Decarbonising the global steel industry by 2050 will require an eye-watering 550-600GW of electrolyser capacity by mid-century, energy consultancy Wood Mackenzie tells Recharge.

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Getting the carbon-intensive sector to net zero would require an astonishing 52 million tonnes of green H2 by 2050 — around three quarters of all hydrogen produced across the world today, according to the WoodMac report, Pedal to the metal: Iron and steel’s $1.4 trillion shot at decarbonisation. Most of that hydrogen would be used as a reducing agent to extract “direct-reduced iron” (DRI) from iron ore.

That volume would represent a more than 2,000-fold increase in global installed electrolyser capacity, which sits at 257MW today (according to Norwegian analyst Rystad Energy) — and would require 1,100-1,800GW of renewable energy, depending on location, technology and electrolyser utilisation, Recharge estimates.

Green hydrogen’s role would only be assured if it can be provided “competitively” at around $2/kg, which would contribute to the overall production cost of green steel rising by 15-20% to around $100/tonne. This would be recouped via green premiums on decarbonised steel, the UK-based consultancy believes.

In total, WoodMac envisages that steel plants would be powered by 2,000GW of dedicated renewables capacity — equivalent to two thirds of today’s global clean-energy generation and more than double that of the world's current installed wind and solar capacity. That would include power supply for electric arc furnaces and other power needs as well as electrolysers, the company tells Recharge.

Price tag

The development of this hydrogen ecosystem for green steel production would come with a price tag of up to $176bn — around 44% of the $400bn WoodMac says would be required to switch over steelmakers to DRI technology — although it is not clear whether this includes the cost of building and operating dedicated renewables power. WoodMac had not clarified this point at the time of writing.

“The availability of competitively priced green hydrogen at scale is a must in delivering decarbonisation goals,” WoodMac said in its report. “Commercialising new technologies, such as hydrogen-based DRI and molten oxide electrolysis [an all-electric alternative being developed by Boston Metal] running on renewable energy, could reduce emissions to zero.”

But despite the massive figures involved, the cost of green hydrogen is dwarfed by the overall investment of $1.4trn needed to put steel production — which accounts for 7% of all global emissions — on a net-zero pathway, the report said.

In addition to investment in green hydrogen and DRI, producers would have to throw cash at exploring high-grade iron mines, switching from highly polluting blast furnaces to electric arc furnaces, increasing recycling, and up to $250bn in carbon capture and storage.