The latest project was launched in early May 2020 by another private steelmaker, Rizhao Steel*. The project will produce 0.5 Mt/a DRI using hydrogen, which is extracted from the co-products of a natural gas-based process to make vinyl acetate.
Challenges ahead for hydrogen's widespread useAccording to some analysts reports, the global hydrogen-making capacity is about 70 Mt/a and China accounts for one-third of the total.
So far, this hydrogen supply in China is mainly for the chemical industry with a fraction for transportation, e.g. HBIS Group's pilot hydrogen station for refuelling of heavy trucks which was commenced on 28 August 2020.
Therefore, the existing hydrogen-making capacity in China is not sufficient to support the steel industry.
HBIS Group pilot hydrogen station for refuelling of heavy trucks
In addition to availability, the cost of hydrogen is another challenge. With the current hydrogen market price in China (approximately RMB 60,000/tonne / Euros 7,800/tonne), the energy cost of the hydrogen-based ironmaking technology would be more than five times costlier than the traditional blast furnace technology.
Hydrogen production levels and its cost will therefore need to be resolved for it to become a viable solution. This will require engagement and funding.
China trading system supporting decarbonisationDecarbonisation is a core challenge ahead for the Chinese steel industry. In 2019, China produced 996 Mt of crude steel, of which approximately 780 Mt or 78% was produced from iron ore with coal as the primary source of energy, the remaining 22% was from recycled steel.
Since 2011, a few Chinese steelmakers have been involved in a pilot system for carbon emission trading established by the central government.
In December 2017, the Chinese government officially launched its carbon emission trading system with power generation being the first sector covered. It was reported that the steel industry will also soon be covered by the carbon trading system, which will push the steelmakers to allocate more resources to look for low-carbon energy such as hydrogen. (source from worldsteel.org)
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