are always a step in the right direction when it comes to reducing energy requirements and therefore emissions. Redesigning BF-BOF and EAF processes could also improve the compatibility of these processes with carbon capture (CC) technology, which often turns out to be expensive due to the distributed nature of the emission sources in industrial processes.
Accelerate the commercialisation of novel ironmaking processes: Significant investment into novel green technologies for the production of iron and steel are absolutely crucial at this stage. This could ultimately unlock a much wider selection of low-grade iron ore resources at comparable or even superior unit economics to existing processes.
Let’s join forces!
The steel industry is in desperate need of cost-effective solutions to decrease its emissions. At Zero Carbon Capital, we are constantly looking for visionary founders who want to tackle this challenge! At the same time, we as investors always appreciate the advice of seasoned industry professionals and leading researchers in the field. If you have read this article and want to engage with us, do not hesitate to reach out to us via our website or LinkedIn.