EU steelmakers should reconsider transition to hydrogen and DRI – EuRIC

European steelmakers need to reconsider their approach to switching to hydrogen-based steelmaking and direct reduction of iron. This is stated in the latest review by EuRIC, the EU Confederation of Process Industries.

As noted, since 2020, most European flat steel producers have announced the transition from blast furnaces to DRI. However, these commitments should be revised due to rising energy prices after Russia’s invasion of Ukraine and the delay in the development of green hydrogen in Europe.

The confederation notes that hydrogen increases the cost of steel production. According to estimates, for flat steel products, this figure varies from 20-30% to 50%, and the pan-European hydrogen infrastructure is far from complete.

The DRI route has become too expensive to scale up in Europe. But it could become a competitive advantage for emerging steelmaking countries in the Middle East and North Africa, which could benefit from low gas prices.

The confederation believes that decarbonization through electric arc furnace production is a faster and more cost-effective solution for Europe.

Currently, EAF can produce steel with a 90-95% reduction in emissions compared to the blast furnace route, using scrap as a raw material with a marginal cost premium of 8-13%.

According to EuRIC, the use of more scrap in steel production can significantly reduce the carbon footprint compared to iron ore, while being cost-effective. Approximately 72% and 70% of steel production in Turkey and the United States, respectively, is produced in electric arc furnaces. Meanwhile, in the EU, this figure has remained stable at around 45% for years.

As GMK Center reported earlier, European steelmakers are calling on the European Commission to limit scrap exports so that the bloc can achieve its sustainable development goals and maintain industrial competitiveness. It is noted that the demand for scrap is likely to increase significantly as a result of the bloc’s ambitious climate policy.