Renewables‐based decarbonization and relocation of iron and steel making: A case study

Abstract

AbstractThe article assesses the future role of hydrogen‐based iron and steel making and its potential impact on global material flows, based on a combination of technology assessment, material flow analysis, and microeconomic analysis. Renewable hydrogen‐based iron production can become the least‐cost supply option at a carbon dioxide (CO2) price of around United States dollars (USD) 67 per tonne. Availability of low‐cost renewable electricity is a precondition. Australia is the world's largest producer of iron ore and at the same time a country with significant low‐cost renewable electricity potential. A shift to direct reduced iron (DRI) exports could reduce global CO2 emissions substantially and at the same time increase value added in Australia, while maintaining steel production in countries that are currently processing ore into iron and steel, such as China, South Korea, and Japan. The approach could be expanded to other parts of the world and other energy‐intensive industry sectors. Such relocation analysis in a climate context can become a new industrial ecology research area. Iron and steel industry CO2 emissions can be reduced by nearly a third, around 0.7 gigatonnes (Gt) CO2 per year. To achieve these emission reductions, investment of USD 0.9 trillion, or 0.7% of the total energy sector investment needs, would be required, global DRI production would have to increase seven‐fold from today's level, and the hydrogen energy used would equal 1% of global primary energy supply. Such a shift could develop from 2025 onward at scale, if the right policies are put in place.