The Role of Hydrogen in Decarbonizing U.S. Iron and Steel Production
Katherine Jordan, Paulina Jaramillo, Valerie J. Karplus, P. J. Adams, Nicholas Z. Muller
Abstract
High Resolution Image Download MS PowerPoint Slide This study investigates the role of hydrogen as a decarbonization strategy for the iron and steel industry in the United States (U.S.) in the presence of an economy-wide net zero CO 2 emissions target. Our analysis shows that hydrogen-based direct reduced iron (H 2 DRI) provides a cost-effective decarbonization strategy only under a relatively narrow set of conditions. Using today’s best estimates of the capital and variable costs of alternative decarbonized iron and steelmaking technologies in a U.S. economy-wide simulation framework, we find that carbon capture technologies can achieve comparable decarbonization levels by 2050 and greater cumulative emissions reductions from iron and steel production at a lower cost. Simulations suggest hydrogen contributes to economy-wide decarbonization, but H 2 DRI is not the preferred use case for hydrogen in most scenarios. The average abatement cost for U.S. iron and steel production could be as low as $70/tonne CO 2 with existing technologies plus carbon capture, while the cost with H 2 DRI rises to over $500/tonne CO 2 . We also find that IRA tax credits are insufficient to spur hydrogen use in steelmaking in our model and that a green steel production tax credit would need to be as high as $300/tonne steel to lead to sustained H 2 DRI use.