HYBRIT and H2 Green Steel have launched projects in Sweden with a target to manufacture 10 million tonnes (mt) of fossil fuel-free crude (green) steel per year by 2030. Success, of course, depends on the numbers adding up, or rather, the numbers going down.
To make green steel, you need green hydrogen; to make green hydrogen, you need cheap renewable energy. HYBRIT and H2 Green Steel believe this will come from wind power at a LCOE of $30 per megawatt-hour. With the trajectory of costs for renewable energy going ever downward, it is likely they will be able to achieve this.
Add to the mix the increasing costs of carbon and the pressure to decarbonize, and you have a winner. It is expected that a carbon credits will be available to green steel producers of around $85 per ton.
Sweden is a relatively small producer of steel and this target of 10 mt is three times what is currently being produced in the Scandinavian country. However: “The country boasts Europe’s largest iron ore reserves and excellent renewable energy resources — two primary prerequisites for the production of green hydrogen and decarbonized crude steel,” writes Wood Mackenzie principal analyst Sohaib Malik.
“According to Malik, at a levelled cost of electricity at $30 per megawatt-hour, wind power is a highly economical source of power generation in Sweden today. Meanwhile, further cost reductions are expected with better financing structures for onshore wind, lower capex for onshore and offshore installations, technological optimization for asset management and state support for offshore grid infrastructure.”
Another part of the green steel mix that needs to be factored in is the method for the production of green hydrogen — in this case, alkaline electrolysis technology. The costs associated with this are expected to halve by 2030, enabling a levelled cost of $1 per kilogram of green hydrogen using onshore wind power.
Expect to see global interest in this new frontier of climate change abatement. I know Twiggy Forrest is interested.