This post is by Valentin Vogl, an academic working on sustainability transitions in the global steel industry.
This was supposed to be the UK’s climate leadership year. In November, global leaders will gather in Glasgow to try to tame and temper humanity’s climate disruption. Meanwhile, a mere 137 miles south in Cumbria, the UK is set to do the polar opposite and open up a new coal mine.
This colliery’s yearly capacity would be 2.5 million tonnes of coking coal, a high grade type of coal used in steel production. Only a seventh of the output would be used in the UK, the rest is supposed to be shipped to Europe. In a recent letter, the Climate Change Committee has advised the government to reconsider the plan, and international commentators have accused the UK of jeopardising its credibility ahead of COP26.
One of the main arguments of the project’s proponents is that there is no alternative to coking coal for steel production. This is not true. The European steel industry has long turned its strategic eye away from coking coal and towards increased recycling and hydrogen.
Steelmaking methods are having to change
In steel production, coking coal is first converted into coke, which is then used to supply heat and fuel the chemical reaction in the blast furnace. To produce a tonne of steel roughly 350 kilogrammes of coke are needed. Coke has a special characteristic that makes it important in the blast furnace: it can carry very high weights without crumbling. So far, scientists have not come up with a non-fossil fuel alternative that has similar mechanical properties.
The European Union’s climate targets oblige a 55 per cent reduction in greenhouse gas emissions by 2030 (from 1990 levels) and carbon neutrality by 2050. For the steel industry, this means that long trusted production methods must change. In the industry’s own words: “This cannot be achieved with existing technologies. The technical potential for reducing carbon [in the traditional blast furnace route] has been exhausted.”
To achieve these targets, the industry has two primary options. For a long time, the go to idea was to capture off-gases and permanently store them underground. When the 2015 Paris Agreement made clear that eventually emissions must go down to zero, this option lost much of its appeal. To reach zero emissions with the blast furnace, large amounts of sustainable biomass are needed to replace as much coal as possible in the process. While this can be done in theory, it is going to be expensive without providing any more benefits except emission reductions.
Hydrogen is the new coal
The alternative is to get rid of the blast furnace and electrify steel production, most prominently through using green hydrogen, produced from water with renewable electricity. This seems to have inspired confidence in the European steel industry in recent years. Firms covering 87 per cent of coal based steelmaking in Europe are undertaking research and development work in hydrogen steelmaking. More than a third of them have already said they will abandon the blast furnace in favour of electrification. Counting only these implies a reduction of coking coal use by more than 10 million tonnes per year, equal to 400 per cent of the Cumbria mine’s total output.
No European steelmakers have decided to solely pursue carbon capture. The reason for this is probably simple economics. Carbon capture and storage and large scale procurement of bioenergy represent high additional costs without much added benefit. Hydrogen, on the other hand, changes the logic of steel production. It opens the door to new business models, for example by also offering large scale energy storage for the power grid. Moreover, renewable electricity is getting cheaper by the day and, with it, the production of low cost, renewable hydrogen.
The rest of the world is not sleeping either. The International Energy Agency is seeing a decline of global blast furnace capacity by 85 per cent until 2070, which can be understood as a contraction of the coking coal market of the same magnitude. Meanwhile, major efforts in hydrogen steelmaking are being reported by China, Japan and South Korea. Four of the five largest steel producers in the world have announced carbon neutrality targets for 2050. All five of them are working on hydrogen steelmaking.
Hydrogen direct reduction, as the new production method is called, has turned from research effort into a competitive race. The first pilot plants are already running and several large demonstration plants are planned to come online before 2030 (eg in Austria, Germany, Sweden and China).
And there is yet more bad news for European coking coal demand. With each year, more end of life steel scrap becomes available for recycling in Europe. A 2018 study by Material Economics found that up to 85 per cent of steel demand in Europe could be covered through recycling by 2050, up from 40 per cent today. Steel recycling occurs in electric arc furnaces using electricity . No coking coal is required.
The world is powering past coking coal
The future for coking coal in Europe looks grim to put it mildly. Most of today’s coking coal consumers are looking for alternatives and the European steel sector is becoming more circular. It is a myth that steel production requires coking coal. A third of global steel today is made without coking coal, either through scrap recycling or gas-based steel production; and counting. Europe is racing against the rest of the world for a first full-scale hydrogen steel mill. Where was the UK when this train departed?