Wednesday, 24 February 2021
On 23 February 2021 H2 Green Steel (H2GS) announced their sustainable steel project near Boden in Northern Sweden, which includes plans for a giga-scale green hydrogen plant, aiming to produce 5 million tonnes of zero-emissions steel by 2030.
Henrik Henriksson will lead the H2GS venture and is also the Chief Executive of the Swedish headquartered automaker Scania. The project is hugely consequential for the vehicle industry - an estimate of 130-180 Euro per vehicle cost the producers if emissions from the steel industry were subject to the ETS with costs being passed along the supply chain.
Scania Head of Purchasing, Anders Williamsson admitted "A Scania truck weighs about six tons and five of those are steel, which today, unfortunately, is produced with a substantial carbon footprint."
Continuing, "by investing in and partnering with H2 Green Steel we are now further accelerating the journey towards emission-free products across the whole value chain. It's a significant increase in ambition, which will not only contribute to Scania delivering on the goal of Paris Climate Agreement but also raising the bar even further".
The green steel will be manufactured via the Direct Reduced Iron (DRI) process utilising green hydrogen produced renewable energy, rather than traditional blast furnace processes which utilise coke and release CO2. The HYBRIT project, which was founded by SSAB, LKAB, and Vattenfall is also based upon this methodology and was cited as a source of inspiration by Carl-Erik Lagercrantz of Vargas, who were co-founders of the H2GS initiative.
CO2 emissions for EU flat steel (products from steel sheet or plate) market accounts for 200 mil tonnes a year. The H2GS facilities to be based at Boden-Lulea, while only representing a fraction of this total production would go a long way towards establishing the green credentials of the European steel industry.
According to a McKinsey study, an expected output of 5 million tonnes of green steel would require approximately 360 000 tonnes of hydrogen equivalent to 12 TWh in energy content. This requires in excess of 2 GW electrolyser capacity, which is consistent with the gigascale tag on the project. For comparison, the EC hydrogen strategy announced in Europe July last year gave a EU target of 40 GW capacity in 2030.
Adoption of the EC recast Renewable Energy Directive should see an EU wide GO scheme for renewable gases, including green hydrogen (Recital 59 of RED II). Currently, CertifHy is the only existing Hydrogen GO registry, with 4.8 GWh GOs issued for green hydrogen in 2020. The 12 TWh hydrogen aimed for 2030 by H2GS already dwarfs this amount, as does the 173 TWh targeted by the EC in 2030 suggesting aggressive expansion in hydrogen capacity over the next ten years.
Also according to McKinsey, to produce 5 million tonnes of green steel, an estimated 24 TWh of renewable electricity is required for not only hydrogen production but also energy requirements. This represents more than 20% of current Swedish electricity usage (around 150 TWh/year). Much of this electricity will effectively come from wind turbines, particularly onshore wind farms.
While these wind farms have seen public sentiment turn against them in recent times in Sweden, they are relatively prolific, including the Markbygden Windfarm which is located near Boden-Lulea which could amount to 4 GW capacity between the three phases of the wind farm by 2022.
When operational, H2GS should be utilising GOs for both electricity and green hydrogen for disclosure purposes. While the project may be self-sufficient with regards to its hydrogen requirements, hydrogen GOs will likely be requested by end-users or manufacturers of steel products as proof of sustainably produced steel.