This study deals with the use of hydrogen for the de-carbonization of the Resources and Energy Intensive Industries (REIIs) and gives a specific insight of the situation of the steel-making industry.
The growing use of hydrogen in our economy is synonym for an equal increase in electricity consumption. This results from the fact that the current most promising technologies of H2 production is water electrolysis. For this purpose, the EU hydrogen strategy foresees a progressive ramp up of H2 production capacities. But bottlenecks (especially regarding energy needed for electrolysers) may occur. Capacities should reach 40 GW (around 10 Mt/y) by the end of 2030.
The steel-making industry relies heavily on H2 to decarbonise its process (through direct iron ore reduction). Our study analyses the conditions under which this new process will be able to compete with both European and offshore existing carbonised assets (i.e. blast furnaces). It emphasises the need for integrated and consistent policies from carbon prices to the carbon border adjustment mechanism through carbon contracts for differences but also highlights that a better regulation of electricity prices should not be neglected.