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Towards Defossilised Steel: Supply Chain Options for a Green European Steel Industry


As the European Union intensifies its response to the climate emergency, increased focus has been placed on the hard-to-abate energy-intensive industries. Primary among these is the steel industry, a cornerstone of the European economy and industry. With the emergence of new hydrogen-based steelmaking options, particularly through hydrogen direct reduction, the structure of global steel production and supply chains will transition from being based on low-cost coal resources to that based on low-cost electricity and therefore hydrogen production. This study examines the techno-economic options for three European countries of Germany, Spain, and Finland under five different steel supply chain configurations compared to local production. Results suggest that the high costs of hydrogen transportation make a European steelmaking supply chain cost competitive to steel produced with imported hydrogen, with local production costs ranging from 465-545 €/t of crude steel (CS) and 380-494 €/tCS for 2030 and 2040, respectively. Conversely, imports of hot briquetted iron and crude steel from Morocco become economically competitive with European supply chains. Given the capital and energy intensive nature of the steel industry, critical investment decisions are required in this decade, and this research serves to provide a deeper understanding of supply chain options for Europe.

Funding source: The authors gratefully acknowledge the public financing of Business Finland for the ‘P2XENABLE’ project under the number 8588/31/2019, Academy of Finland for the ‘Industrial Emissions & CDR’ project under the number 329313, and LUT University Research Platform ‘GreenRenew’, which partly funded this research.
Related subjects: Applications & Pathways
Countries: Finland

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