Industry depends on steel to make the cars, appliances, and other consumer goods that are at the heart of the global economy. It is also used to construct the buildings that define many world cities and the bridges that connect those cities. But making steel accounts for about 9% of all carbon emissions, according to the World Steel Association.
The way steel is made has not changed significantly in the past 150 years. Iron ore is smelted in huge blast furnaces that use carbon-rich coke — a form of coal — as a reducing agent to turn the iron into steel. Those furnaces belch out huge amounts of carbon dioxide, and it’s not like the iron ore just shows up at the furnaces unaided. Mining it and transporting it creates lots more carbon emissions.
Climate activists have been hammering the steel industry for years to clean up its emissions. Now a new report by Bloomberg New Energy Finance claims hydrogen could replace coke in 10 to 50% of all steelmaking my the year 2050, given the right carbon pricing. Using hydrogen instead of coke — a process known as direct reduction — could lower the carbon emissions from steel mills significantly.
“Hydrogen technologies offer a viable pathway to slash the emissions from making steel,” according to Kobad Bhavnagri, head of special projects at BloombergNEF. “No big R&D breakthroughs are necessary. If policy was in place, the world could start producing green steel within a decade. Hydrogen can do everything coal does in the steel-making process, and the technology to make fossil-free steel is already currently operating with natural gas in many parts of the world.”
It’s an alternative already being tested by industry giants including top supplier ArcelorMittal, as well as Germany’s Thyssenkrupp AG. In fact, direct reduction iron accounts for nearly 6% of steel output worldwide according to a report by Citigroup.
Bloomberg NEF says hydrogen technology will be competitive with high-cost, coal-based plants when the cost of renewable hydrogen falls below $2.20 a kilogram, assuming coking coal prices remain where they are now at about $310 a ton. That could happen by 2030, Bloomberg says. Currently, most commercial hydrogen in North America is derived from natural gas, which has its own carbon and methane emissions problems. But new technologies that rely on renewable energy are coming to market soon.
Any shift to hydrogen would pose a danger to coking coal producers and their investors. The material has few uses other than in blast furnaces. “It has long been thought that met-coal is untouchable and would be unaffected by the changes sweeping the energy sector,” Bhavnagri says. “Hydrogen extends the reach of renewables right into the front yard of met-coal miners.”
Notice the important qualifier Bloomberg inserted into its report: “given the right carbon pricing.” Putting a price on carbon, which should be a no-brainer for free market conservatives, is bitterly opposed by them because they really aren’t free market conservatives at all but rather shills for fossil fuel companies. They will say anything and to anything to keep the flood of campaign cash flowing their way. In other words, they are bold faced liars who need to be called out for their egregious hypocrisy.
Whether hydrogen starts replacing coal in 10 years or 30 years, the changeover is coming and is one more reason not to load up on coal stocks for your IRA.