Green Steel Adoption Over a Decade Away Without Cheaper Hydrogen: IDTechEx
Green steel adoption faces delays due to high green hydrogen costs, according to IDTechEx.
IDTechEx has forecasted that the widespread adoption of hydrogen-based direct reduced iron (DRI) production is over a decade away, unless hydrogen becomes significantly cheaper and infrastructure is implemented at a rapid pace.
The UK-based independent research and consulting firm found that while hydrogen DRI is leading the green steel project pipeline globally, especially in Europe, the Middle East, the US, and China, the most immediate barrier is cost.
The report highlighted that steelmakers require low-carbon hydrogen at $2–3/kg, significantly lower than the current $4–8/kg for green hydrogen, which has prompted companies like ArcelorMittal to delay final investment decisions (FID).
The Luxembourg-based multinational ultimately said that hydrogen and CCUS-based steelmaking will not be economically viable before 2030.
IDTechEx noted that even flagship green steel projects will initially use natural gas and plan to transition to hydrogen later, depending on the infrastructure build-out.
If projects proceed as planned, IDTechEx forecasts that hydrogen-based green steel production could reach 46 million tonnes by 2035.
However, the research firm stressed, “The expansion and cost reduction of low-carbon hydrogen infrastructure around industrial clusters will be crucial for DRI sites to adopt hydrogen at scale.”
The supply of green hydrogen also remains a significant hurdle. Thyssenkrupp CEO Miguel Lopez recently warned that the company’s €3bn hydrogen-based steel plant in Germany risks becoming a stranded asset without reliable access to green hydrogen.
Steel decarbonisation advocacy group SteelWatch has previously highlighted that importing green hydrogen-based sponge iron from renewable-rich countries could reduce shipping volumes by almost 75% compared to producing it locally using imported hydrogen and iron ore.
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