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BECCS beats hydrogen for decarbonizing steel in Europe: ArcelorMittal

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BECCS beats hydrogen for decarbonizing steel in Europe: ArcelorMittal

Highlights

CO2 over Eur100/mt needed with today's green H2 costs

Hydrogen not competitive for steel this decade

ArcelorMittal targets 30% CO2 reduction by 2030

London — Bioenergy with carbon capture and storage (BECCS) offers a more cost-effective, readily available solution for decarbonizing the steel industry in Europe than clean hydrogen, steel producer ArcelorMittal's head of strategy David Clarke said May 17.

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Looking at four key factors the company uses to assess renewable pathways -- existing technology, availability of clean energy systems, the economics and other benefits beyond steel decarbonization -- ArcelorMittal viewed BECCS as the solution with the most promise, Clarke said at the online BNEF summit.

"We know biomass worked as a replacement for coal," he said. "We've been using it in our operations in Brazil and other places for many, many years. We have a project in Belgium that we'll be starting up next year using waste wood, using that to make bio-coal," with a project to take the emissions from the bio-coal to produce bioethanol.

Though biomass is a finite resource, ArcelorMittal does not see an issue with availability.

"We believe when you look at the numbers and the availability, and especially when you look at waste streams, that there is potential and not a big issue with the availability," Clarke added.

Clarke noted though that the supply chains and CCS facilities required needed to be built.

Hydrogen shortcomings

Clarke said that while the technology was proven for hydrogen produced either by electrolyzing water with renewable power, or through steam methane reforming with CCS, the economics would be a barrier to using clean hydrogen in the steel sector.

"The cost and economics of making steel using hydrogen are very expensive today," he said. "We can imagine how hydrogen costs might evolve going forward, but it fundamentally centers on the cost of clean electricity, which, again, we're looking at least a 10, if not 20-year horizon before we see those economics being positive.

"We don't have that kind of timescale in which to make some meaningful dent in the emissions from steel making today, at least in Europe."

With green hydrogen production costs where they currently are, a carbon price "in the few hundreds" of euros would be needed to make hydrogen cost-competitive, Clarke said, versus a carbon price of below Eur100/mt ($121/mt) for other solutions.

"A scenario where you can get hydrogen well below $1/kg or something like that, then things can change," he added.

S&P Global Platts last assessed the cost of producing hydrogen via alkaline electrolysis in the Netherlands (including capex) at Eur4.36/kg May 14. PEM electrolysis production was assessed at Eur5.47/kg, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur2.26/kg.

EU Allowance futures prices for December 2021 delivery on the ICE Futures Europe exchange rallied to an all-time closing high of Eur56.65/mt May 14.

Negative emissions

Clarke said that a major advantage BECCS had in ArcelorMittal's view was its scope to be carbon negative.

"If you feed steelmaking from fundamentally renewable sources of carbon, combine that with CCU and CCS, then the steel sector not only becomes carbon neutral but potentially a carbon sink."

ArcelorMittal has committed to a 30% reduction in its CO2 emissions by 2030, from 2018 levels.

Clarke said the company was technology neutral in achieving this goal, but "we're going to have to use other vectors than hydrogen because it's just not going to be ready or available or more cost effective."

Another option the company is exploring is direct electrolysis, he added.

If it is a viable steel production pathway, "that takes out the whole need for hydrogen, which is effectively a molecule we're creating as an intermediate step between the clean electrons and the reduction of the iron ore," he said.