A report conducted by BloombergNEF has investigated the potential for steel manufacturing to shift toward hydrogen fuel. The steel industry has long relied on fossil fuels to power its production, but the report claims that hydrogen could account for up to half of the power needed for global steel output by 2050. This could be an attractive opportunity for businesses in an industry which accounts for up to nine per cent of global carbon emissions. These businesses may begin looking for avenues toward climate responsibility in order to stay in line with social and public pressure.

Developments in the processes involved in the mining of iron and manufacturing of steel have been rare over the past century. To this day, iron ore is smelted with carbon-rich coke in blast furnaces which emit high levels of CO2 into the atmosphere. A BloombergNEF representative claims that hydrogen could fuel the chemical reactions necessary for steel production through direct reduced iron (DRI), a process by which gas is used as a reduction agent rather than the carbon-heavy coke.

According the BloombergNEF, the benefits of hydrogen could extend to the budgets of steel businesses. The report claims that renewable hydrogen prices could drop below $2.20 per kilogram by 2030, making it competitive with high cost coal plants. This could create problems for coal businesses which rely on demand from manufacturers who require resources for high-temperature smelting operations.

This report follows a recent announcement that the Government plans to spend £390m on low carbon technology. Most of this investment (£250m) is set to go to the steel industry, while £100m will fund the development of hydrogen production methods. The remainder of the money will go to smaller projects, like a hydrogen-powered gin distillery in Scotland, reported on here. This investment could push the steel industry further in the direction of hydrogen power.

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