Green steel produced using renewable energy and hydrogen offers a promising avenue to decarbonise steel manufacturing and expand the hydrogen industry. Australia, endowed with abundant renewable resources and iron ore deposits, is ideally placed to support this global effort.

A team of researchers from Monash University and Geoscience Australia have published a paper, offering what they consider to be the first comprehensive assessment of Australia’s potential to develop green steel as a value-added export commodity. According to the paper’s lead author, Monash University Research Fellow Changlong Wang, green iron could hold the solution to the twin challenges of decarbonising the global steel industry and exporting Australian hydrogen.

Why steel?

The steel industry is characterised as a ‘hard-to-abate’ sector, due to a combination of technical, economic and infrastructural challenges that have hindered the adoption of green alternatives for primary steel production.

“The technical complexity of steelmaking lies at the heart of the challenge,” Dr Wang said.

“The traditional process involves high-temperature reactions facilitated by burning coal, a carbon-intensive fuel. Developing an effective low-carbon alternative that can deliver the same results has proven difficult. The use of hydrogen as a reducing agent, instead of carbon, is one promising approach. However, this requires significant advancements in hydrogen production, storage, and transportation, as well as access to low-cost renewable electricity.”

As well as these technical hurdles, economic factors have also played a role, with current low-carbon steelmaking technologies tending to be more expensive than traditional methods. Without a substantial carbon pricing mechanism or other economic incentives, Dr Wang said steel producers have little motivation to invest in these costlier green alternatives.

Despite these challenges, Dr Wang said progress is being made in the development of sustainable alternatives for primary steel production.

“Emerging techniques such as hydrogen-based direct reduction, hydrogen plasma smelting reduction, molten oxide electrolysis, and electro-winning of iron in an aqueous alkaline solution are currently under investigation.

“Among these alternatives, the hydrogen direct reduction method has achieved the highest level of technical readiness, and its deployment at an industrial scale has already begun. As the cost-effectiveness of renewable technologies continues to improve and global decarbonisation calls for urgent actions, the prospects for hydrogen-based direct reduction (H2-DRI) in steelmaking are becoming increasingly promising.”

Decarbonising steelmaking is a crucial step in achieving the necessary reductions in emissions to meet net zero targets. According to Dr Wang, steel production is a significant contributor to global emissions, and accounts for approximately seven per cent of all energy-related emissions.

“Meeting the international goal of a net zero future will require a fundamental shift to low-emission iron and steel manufacturing processes, particularly as per the IEA’s Net Zero by 2050 scenario, global steel emissions will need to decrease by 24 per cent by 2030 and 91 per cent by 2050 to avoid the worst effects of climate change and limit global heating to 1.5°C.

“Australia’s resources exports are dominated by steel feedstocks – including iron ore and metallurgical coal – which comprised $200 billion in 2021-2022 (or 47.45 per cent of all resource and energy exports).”

Dr Wang said that this leaves Australia vulnerable to future disruption.

“If we’re part of the solution, then Australia can lead global action on the path to net zero while also maintaining our high quality of life.

The research of Dr Wang’s team shows a strong alignment between prospective hydrogen hubs and current and future iron ore operations in Australia, with the alignment enabling shared infrastructure development and first-mover advantages.

“The Economic Fairways modelling used in the study reveals that many current iron ore mining centres are particularly suited for hydrogen production from renewable resources because of the enabling power and transportation infrastructure built to service existing mining operations.

“While Australia has ample areas of high-quality renewable resources, it is also vast and sparsely populated, with many regions lacking easy access to power and roads. Therefore, the availability of infrastructure is a critical factor in determining the location of hydrogen hubs and iron ore operations.”

According to Dr Wang, the alignment between the two industries can enable shared infrastructure development, reduce costs associated with long-distance hydrogen transportation, and contribute to the production of green steel at a lower cost and with a lower carbon footprint.

Hydrogen’s potential role in steelmaking

Renewably-sourced hydrogen can be used as a substitute for coking coal and methane in the iron treatment process to decarbonise steel production.

“Traditionally, coking coal is used as a source of carbon and energy in the blast furnace process, where it reacts with iron ore to produce molten iron. Methane, on the other hand, is used in the direct reduction process, where it reacts with iron oxide to produce metallic iron.

“By replacing coking coal and methane with renewably-sourced hydrogen, the carbon emissions associated with steel production can be significantly reduced.”

Dr Wang said that the hydrogen can be produced through electrolysis using renewable energy sources such as wind or solar power, with this renewable hydrogen then being used as a reducing agent in the iron treatment process.

“In the case of blast furnace-based steelmaking, hydrogen can be injected into the blast furnace as a substitute for coking coal. This process – known as hydrogen injection – reduces the carbon content in the iron production process, resulting in lower greenhouse gas emissions.”

Hydrogen can be used to replace methane in the direct reduction process. This method is known as hydrogen direct reduction and involves reducing iron ore in a hydrogen-based shaft furnace instead of a conventional blast furnace. The reduced iron is then cast in an electric arc furnace for steelmaking.

“This two-step process requires renewable energy resources, with green hydrogen used for shaft furnace reduction and electricity for electric arc casting. These renewable energy-powered processes significantly reduce greenhouse gas emissions and contribute to the goal of achieving a net zero future.”

Using hydrogen domestically vs exporting

Dr Wang said one of the benefits of using green hydrogen domestically instead of exporting it overseas is that it reduces the costs associated with long-distance hydrogen transportation and extensive, long-term hydrogen storage.

“Transporting hydrogen over long distances, whether by ship or pipeline, is expensive and technically challenging.

“Hydrogen, in its natural state, is a very low-density gas. While it has more energy per unit mass than many other fuels, it is less energy-dense per unit volume. This means that to transport hydrogen, you either need to transport a very large volume of it, which is not practical, or you need to alter it in some way to make it more dense.”

Although there are several ways to do this, each comes with its own challenges and costs.

“Hydrogen can be compressed into high-pressure tanks. However, this requires a lot of energy and specialised, expensive equipment to handle the high pressure. Moreover, even when compressed, hydrogen has a lower volumetric energy density than other fuels, meaning you still need to transport a larger volume to deliver the same amount of energy.

“Hydrogen can be cooled to extremely low temperatures (minus 253℃) to turn it into a liquid, which is denser than gas. This method greatly reduces the volume of hydrogen, making it more practical for storage and long-distance transportation.

“However, the cooling process is energy-intensive and requires expensive, specialised infrastructure, both for the cooling process and for maintaining low temperatures during transportation and storage.”

Another method of transporting hydrogen is by binding it to a chemical carrier, forming a liquid organic hydrogen carrier (LOHC), which means the hydrogen can then be transported at normal temperatures and pressures and extracted from the carrier at the destination. The downside to this method, however, is that it requires complex and costly infrastructure for the binding and extraction processes.

Pipeline transportation of hydrogen can be a practical solution for short distances or within a certain geographic area, but it presents its own set of challenges for longer distances, including that hydrogen embrittlement may lead to damage in certain natural-gas pipelines that are made from metal.

Additionally, regulatory and safety considerations can add to the cost and complexity of hydrogen transport.

Strategically located hydrogen

According to Dr Wang, the strategic co-location of hydrogen production facilities, iron ore mining operations, and steel manufacturing plants can play a vital role in minimising costs associated with extensive hydrogen transportation and storage.

“This approach not only brings these interdependent processes closer together at key industry hubs with abundant infrastructure, but also offers opportunities to harness renewable energy sources effectively.

“Areas like the Eyre Peninsula in South Australia, where wind and solar resources are largely complementary, present unique opportunities. Here, the wind predominantly blows at night when solar energy isn’t available, creating an almost round-the-clock renewable energy supply.”

Dr Wang said a well-designed hybrid system that synergises wind and solar photovoltaic (PV) generation can significantly reduce reliance on expensive battery and hydrogen storage solutions.

“By situating green hydrogen plants and steelworks in regions with such abundant and complementary wind and solar resources, renewable energy can be efficiently used to power the electrolysis process for hydrogen production, as well as provide electricity for the steelmaking operations.”

Overall, the alignment between these two industries can enable shared infrastructure development, reduce costs associated with long distance hydrogen transportation, and contribute to the production of green steel at a lower cost and with a lower carbon footprint.

Off paper, into reality

The 2022-23 Federal Budget allocated $2 billion towards making green hydrogen readily available for various applications, including replacing coking coal in the steelmaking process. Despite this, Dr Wang said there is still more to be done to get green steel off the paper and into production.

Value chain analysis

Dr Wang said that as a country, Australia needs to identify how far down the value chain it should go, which will facilitate setting the conditions to leverage Australia’s natural advantages. The configuration of hubs and export facilities will depend on whether Australia is an exporter of ores, hydrogen, briquette iron, or steel.

Scaling up renewable energy capacity

To produce green hydrogen at a large scale, Dr Wang said there needs to be a significant increase in renewable energy capacity. This involves expanding the deployment of wind, solar, and other renewable energy sources to generate the electricity required for hydrogen production, which will require further investments in renewable energy infrastructure and technologies.

Developing hydrogen production infrastructure

The establishment of a robust hydrogen production infrastructure is crucial for the widespread adoption of green hydrogen. According to Dr Wang, this includes the construction of electrolysers, hydrogen storage facilities, and transportation networks to ensure the efficient distribution of hydrogen to steelmaking facilities and other end-users.

Magnetite production

According to Dr Wang, and depending on how green steel technology develops, Australia will likely need to produce more magnetite. While magnetite is currently mined in Western Australia, South Australia and Tasmania, the vast majority of Australia’s current iron ore production is hematite.

Technological advancements and cost reduction

Continued research and development efforts are needed to advance electrolysis technologies and reduce the cost of green hydrogen production, including improving the efficiency of electrolysers, exploring new catalyst materials, and optimising the overall hydrogen production process.

“Cost reduction is essential to make green hydrogen competitive with traditional fossil fuel-based alternatives. Similarly, integrating green steel production with other flexible industrial processes could hedge capital and operational costs, while minimising renewable energy curtailment,” Dr Wang said. “Supportive policies and regulations, along with collaborative efforts and partnerships, are also essential elements in this endeavour.”

Barriers to uptake

Despite the potential positive outcomes to green steelmaking, there are still barriers and challenges that impact the widespread adoption of the process. As it stands, green hydrogen production is currently more expensive than traditional fossil fuel-based alternatives.

“The high cost of renewable energy sources, electrolysis equipment, and infrastructure development contributes to the higher cost of green hydrogen. Cost reduction measures and economies of scale are needed to make green hydrogen competitive with conventional methods.

“The establishment of a comprehensive hydrogen infrastructure is a significant challenge. This includes the construction of electrolysers, hydrogen storage facilities, and transportation networks. The lack of a well-develope infrastructure can limit the availability and accessibility of green hydrogen, hindering its adoption in the steel industry.”

Scaling up renewable energy capacity is critical for large-scale green hydrogen production, however, the intermittent nature of renewable energy sources, such as wind and solar power, poses challenges in ensuring a consistent and reliable supply of electricity for electrolysis.

According to Dr Wang, additional investments in renewable energy infrastructure are needed to meet the energy demands of green hydrogen production.

“While electrolysis technology has advanced, further research and development efforts are required to improve its efficiency, durability, and cost-effectiveness. Advancements in catalyst materials, membrane technologies, and system integration are needed to enhance performance and reduce the capital and operational costs of electrolysers.”


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