Improving the Economics of Fossil-free Steelmaking via Co-production of Methanol

Steelmaking is responsible for 7% of the global net emissions of carbon dioxide and heavily reducing emissions from currently dominating steelmaking processes is difficult and costly. Recently, new steelmaking processes based on the reduction of iron ore with hydrogen (H2) produced via water electrolysis have been suggested. If the electricity input to such processes is fossil-free, near-zero carbon dioxide emissions steelmaking is achievable. However, the high electricity demand of electrolysis is a significant implementation barrier. A H2 storage may alleviate this via allowing a larger share of H2 to be produced at low electricity prices. However, accurately forecasting the dynamics of electricity markets is challenging. This increases the risk of investment in a H2 storage. Here we evaluate a novel methanol-based H2 storage concept for a H2-based steelmaking process that also allows for the coproduction of methanol. During electricity price peaks, the methanol can be reformed to produce H2 for the steelmaking process. During prolonged periods of low electricity prices, excess methanol can be produced and sold off, thus improving the prospects of storage profitability. We use historical electricity prices and a process model to evaluate methanol-fossil-free steel co-production schemes. Methanol coproduction has the potential to improve the economics of H2 supply to a fossil-free steelmaking process by up to an average of 0.40 €/kg H2 across considered scenarios, equivalent to a reduction in H2 production electricity costs of 25.0%