How hydrogen is gaining momentum in the Chinese steel industry

• Monday, September 28, 2020
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  [Ferro-Alloys.com] 

By Frank Zhong

 

Chief Representative, Beijing Office / Advisor on Economics, Raw Materials and Markets

 

People often ask me what Chinese steel companies are doing to reduce the steel industry’s impact on the environment. 

 

I thought I would take the opportunity of this blog to provide an overview of the promising research and development projects Chinese steel companies have initiated since 2019 around the use of hydrogen as a replacement for coal.

 

Public and private company initiatives in China

 

At the end of 2019, China’s second-largest steelmaker HBIS Group announced its ambition to build a 1.2 Mt/a hydrogen-based steelmaking plant. This is a historic step forward for the decarbonisation of the Chinese steel industry, which represents more than half of global steel production and related carbon dioxide emissions.

 

Although it is not clear when the 1.2 Mt/a new plant will be put into operation, HBIS Group has begun working with the Italian company Tenova on technical preparation for ground-breaking in 2020.

 

This project is claiming to be the first and the largest real-life plant using hydrogen-based technology at an industrial production scale.

 

Baowu Group is also very active. In early 2019, it created a partnership with the China National Nuclear Corporation and Tsinghua University to develop a technology jointly to use nuclear power to generate hydrogen to replace fossil fuel in steelmaking.

 

In September 2019, another medium-sized steelmaker Jiuquan Steel*, situated in Northwest China, created a research institute to study a new hydrogen-based ironmaking technology mixing the roles of both hydrogen and coal. Following successful laboratory experiments, a pilot plant will be built.

 

The above three are all state-owned companies, however, a privately-owned steelmaker, Jianlong Group, the fifth-largest in China, has also taken its first steps towards developing hydrogen technology.

 

In September 2019, Jianlong Group* launched the construction work for a 0.30 Mt/a smelting reduction plant which uses a mixture of hydrogen and coal. Hydrogen will be extracted from the coke oven gas and the project is scheduled for first production in October 2020.

 

The latest project was launched in early May 2020 by another private steelmaker, Rizhao Steel*. The project will produce 0.5 Mt/a DRI using hydrogen, which is extracted from the co-products of a natural gas-based process to make vinyl acetate.

 

Challenges ahead for hydrogen’s widespread use

 

According to some analysts reports, the global hydrogen-making capacity is about 70 Mt/a and China accounts for one-third of the total.

 

So far, this hydrogen supply in China is mainly for the chemical industry with a fraction for transportation, e.g. HBIS Group’s pilot hydrogen station for refuelling of heavy trucks which was commenced on 28 August 2020.

 

Therefore, the existing hydrogen-making capacity in China is not sufficient to support the steel industry.

 

HBIS Group pilot hydrogen station for refuelling of heavy trucks

 

In addition to availability, the cost of hydrogen is another challenge. With the current hydrogen market price in China (approximately RMB 60,000/tonne / Euros 7,800/tonne), the energy cost of the hydrogen-based ironmaking technology would be more than five times costlier than the traditional blast furnace technology.  

 

Hydrogen production levels and its cost will therefore need to be resolved for it to become a viable solution. This will require engagement and funding.

 

China trading system supporting decarbonisation

 

Decarbonisation is a core challenge ahead for the Chinese steel industry. In 2019, China produced 996 Mt of crude steel, of which approximately 780 Mt or 78% was produced from iron ore with coal as the primary source of energy, the remaining 22% was from recycled steel.

 

Since 2011, a few Chinese steelmakers have been involved in a pilot system for carbon emission trading established by the central government.

 

In December 2017, the Chinese government officially launched its carbon emission trading system with power generation being the first sector covered. It was reported that the steel industry will also soon be covered by the carbon trading system, which will push the steelmakers to allocate more resources to look for low-carbon energy such as hydrogen.

 

Long-term – a promising outlook?

 

All in all, this is looking very promising, and it only goes to confirm worldsteel’s conviction that globally with the combined efforts of all the players in the industry, new carbon-neutral technologies will emerge. The question is when is this likely to happen. 

 

Source: worldsteel

 

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