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ARCELORMITTAL • CLIMATE ACTION REPORT 2 13
2.2.2 Technology pathways.
As we have explained in previous climate action reports, we have identified two viable decarbonisation technology pathways for steel: Innovative DRI and Smart Carbon, and a third pathway, direct electrolysis, which is promising but not yet mature.
We have done a lot of work developing technologies for the two viable routes since the publication of our last report. While these technologies are still far from being commercially competitive, this work has reinforced the potential that both pathways have to produce net-zero steel.
In Europe, the policy environment has enabled ArcelorMittal to accelerate plans to decarbonise steel. EU policy combined with support for significant projects to kickstart the development of hydrogen infrastructure in Europe and reduce the costs, alongside ambitious national commitments to deliver abundant supplies of clean energy and provide funding support for decarbonisation, make it possible to envision zero carbon-emissions steelmaking in first-mover countries across scope 1 and 2 emissions within the next five years: as set out in our detailed plan for our Sestao plant in Spain.
As renewable and low-carbon electricity becomes increasingly available, the production of affordable, industrial-scale green hydrogen becomes a possibility and the prospect of zero carbonemissions steel made via the green hydrogen– DRI–EAF route becomes viable. In Europe, our strategy is largely focused on the Innovative DRI pathway. This reflects the commitment in Europe to prioritise the availability of green hydrogen at competitive prices. Given the significant variation across countries and regions in existing CO2 policy frameworks and in the availability and cost of the clean energy, we will continue to develop our Smart Carbon route. This combines bio-energy, carbon capture and utilisation – all technologies that the International Energy Agency (IEA) and the UN Intergovernmental Panel on Climate Change (IPCC) see as critical to achieving net-zero by 2050. Crucially, Smart Carbon gives us flexibility to adjust our carbon emission reduction plans to local steelmaking conditions.
We are also cautiously optimistic about a third potential technology pathway – direct electrolysis of iron – which is currently in the research and development phase and showing good potential in our Siderwin project (see section 5.1 for more information).
Section 2 Our decarbonisation strategy 2.2 Our net-zero roadmap.
Hydrogen DRI technology continues to advance, yet at today’s green hydrogen cost of $3.5-5/kg, we estimate that green hydrogen based DRI production would increase the cost of steel production by $150 to $250 per tonne compared to natural gas based DRI. On a like-for-like basis (excluding CO2 costs), hydrogen would need to fall below $1/kg to compete with natural gas DRI in Europe, and below $0.7/kg to compete in USA.
If renewable energy costs – the highest contributor to green hydrogen costs – continue to fall, we estimate green hydrogen costs could drop to ~$1.5/kg by 2030. This still means that green hydrogen DRI would require significant public support beyond 2030 to be competitive versus other carbon neutral steelmaking routes.
ArcelorMittal has recently joined the Hydeal consortium, which is focussed on creating the right environment to improve both the supply and market conditions required to drive down the price of green hydrogen to €1.5/kg. At this level it can start to be competitive with fossil fuels in the steel-making process.
Should the costs of green hydrogen fall more quickly than our estimates – which could happen as a result of accelerated regulation and strong government support – then we will be ready to utilise green hydrogen in our DRI-EAF plants. At this point, we expect green hydrogen DRI-EAF to play a significant part in our emissions reduction after 2030.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 14 Hydrogen costs.
Clean electricity generation Water electrolysis Heating.
Hydrogen DRI H2 use for DRI production.
Carbon capture and storage Steelmaking.
Circular carbon.
Clean electricity and green hydrogen.
Carbon capture and storage and blue hydrogen.
Carbon capture and storage Steelmaking Carbon capture and storage.
Clean electricity.
Circular carbon.
DRI.
H2O.
Carbon capture and storage Steelmaking Carbon capture and storage.
Clean electricity.
Circular carbon.
IGAR.
BF-BOF.
DRI.
DRI
Input of clean energy in the form of bioenergy from circular carbon from sustainable biomass.
Circular carbon.
Sustainable biomass.
Pyrolysis.
Circular carbon dioxide.
Clean electricity (post 2030)
Clean electricity generation Electrolysis.
Carbon transport Carbon transport Carbon storage Carbon storage.
Bioenergy.
Reformer.
Carbon capture and storage.
Capturing, transporting and storing any non-circular carbon sources.
Carbon capture and storage.
Green hydrogen Input of clean energy in the form of hydrogen from clean electricity via electrolysis of water into steelmaking.
Blue hydrogen Input of clean energy in the form of hydrogen via separation and carbon capture and storage of carbon in natural gas.
Fossil fuels.
DRI – EAF 2.3.1 Decarbonisation projects 2021-2030 2.3.1.1 Announced projects – Innovative DRI-EAF.
At the forefront of our announcements in 2021 are detailed plans to develop a zero carbon-emissions steel plant in Sestao, Spain. It will produce zero carbonemissions steel across scope 1 and 2 emissions by 2025. We are also working on other new technologies for low carbon-emissions steelmaking.
Making carbon-neutral steel: the DRI-based route.
Section 2 Our decarbonisation strategy 2.3 Our plans: the DRI-based route.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 15
We will also construct a new hybrid EAF in Gijón. The construction of the DRI and EAF units will transition the Gijón plant away from BF-BOF steelmaking to DRI-EAF production, which generates a significantly lower carbon footprint.
We have signed a Memorandum of Understanding with the Spanish government that will underpin the EUR1 billion required for the transition.
Government support for this project is crucial, firstly from a funding perspective, given the significant cost associated with the transition to net zero steelmaking. Secondly, because it will enable ArcelorMittal to have access to green hydrogen supplied through a consortium of companies that will cooperate in the construction of the infrastructure required in order to produce hydrogen in the Iberian Peninsula using solar-powered electrolysis and to transport it directly through a network of pipelines. The initiative involves the construction of multiple large-scale solar farms, with the hydrogen produced in the same location, thereby reducing production costs, and transported directly via pipeline to Gijon and Sestao.
Expected completion date: 2025.
Section 2 Our decarbonisation strategy 2.3 Our plans: the DRI-based route.
ArcelorMittal Spain.
Sestao: zero carbon-emissions steel plant Gijon: new DRI and EAF.
ArcelorMittal’s facility in Sestao will become the world’s first full-scale zero carbon-emissions steel plant. To achieve this, a ~2 million tonne green hydrogen-powered DRI unit will be constructed at our nearby Gijón plant, from which tonnes of DRI will be transported to Sestao to be used as feedstock for its two EAFs.
By 2025, the Sestao plant – which manufactures a range of flat steel products for the automotive and construction sectors, and general industry – will produce 1.6 million tonnes of zero carbonemissions steel by: • Changing the metallic input by increasing the proportion of circular, recycled scrap, and using green hydrogen-produced DRI from Gijón in its two existing EAFs. This means the metallic input into Sestao’s EAFs will be from zero carbon emission sources (covering scope 1 and 2).
• Powering all steelmaking assets (EAFs, rolling mill, finishing lines) with renewable electricity, either by establishing a renewable energy power purchase agreement (PPA) or buying renewable energy guarantees of origin (GOOs) certificates.
• Introducing several key emerging technologies that will replace the small, remaining use of fossil fuel in the steelmaking process with carbonneutral energy inputs, such as sustainable biomass or green hydrogen. This will bring the plant to zero carbon-emissions on a scope 1 and 2 basis.
Iron ore.
Scrap.
Renewable electricity generation Renewable electricity generation Electrolysis.
New Green Hydrogen DRI plant, Gijón.
Existing electric arc furnace (EAF) in Sestao fully decarbonised.
New EAF, Gijón.
This is how we will reduce CO2 from ArcelorMittal Spain by 2025.
DRI – EAF.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 16
Section 2 Our decarbonisation strategy 2.3 Our plans: the DRI-based route.
Hamburg: Europe’s only EAF-DRI facility.
In Germany, ArcelorMittal already operates Europe’s only DRI-EAF plant in Hamburg, where the switch to using hydrogen instead of natural gas in the iron ore reduction process is being prepared. A project is underway to test the ability of hydrogen to reduce iron ore and form DRI on an industrial scale, as well as testing carbon-free DRI in the EAF steelmaking process. The objective is to reach industrial commercial maturity of the technology by 2025, initially producing 100,000 tonnes of DRI a year.
The process of reducing iron ore with hydrogen will first be tested using grey hydrogen generated from gas separation.
In the future, the plant should also be able to run on green hydrogen when it is available in sufficient quantities at affordable prices, with the clean energy for hydrogen production potentially coming from wind farms off the coast of Northern Germany.
Supporting green hydrogen production.
To support and enable the availability of hydrogen for steel production, ArcelorMittal is participating in the establishment of regional hydrogen networks. These include North German hydrogen projects: the Clean Hydrogen Coastline to benefit Bremen and the Hydrogen Cluster East Brandenburg to enable hydrogen supply for Eisenhüttenstadt.
ArcelorMittal is also collaborating with Shell, Mitsubishi and other cross-industry companies to form the Hamburg Green Hydrogen Hub, with the goal of generating energy from renewable sources.
ArcelorMittal Germany.
Bremen and Eisenhüttenstadt: supporting zero carbon-emissions steelmaking.
We are planning to build a large-scale industrial plant for DRI and EAF-based steelmaking at our site in Bremen, as well as an innovative DRI pilot plant and EAF in Eisenhüttenstadtat. The Bremen plant will produce ~2 million tonnes of DRI per year and supply ArcelorMittal EAFs in Bremen and Eisenhüttenstadt.
Bremen and Eisenhüttenstadt will produce up to 3.5 million tonnes of steel by 2030, with significantly lower CO2e emissions.
Depending on the amount of hydrogen available, CO2e savings of more than 5 million tonnes could be possible.
DRI – EAF.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 17
Section 2 Our decarbonisation strategy 2.3 Our plans: the DRI-based route.
ArcelorMittal Canada.
Contrecoeur: Testing incremental use of hydrogen in existing facilities Status: Operational.