DECARBONISING EUROPEAN INDUSTRY: HYDROGEN AND OTHER SOLUTIONS 'CARBON-FREE STEEL PRODUCTION'
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DECARBONISING EUROPEAN INDUSTRY:
HYDROGEN AND OTHER SOLUTIONS
‘CARBON-FREE STEEL PRODUCTION’
1/03/2021 Frank Meinke-Hubeny, 01.03.2021
©VITO – Not for distribution 1
BACKGROUND
Publication of the Scientific Foresight Unit (STOA)
EPRS | European Parliamentary Research Service
Jan/Feb 2021
Authors:
Frank Meinke-Hubeny, Juan Correa Laguna,
Joris Valee and Jan Duerinck (EnergyVille/Vito NV)
1/03/2021
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SCOPE OF THE STUDY
Steel Production in Europe Production & Supply of Hydrogen
Established steel production paths Hydrogen Infrastructure
Steel products and applications Hydrogen Backbone
Decarbonisation paths Transmission and distribution
Hydrogen-based steel production Transmission costs
Blending and retrofitting
Case Study “A Long-term vision on Storage of Hydrogen
steel production”
1/03/2021
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STEEL PRODUCTION
IN EUROPE
Steel is produced throughout Europe
But the main steel plants are located
in clusters
Share per country …
Germany 25.1%
Italy 14.8%
France 9.2%
Spain 8.6%
Poland 5.7%
Belgium 4.9%
Austria 4.7%
UK 4.6%
Netherlands 4.2%
…
1/03/2021
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STEEL PRODUCTION IN EUROPE
Steel is produced
in different routes
Each route has a
specific CO2 footprint
Primary route
BF/BOF
~1.9 tCO2/tsteel
Secondary route
Scrap/EA
~0.4 tCO2/tsteel
Primary route
Source: Secondary route
1/03/2021 ~60% or 94 Mt World steel association, 2019
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STEEL USES AND FINAL PRODUCTS
Different steel
applications
require different
steel qualities
2 main categories
Long steel
(= lower quality)
Flat steel
(= higher quality)
Source: EUROFER, 2020
1/03/2021
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HYDROGEN-BASED STEELMAKING
To make Europe’s primary flat steel of
94 Mt carbon neutral requires …
37-60 GW of electrolyser capacity
EU Hydrogen Strategy aims for
40 GW installed within the EU by 2030
296 TWh of green electricity equal to ….
~10% of all EU electricity (2 724 TWh)
~1.7 x Germany’s green electricity (2020)
1/03/2021
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Source: Own elaboration 7
PROJECTS IN EUROPE H2-DRI projects in Europe
HYBRIT 1: LKAB4:
Hydrogen Breakthrough Ironmaking The mining group plans to integrate
Technology is a joint venture of SSAB, downstream and initiate trading sponge iron
LKAB, and Vattenfall, launched in 2016 in produce entirely using H2 from renewable
Several H2-DRI pilot projects Sweden, with the aim to have a fossil-free
steel production solution by 2035. This will
energy sources. In other words, it will install
hydrogen shafts (H-DRI), without the EAF
help SSAB to be practically carbon-free by step.
within the EU 2045. Voestalpine5:
ArcelorMittal :2
The production facility in Linz, Austria, in
In 2019, ArcelorMittal started association with VERBUND, Siemens, Austrian
Targeted time frame from 2035 to collaborating with Midrex to build a Power Grid, K1-MET, and TNO are under
production plant able to annually produce development. With 6 MW of electrolyzer
2050 0.1 Mtsteel using only H2 as a reductant capacity, the project expects to reduce by
agent in Hamburg, Germany. It will initially 30% the emissions of Voestalpine by 2035,
start production using grey hydrogen and with the final goal of reducing the emission
be ready for when green hydrogen supply by over 80% by 2050.
All projects in early development is reliable and affordable.
Salzgitter6:
Thyssenkrupp 3:
stages, meaning high uncertainty In partnership with REW, the steel
With the project SALCOS, the company
expects to develop and demonstrate the
about … producer expects to convert its current
BF/BOF production into H-DRI by 2050.
techno-economic feasibility of hydrogen-
based steel production. The project is divided
Technical parameters (efficiency at Starting with the facilities in Duisburg (2% into several stages: demonstration of MW
of Germany's CO2 emissions) in 2025, one scale electrolyzer, wind power production
large scale, etc.) of the main challenges is the need for a onsite, pipe for H2 transport and storage, and
pipeline to transport H2 from Lingen to the final profitability for steel production.
Cost (CAPEX, OPEX, fuel H2) plant. If H2 is not available in the quantities
Liberty Steel Group7:
needed, the plant will start running on
natural gas. Constriction of a DRI/EAF plant to produce 2
Mtsteel. It will be designed to phase into H2
from natural gas (grey H2), reaching carbon
neutrality by 2030.
1/03/2021
©VITO – Not for distribution Source: Own elaboration 8
PROJECTED STEEL PRODUCTION COST
By 2030, the alternative routes will By 2050, H2-DRI could be the least
increase the end product cost by 5-24%, costly way to produce steel (given a
Equal to an abatement cost of €73-€166 CO2 price).
per ton of CO2 (compared to BF/BOF)
H2-DRI cost decrease -
cheaper electricity & electrolyzer costs
2050
Primary route -
cost increase due to
1/03/2021
©VITO – Not for distribution
EU ETS (84€ -> 160€) Source: Own calculation & elaboration 9
PROJECTED STEEL PRODUCTION COST – HYDROGEN BASED DRI
Delivery of low cost carbon-free electricity essential € 716/t
Impact of electricity price in H-DRI steel production - 2050
steel
(€80/MWh) 20%
Alternative: Hydrogen delivery to the steel sites at competitive prices 39%
€20/MWh
Impact of electricity price in H-DRI steel production - 2050
€ 446/tsteel
2050 € 716/tsteel
(€80/MWh)
(€20/MWh)
Impact of electricity price in H-DRI steel production - 2050
Production20%
price 39%
€20/MWh €50/MWh
sensitivity
€ 716/tsteel
(€80/MWh)
€ 446/tsteel 20%
(€20/MWh) to €(€80/MWh)
716/tsteel
20% 39% 50% €80/MWh
electricity Share of
€20/MWh €50/MWh39%
prices electricity
€ 446/tsteel €20/MWh €50/MW
(€20/MWh) cost
€ 446/tsteel
(€20/MWh) in final steel
50% €80/MWh
Others Electric
product
H2-DRI/EAF
Others Electricity 50% €80/MWh
H2-DRI/EAF 50% €80/MWh
Others Electricity
1/03/2021 H2-DRI/EAF Others Electricity
Source: Own calculation & elaboration
©VITO – Not for distribution H2-DRI/EAF 10LONG-TERM GLOBAL STEEL PRODUCTION AND SCRAP AVAILABILITY
Case Study “A Long-term vision on steel production “ (Vito & KTH, 2018)
13 world regions,
Projected demand for long and flat steel,
Projected availability of steel scrap,
Projected trade among the world regions. Steel scrap
+167% by
2070
Global Flat steel +87% by 2070 Global Long Steel +30% by 2070
Source:
Vito, KTH (2018)
1/03/2021
Global Steel production by Technology
©VITO – Not for distribution 11LONG-TERM GLOBAL STEEL PRODUCTION AND SCRAP AVAILABILITY
Case Study “A Long-term vision on steel production “ (Vito & KTH, 2018)
Trade of scrap and finished products among regions balances demand & supply
Well developed regions (e.g. Europe) net-exporters, maintaining production capacities
Results are highly sensitive to unilateral GHG policies (e.g. CO2 taxes)
Stable demand & Steel scrap
production for high (recycling) in long
quality steel in EU products
1/03/2021
European Steel Production Scenarios Source: Vito, KTH (2018)
©VITO – Not for distribution 12used.
HYDROGEN PRODUCTION
Obtained by electrolysis
It faces the public acceptance
Purple/ of nuclear plants and the
linked to a nuclear power CO2 free
Pink phase-out plans defined by
plant.
Established ‘colour scheme’ for hydrogen by technology & fuel several Member States.
Turquoise hydrogen is a by- It is highly energy-intensive.
Type of Hydrogen Production
product of methane
Considerations
The current market will not be
Emission Factor
Turquoise
Selected ‘colours’- see report for full overview
(natural
Produced
which
gas) pyrolysis,
through
splits methane
coal
into
able to absorb the massive
It is a highly
amounts ofpolluting
carbon process
black
CO2 free
Brown/ gasification. The colour
hydrogenongas and ofsolid since both CO and CO are not
produced (Wiley-VCH-GmbH,
2 19 tCO2/tH2
Black depends the type coal
carbon. reused
2020). and, thus, released into (IEA, 2019)
used: brown (lignite) or
the atmosphere.
black
It does(bituminous)
not havecoal. yet an
Type of Hydrogen Production Considerations Emission Factor
established colour to be
Produced from fossil fuels, Although it is a mature
classified. through
Produced Produced coal by Several technologies are being
most commonly from It is a highlyitpolluting
technology, involves process
Grey
Sunlight
Brown/ photocatalytic
gasification. The colourwater developed but are stillnotable
at the CO2 free
natural since both CO2 and COasaremass
not 19 tCO22/tH22
Black splitting gas
depends on the
with through
typeenergy,
solar the
of coal disadvantages such
lab or small prototype scales. 10
SMR process. Less reused
and heat transfer issues, as into
and, thus, released well (IEA,
(IEA, 2019)
2019)
used:
withoutbrown (lignite) the
going through or
commonly it uses coal.
the ATR thecoke
as atmosphere.
deposition during the
black (bituminous)
electrolysis step.
process reaction.
Produced frombyfossil water
Produced fuels, Although it is a mature Power grid factor
Yellow electrolysis
It is produced
most utilising
commonly in the using
same
from technology, it involves notable
Grey Since the origin of the power is (gCO2/kWh).
the
way power
natural as gasof through
brownmixed or origin
grey
the Depends on thesuch
disadvantages availability of
as amass 10 tCO /tH
Blue not carried, it could have high Incurred
0.64 T&D
– 20.99 losses
2 tCO 2/tH2
from
SMR the process.
hydrogen, grid
but(others
its COrefer
2 is
Less carbon
and storage (CCS) or carbon
CO2 heat transfer
emission issues,
factor as well
associated. (IEA,
should
(CE 2019)
be2018)
Delft, accounted
to hydrogen
captured
commonly itproduced
anduses the from
stored or
ATR use (CCU).
as coke deposition during the for.
solar
used.
processpower) reaction.
It is produced by
It faces the public acceptance
It is produced
Obtained
electrolysis by inelectrolysis
the using
of water, same Availability of RES and water
Green
Purple/ of nuclear plants and the CO2 free
Blue way
solely asto electricity
linked brown
a nuclear or power
grey
from Depends
play a keyon the availability of
role. CO2 free
Pink phase-out plans defined by 0.64 – 0.99 tCO2/tH2
hydrogen, but itssources.
renewable energy
plant. CO2 is carbon storage (CCS) or carbon
several Member States. (CE Delft, 2018)
captured and stored or use (CCU).
used.
Turquoise hydrogen is a by- It is highly energy-intensive.
Turquoise product of methane The current
It faces the market will not be
public acceptance
Obtained gas)
(natural by electrolysis
pyrolysis, able to absorb the and
massive
Purple/ of nuclear plants the CO
linked splits
which to a nuclear
methanepower
into amounts CO22 free
free
Pink phase-out plans definedblack
of carbon by
1/03/2021 plant.
hydrogen gas and solid produced (Wiley-VCH-GmbH,
several Member States.
©VITO – Not for distribution carbon. 2020). 13HYDROGEN PRODUCTION
Hydrogen production costs for different technology options in 2030
Selected colours
1/03/2021
©VITO – Not for distribution 14HYDROGEN OVERALL DEMAND
Vision on Europe’s future hydrogen demand by sector 2030 & 2050 (FCH-JU)
TWh
by 2050:
Hydrogen demand
New Industries 7.8 Mt H2
of which …
Steel Sector 4.2 Mt H2
(own calculation ~6.6 Mt)
1/03/2021
©VITO – Not for distribution 15HYDROGEN INFRASTRUCTURE
Europe’s gas transmission ~260 000 km & distribution pipelines of 1.4 million km
Compared to appr. 2 000 km of existing hydrogen pipelines
The natural gas grid is operated by different organizations across the EU
Existing European natural gas network Existing European non-natural gas network
1/03/2021
©VITO – Not for distribution 16HYDROGEN PRODUCTION AND TRANSPORT ROUTE USING PIPELINES
High CAPEX of new H2 pipelines are a challenge for
the infrastructure deployment and demand proliferation.
Potential technical challenges:
Hydrogen embrittlement → pipelines cracks and fractures at stresses
Hydrogen leaks and safety conditions
Improved compression system for hydrogen required
Asses potential, location and needs for hydrogen storage at big scale
1/03/2021
©VITO – Not for distribution 17EUROPEAN HYDROGEN BACKBONE – MAIN TAKE AWAYS
The European backbone to follow
~23 000 KM of
hydrogen valleys -> existing dense hydrogen network,
industrial clusters 75% repurposed
pipes
Blending 10% of hydrogen will lead
to a carbon emission reduction of
only 3%.
Storing hydrogen requires 3 times
more space than natural gas for the
same amount of energy.
Blending might create fragmentation
in the EU gas market due to
differences in the quality of the gas.
Regulatory frameworks required for
network operators to own, operate
and finance hydrogen pipelines.
1/03/2021
©VITO – Not for distribution 18NATIONAL HYDROGEN BACKBONE IN DE (2030) – PROPOSED BY FNB GAS
Connect H2 imports, local hydrogen
production from wind and solar with
steel and petrochemicals sites.
The plan is to build a 5 900 km
hydrogen grid (90% repurpose
pipelines).
FNB Gas estimates the cost to be 10-
20% of the cost of building new H2
pipelines.
1/03/2021
©VITO – Not for distribution 19‘FIRST’ INSIGHTS IN COSTS - PIPELINES
Component Value (2019) Comment Source
Current projects are pilot or research Investment
repurposing existing
M€ 0.37/km Germany based case, cost of repurposing
15% compared to the new pipeline
[1]
pipelines
projects and context specific (excl. compressors).
Investment cost new M€ 0.93/km 16-inch average diameter. Costs for [2]
pipeline (range) transmission of 6 300 km in the UK.
Repurposing offers cost savings and M€ 2.1/km The 48-inch pipeline, operating between [3]
30-80 bar with a length of 300 km in the
reduced execution time (limited M€ 3.28/km
UK.
[4]
48-inch pipeline.
permitting) (excl. compressors)
Investment New M€ 0.65/MW Costs for a 5.8 MW compressor, with a 240 [5]
Focus on strategic connections and compressor (range)
M€ 1.07/MW
t/day throughput.
5.8 MW capacity for compressor, calculated [4]
advantageous conditions for first according to cost curve in source
(compressors are required every 100-600
implementations km, highly case-specific)
LCOT for H2 M€ 3.7/MWh H2 Repurposing existing gas infrastructure for [6]
transmission – per 600km 100% hydrogen.
‘Later stage’ capacity increase possible by repurposing natural
gas infrastructure
upgrade of compressors (higher flow LCOT for H2 M€ 4.6/MWh H2 48-inch pipeline. Includes pipeline and [6]
transmission - New per 600km compressor CAPEX and OPEX and
rate) natural gas compression fuel-related costs.
infrastructure (range)
M€ 11.4/MWh Transportation over 1500 km is assumed [7]
H2 per 600km by source, considering all capital and
operating costs. Normalised to 600 km.
M€ 45/MWh H2 Estimated including compression costs for [8]
per 600km pipes of diameters between 7-10 inches
1/03/2021 over 100 km as assumed by source.
Normalised to 600 km.
©VITO – Not for distribution 20‘FIRST’ INSIGHTS IN COSTS - STORAGE
Investment Costs
Similar to natural gas, end-use Technology Range (2019) Comment Source
Depleted gas field €280 - 424 /MWh CAPEX including compressors and pipes, [1]
sectors will require constant H2 stored 4% OPEX.
molecule flow, but context &
Salt caverns €344 /MWh H2 CAPEX for 1,160 t of working capacity (+1/3 [1]
application specific stored additional for cushion gas), but highly
dependent on geography. 4% OPEX,
includes compressors and pumps.
Hydrogen storage needed, Rock caverns €1 232 /MWh H2 4% OPEX. [1]
approximately 3x volume vs. stored
Levelized Cost of Storage
natural gas
Technology Range (2019) Comment Source
Tank €0.17 kg H2 Compressed state hydrogen at 5 – 1 100kg [1]
First pilot projects under per container
€4.1 kg H2 Liquid state hydrogen at 0.18 - 4 500t H2
evaluation per tank
Depleted gas field €51 - 76 /MWh H2 Cost for working gas capacity, 1 cycle/year. [1]
Including the cost of compression and
See report for overview of pipelines needed for the facility to
initiatives & cost projections function.
Salt caverns €6 - 26 /MWh H2 300-10,000 t per cavern, lower bound: [1]
monthly cycling, upper value: bi-annual [2]
€17 /MWh H2 cycling.
Rock caverns €19 - 104 /MWh 300-2,500 t per cavern, lower bound: [1]
H2 monthly cycling, upper bound: bi-annual
1/03/2021 cycling.
©VITO – Not for distribution 21… keep in touch!
Frank Meinke-Hubeny
Sr. Researcher | Project Manager – Sustainable Energy
Unit Smart Energy & Built Environment
HQ: VITO NV | Boeretang 200 | BE-2400 Mol
Office: EnergyVille I | Thor Park 8310 | BE-3600 Genk
Phone +3214335820 | Frank.Meinke-Hubeny@vito.be
1/03/2021
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