Green Steel Economics
Comparing Economics of Green H2-DRI and Traditional Steelmaking Around the World
About the Report
The global steel industry accounted for over 7% of global greenhouse gas (GHG) emissions and over 11% of global CO2 emissions. The Hydrogen Direct Reduced Iron (H2-DRI) process utilizing green hydrogen from renewable sources promises significant emission reductions and a transition to greener steel production in the sector. The adoption of green H2-DRI-EAF steelmaking involves financial considerations varying by country, influenced by hydrogen costs and carbon pricing mechanisms investigated in this study.
This study by Transition Asia, Global Efficiency Intelligence and Solutions for Our Climate assesses the costs of green H2-DRI-EAF steelmaking compared to traditional Blast Furnace-Basic Oxygen Furnace (BF-BOF) and Natural Gas Direct Reduced Iron-Electric Arc Furnace (NG-DRI-EAF) routes across seven major steel-producing countries, including the U.S., EU, China, Japan, South Korea, Brazil, and Australia. It utilizes a detailed financial model to calculate the levelized cost of steel (LCOS) ($/ton of steel) using expenses such as capital investments, raw materials, labor, and energy costs, adjusting for varying levels of hydrogen use. Different levels of H2 and carbon prices are included in this analysis.
As green-steel incurs a cost premium, this directly affects the material costs of downstream use sectors. This study has analysed the potential cost increases related to three notable downstream sectors; automobile ($/car), construction ($/building unit) and shipping ($/ship), using steel produced via the H2-DRI-EAF method compared to conventional methods for those sectors.
Our study includes critical components such as the gradual substitution of natural gas with green hydrogen (H2) in the DRI route, the integration of renewable energy and green H2 production, and the required electrolyzer capacity. Additionally, we discuss international experiences with financing H2-DRI projects.
Project team and authors
| Name | Company / Organization |
| Ali Hasanbeigi, PhD (Lead Author) | Global Efficiency Intelligence, United States |
| Cecilia Springer, PhD | Global Efficiency Intelligence, United States |
| Bonnie Zuo | Transition Asia, Hong Kong |
| Alastair Jackson | Transition Asia, Norway |
| Daseul Kim | Solutions for Our Climate (SFOC), South Korea |
| Esther Haerim Heo | Solutions for Our Climate (SFOC), South Korea |
Acknowledgements
This report was made possible by support from the Climate Imperative. The authors would like to thank Kathleen Yip, Fei Meng, and Al Armendariz of Climate Imperative, Sean Lang and Monica Wong of TransitionAsia, Kate Kalinova of SFOC, Chris Bataille of Columbia University, and Max Ahman of Lund University for their valuable input to this study and/or their insightful comments on the earlier version of this document.
Disclaimer
The authors and their affiliated organizations have provided the data in this publication for informational purposes only. Although great care has been taken to maintain the accuracy of the information collected and presented, the authors and their affiliated organizations do not make any express or implied warranty concerning such information. Any estimates contained in the publication reflect authors’ current analyses and expectations based on available data and information. Any reference to a specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise, does not constitute or imply an endorsement, recommendation or favoring by the authors and their affiliated organizations. This publication report does not necessarily reflect the policy or intentions of the contributors.
This document may be freely quoted or reprinted, but acknowledgment is requested.
Suggested citation
Hasanbeigi, Ali; Zuo, Bonnie; Kim, Daseul; Springer, Cecilia; Jackson, Alastair; Heo, Esther Haerim. 2024. Green Steel Economics. Global Efficiency Intelligence, Transition Asia, Solutions for Our Climate.
