Hydrogen in Steel
The adoption of hydrogen in iron and steelmaking processes holds significant potential to address the
carbon footprint of the steel industry, yet the scourge of excess capacity hinders the deployment
of hydrogen-based solutions and the achievement of climate goals. Studies show hydrogen based
DRI facilities could potentially curb emissions by up to 90% from the traditional BF-BOF route. However,
the persistence of excess capacity, by weighing on companies’ profitability, displaces potential
investments in hydrogen-based solutions.
Recent OECD estimates expect excess capacity to reach 630 mmt by 2026, which corresponds roughly to the amount of hydrogen-based steelmaking capacity that needs to come online to achieve net-zero goals by 2050 in the most ambitious decarbonisation
scenarios for hydrogen-based steelmaking developments.
The level of investment in hydrogen-based solutions is currently modest posing limited
immediate threats to the furthering of excess capacity. OECD figures show that a total of 164 mmt
of DRI capacity are in the planning and construction phase until 2030, of which only 15 mmt (9.2%) are
based on hydrogen, whereas the vast majority are based on natural gas DRI, with some of them
gradually switching to hydrogen as it becomes available for steelmaking.
