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15 March 2023

Hydrogen will make green steel undercut the market by when?

A new report out this week from Rethink Energy takes a look at when the steel sector will be able to produce sustainable green steel at a cheaper price than by using traditional coal based methods and allow the industry to safely and economically decarbonize.

Two years ago we released our first take on the state of the steel manufacturing industry with our report titled “Green Steel – Hydrogen forecast in the steel sector”. A lot has changed in the energy landscape since then in the form of the Russian invasion of Ukraine, the subsequent natural gas induced energy crisis and the hydrogen industry starting to take shape,  but essentially our conclusions remain the same when it comes to the best ways to decarbonize steel production. It’s just that this time around we are in a position from where we can accurately pinpoint when green steel will undercut the market, and how soon regions like China, USA, and Europe will be able to safely ditch polluting methods of manufacturing, and not just pilot projects. For the sake of cleaning the industry and prove that instead of labelling it among the hard to abate sectors, we should rather have named it inconvenient to decarbonize. But as times are changing so will the different prices of steel around the globe.

The recent turbulent times experienced by global economies had a rippling effect on various markets around the world including the ones relevant to steel manufacturing processes, whether present or future. Iron ore, coal, natural gas, hydrogen and even the price of electricity are all ingredients that end up dictating how cheap or expensive steel will become. This report has analyzed those effects on the industry out until 2030.

The price for which steel is being manufactured today varies by region due to the prices of the commodities mentioned above. The model on which this report is based looks at how these markets will evolve from region to region and more importantly where the price of green, blue and grey hydrogen will end up in each of the regions mentioned and how much of a say they will have on any emerging  green steel premium price.

The types of steel whose prices are analyzed as part of this report include:

  • BF/BOF Steel: refers to the primary pathway of crude steel production through the blast furnace, basic oxygen furnace pathway which uses coke as a reducing agent;
  • Gas-DRI/EAF Steel: refers to the primary production of crude steel by direct reduction of iron with natural gas followed by melting in the electric arc furnace;
  • Grey Steel: steel produced in the same manner as the Gas-DRI/EAF crude steel, but uses grey hydrogen instead natural gas for the reduction of iron ore. Grey hydrogen is produced through processes like steam methane reforming or autothermal reforming of natural gas with any CO2 emissions allowed to escape into the atmosphere;
  • Blue Steel: same as grey steel with the only difference being that the carbon emissions associated with hydrogen production are captured and sequestrated, making the hydrogen blue as opposed to grey.
  • Green Steel: crude steel manufactured sustainably through the same processes that grey and blue steel are produced with the only difference being that the hydrogen used is produced from electrolyzers powered by clean electricity, making the hydrogen used in the direct reduction of iron ore, green.

Carbon tax trading mechanisms and Biden’s Inflation Reduction Act are also among the pieces of policy that will have a say on how the steel sector will pan out and what incentives and disincentives there are for not only coal base or hydrogen based steel manufacturing but also exports and imports.

Lastly, this report presents the reader with an overview of which countries are leading the race in terms of investments and pilot projects and what short term targets there are for giant economies like America and Europe.

To get your copy or more information on this definitive report “Green Steel Premium: Myth or Reality? How did the IRA and the war influence the steel sector?, ” email [email protected] or go to and download an executive summary or register your interest.