Climate Neutral Steel – New Proposal from GES

In a paper, Global Energy Solutions subjects the German strategy for future climate-neutral steel production to a reality check. The predominant process today is the so-called blast furnace route, using coke and coal. Steel produced in this way costs at least 390 euros per tonne. In order to produce climate-neutral steel, German policymakers are currently pursuing the approach of direct reduction through green hydrogen. In fact, this would largely avoid CO2 emissions. However, green hydrogen (from domestic production) is foreseeably too expensive (6 to 8 ct/ kWh), so that a tonne of steel would cost 100 to 150 euros more than today. The consequences would be an exodus of steel production from Germany and/or permanent subsidies. In this paper, GES proposes a different path, namely steel production via direct reduction with green methane from North Africa. The price for a tonne of steel produced in Germany would then be around 440 euros. From GES’ point of view, this is an attractive path to climate-neutral steel that also avoids the technical risk of driving with pure hydrogen, which has not yet been realised on a large scale.