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The youth of the region’s blast furnace steel plants makes it
difficult to justify the costs of converting to hydrogen-enabled facilities
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Steel contributed 15 per cent of China’s carbon dioxide
emissions, the second-highest proportion after the power generation sector
Environmentally-friendly
steel on a commercial scale in Asia is still decades away, according to
Australian mining giant BHP. Photo: Shutterstock
Environmentally-friendly
steel on a commercial scale in Asia is still decades away as the
use of hydrogen to replace coal-fired furnaces in production is a long way from
being commercially viable, according to Australian mining giant BHP.
The relative youth of the region’s fleet of traditional blast furnace steel plants –
averaging 12 years in China and 18 years in India – means it would be difficult
to justify the costs of converting them to hydrogen-enabled “direct reduced
iron” (DRI) facilities, said chief development officer Johan van Jaarsveld.
“The adoption of hydrogen in steel making – the replacement of
blast furnace iron with direct reduced iron – is something possible in the
future,” he said. “However, we don’t think that is something that is going to
happen in material quantities in this part of the world for another few
decades. The reason is just costs.”
For DRI to be economically sustainable in Asia, the price of
each tonne of carbon dioxide emitted would need to rise to US$100, and the
price of green hydrogen fall to US$1 per kilogram, he said.
Carbon has traded between 56 yuan and 62 yuan (US$7.8-US$8.6) a
tonne in China’s national carbon market so far this year. In Europe, where “green steel”
production is more advanced, carbon permits fetched €58-€98 (US$56-US$102) a tonne.
Johan van
Jaarsveld, chief development officer of Australian mining giant BHP. Photo:
HANDOUT
The cost of green hydrogen, made by splitting water into oxygen
and hydrogen using renewable energy, could take until 2050 to fall to
US$0.7-US$1.60 per kg in most parts of the world, from US$2.5-US$4.5 in 2019,
according to BloombergNEF, a clean-energy industry data provider.
DRI, which involves the removal of oxygen from the ore to
produce iron without melting it, is much less carbon-intensive than that
produced in blast furnaces.
BHP plans to spend US$4 billion to reduce its own greenhouse gas
emissions globally by at least 30 per cent by 2030 compared to 2020.