Decarbonization Pathways, Strategies, and Use Cases to Achieve Net-Zero CO₂ Emissions in the Steelmaking Industry

Abstract

The steelmaking industry is responsible for 7% of global CO₂ emissions, making decarbonization a significant challenge. This review provides a comprehensive analysis of current steel-production processes, assessing their environmental impact in terms of CO₂ emissions at a global level. Limitations of the current pathways are outlined by using objective criteria and a detailed review of the relevant literature. Decarbonization strategies are rigorously evaluated across various scenarios, emphasizing technology feasibility. Focusing on three pivotal areas—scrap utilization, hydrogen integration, and electricity consumption—in-depth assessments are provided, backed by notable contributions from both industrial and scientific fields. The intricate interplay of technical, economic, and regulatory considerations substantially affects CO₂ emissions, particularly considering the EU Emissions Trading System. Leading steel producers have established challenging targets for achieving carbon neutrality, requiring a thorough evaluation of industry practices. This paper emphasizes tactics to be employed within short-, medium-, and long-term periods. This article explores two distinct case studies: One involves a hot rolling mill that utilizes advanced energy techniques and uses H₂ for the reheating furnace, resulting in a reduction of 229 kt CO₂-eq per year. The second case examines DRI production incorporating H₂ and achieves over 90% CO₂ reduction per ton of DRI.

1. Introduction

Although steel is less carbon emitting per application than many other materials from primary sources, the sheer scale of global steel production means the steelmaking industry contributes to around 7% of global CO₂ emissions, 5% of the CO₂ emissions in the European Union (EU), and 6% of the emissions in the United States of America (USA) [1,2,3,4,5,6,7,8,9,10]. Emissions per ton of steel vary widely between countries, and the differences are based on the production routes, product mix, energy efficiency, fuel used, and the carbon intensity from the fuel and electricity [11]. The environmental impact of steel assumes more significance when viewed within the context of wider global industries. In a net-zero projection for 2030, direct CO₂ emissions resulting from the iron and steel sector represent a substantial 30% [12]. Steel is positioned at the forefront of industries that generate significant emissions, followed by cement at 20%, the chemical and petrochemical sector at 15%, pulp and paper at 10%, and aluminum at 5% [12]. Globally, energy production is the primary contributor to greenhouse gas emissions (GHGs), responsible for 73% of total emissions, with electricity and heat accounting for approximately 42% [13,14]. Agriculture, forestry, and land use (AFOLU) rank second with about 24% of the total emissions. Subsequently, the industry (21%), transport (14%), and building (3%) sectors are reported to emit greenhouse gases [14].

Global steel demand is forecast to increase by 2050 under the current consumption pattern, driven primarily by continued growth in the developing world, as well as increased steel demand to support the global energy transition since more steel will be needed per unit of renewable electricity than conventional technologies [1,15]. The industry growth forecast reaches an annual production of 200 Mt in 2050 for the EU-27 and the United Kingdom (UK) [16]. In other scenarios, such as in the USA, production is forecasted to increase by 12% by 2050 [10]. Nevertheless, the proportion of worldwide manufacturing controlled by the People’s Republic of China is projected to decrease from its current 50% to 35% by 2050, as India’s output is expected to grow more than threefold to fulfill domestic requirements [2], in addition to the imposition of levies by the EU, the USA, and other nations [17,18].

Over the last 150 years, the steel industry has seen significant energy and yield improvements. While incremental improvements will continue, far more is needed to meet the objectives of the Paris Agreement such as a 55% reduction in GHGs by 2030 compared to 1990 levels and CO₂ neutrality by 2050, whilst at the same time responding to the growing demand for steel and preserving competitiveness [8,19,20].

Steel can be produced through different routes: the primary or integrated route and the secondary or electric route. In the primary route, steel is produced from iron ore and coal or coke in a blast furnace (BF) and a basic oxygen furnace (BOF), and it has high CO₂ emissions despite being very efficient when it comes to energy consumption [2,4,20]. As can be seen in Figure 1a, the CO₂ emissions are around 2.2 tons of CO₂ per ton of produced crude steel [2,4,5,16,20]. It should be noted that these emissions vary from country to country and that the CO₂ emissions are between 1.8 and 4.0 tons of CO₂ per ton of crude steel for most of the countries, with China and the EU reporting lower CO₂ emissions (1.84 tons of CO₂ and 1.81 tons of CO₂, respectively) and South Africa and India generating more than 3.8 tons of CO₂ per ton of steel [5,20]. The integrated route is predominant in worldwide crude production, accounting for almost 71% of crude steel production. The BF-BOF route for European steel production accounts for around 56% of the total steel production, whereas in the USA, only 31% of the steel is produced through the primary route [6].

The secondary route produces steel by melting scrap in the electric arc furnace (EAF) with much lower CO₂ emissions than those produced with the BF-BOF route. Another alternative that still reduces the CO₂ emissions from the integrated route is to use an alternative iron input in the EAF such as direct reduced iron (DRI) produced with natural gas (NG) [2,3]. Emissions from the scrap-EAF and DRI-EAF can be seen in Figure 1b. The CO₂ emissions from the electric route range from 0.6 to 1.4 tons of CO₂ per ton of crude steel, depending on the raw material used, in nearly all countries [20]. Most of the crude production in the USA, specifically 69%, is produced through the secondary route, whilst in the EU and worldwide, the EAF route accounts for 44% and 30% of the total crude production, respectively, according to the data from 2021 [6].

The electrification of steel production significantly decreases CO₂ emissions, enabled by the EAF’s advantages: using scrap steel and adapting to cleaner energy sources. Despite this, there are essential factors that ensure the continued widespread use of the BF-BOF route. Historical roots of the existing BOF infrastructure demand significant capital and time for successful BF/BOF-to-EAF conversion. Areas with abundant, reasonably priced coal and iron ore maintain the appeal of the BOF. The integration of CCU in BOF facilities moderates the push for complete electrification. Meeting demands for the exact steel chemical compositions, particularly in Europe, presents obstacles. Although minimills have shifted towards a more environmentally conscious approach, they encounter difficulties in matching the integrated techniques for top-notch steel production. Given the intricacy of maintaining precise residual control over scrap to produce high-quality steel while rigorously monitoring its chemistry, the EAF with DRI and scrap route satisfies all criteria: high-grade steel production, minimal CO₂ emissions, and ample potential for implementing CO2-free processes [23]. As a result, the industry is compelled to balance emissions reduction with competitiveness and long-term sustainability as it strives towards achieving ambitious environmental objectives.

When both steelmaking routes are considered, the country with the lowest CO₂ emissions per ton of steel produced is the USA, as most of the steel is produced through the secondary route. This is followed by Turkey and Europe (EU-27, UK, and Norway). Among the countries that produce over 50% of their steel via the integrated route, the EU has the lowest CO₂ emissions whilst China has the highest [8,10].

Figure 2 and Figure 3 show the latest data related to steel production and CO₂ emissions. The CO₂ intensity of electricity primarily influences the EU and United States’ emissions, while in China and India, the type of raw material used plays a significant role. For the secondary route, the EU relies on scrap as the main raw material, whilst India and Russia widely utilize DRI. In China, approximately 45% of the raw material comes from pig iron produced in blast furnaces, resulting in higher emissions [24]. The CO₂ footprint of DRI in India is substantial, as around 80% is derived from coal [25], which is significantly more carbon-intensive than natural-gas-based DRI [26]. In the United States, electric steel mills use a combination of pig iron, DRI, and scrap to achieve higher-quality steel production [8,10].

Previous research has investigated the effects of pricing policies on the steel industry [27,28], as well as examined the decarbonization processes within domestic steel manufacturing [29,30]. The impact of hydrogen production on CO₂ emissions has been analyzed [31], and recommendations on how to identify suitable low-emission steel plant configurations have been provided [32]. This paper aims to conduct a comprehensive review of the literature, with a specific focus on three potential decarbonization pathways: developments in scrap utilization, the integration of hydrogen, and finishing processes’ electrification by using local renewable energy sources. A range of detailed case studies is presented, demonstrating effective CO₂ emission-reduction strategies.

The rest of this paper is structured as follows: Section 2 describes the decarbonization pathways in the steelmaking industry, focusing on the current state of the technology. Section 3 details the decarbonization strategies adopted by the main steelmakers. Section 4 presents some use cases of hydrogen and new electrification approaches in the steel industry. Finally, Section 5 depicts the conclusions reached from the proposed review.

2. Decarbonization Pathways

Different literature sources [26,33,34,35,36,37,38,39,40,41,42] highlight how changes through new disruptive technologies in the steel industry are required to bring emissions on trend to meet the GHG reduction target by 2050 [8]. This entails a change in the steel industry’s production processes and a greater sense of immediacy in implementing them. Due to the long-lived capital assets of this industry, 2050 is only one investment cycle away [8]. This urge to act is reflected not only in the update by the European Commission in its Industrial Strategy 2020 and accompanying steel working roll [43] but also in steel industry assessments [16], as well as in the plans and strategies of the manufacturing companies [21,44,45,46,47,48]. These commitments are not only within the EU framework, but the USA Administration has also set targets of 100% CO₂-free electricity by 2035 and net-zero GHG emissions by 2050 [49]. The US Long-Term Strategy, called LTS [50], presents, like those of the EU, multiple pathways to achieve a zero-emission economy by 2050 [10].

A growing industrial deployment of decarbonization technologies is being implemented not only in the steel industry but in all sectors where GHG production has a strong impact. In broad terms, there is a common strategy: the use of alternative energies and renewable sources, improvement in the efficiency of the processes and the materials, reduction in methane and other non-CO₂ emissions, increased removal of the CO₂ produced by capturing it, and use of alternative carbon sources [10,50].

Focusing on the steel process, the availability of the energy and material flow required for steel production should be evaluated as key elements for decarbonization. In this context, eight points are presented as critical by Green Steel for Europe [51]:

• The consumption of electrical energy from renewable sources.
• The use and generation of green hydrogen (H₂).
• The consumption of NG.
• The transition to alternative carbon sources.
• The consumption of iron ore and pellets.
• The increased use of scrap.
• The development and implementation of CO₂ storage technologies.
• The production and use of CCU products.

All of them must be complemented by other framework conditions: the technological maturity of each solution, supply aspects, availability of infrastructure, energy and raw materials, plant-specific investment cycles, as well as financial and legislative conditions, including the EU ETS and the CBAM [7,16,22,51].

Decarbonization in the steel industry requires substantial changes in the supply and production chains. Consequently, the challenge could be likened to a new industrial revolution, both in terms of complexity and duration. The current scenario presents a situation where the global transformation would be possible thanks to a hydrogen-based steel industry, as well as the adaptation of fossil-fuel-based steel processes for residual carbon capture and utilization technologies and, finally, an increase in the consumption of scrap as a raw material and the recycling of steel byproducts. To this end, as illustrated in Figure 4, there are two technological pathways for CO₂ reduction in the sector: smart carbon utilization (SCU) and carbon direct avoidance (CDA) [16]. Some proposed and ongoing projects of the EU steel industry have been identified for this purpose [16,52]. Energy, feedstock, and carbon storage are therefore the most important elements in this major challenge.

While it is important to reduce demand for primary steel by increasing the circularity of materials and expanding the secondary steelmaking, achieving net-zero-emissions steel will require reducing emissions from conventional steelmaking as well. To build the groundwork for net-zero steel by 2050, it is essential to commercialize and expand near-zero-emissions primary steelmaking. Several studies have presented a roadmap for achieving net-zero emissions in the production of primary steel, utilizing predictive modeling to outline the essential objectives that need to be met in the medium term [22,53]. These objectives encompass various aspects such as increasing near-zero primary steel production; addressing energy requirements; developing the necessary infrastructure; and incorporating renewable electricity; H₂; and carbon capture, utilization, and storage (CCUS) technologies. Additionally, the concept of the Technology Readiness Level (TRL) has been introduced to assess the maturity and feasibility of different technologies during each projected period.

Determining the mix of technologies that will be used in the future for the EU steel industry is challenging due to state and regional conditions such as energy costs, availability, infrastructure, legal restrictions, and the degree of local industrialization. However, a global provider of consultancy services and some steel manufacturers have proposed several scenarios for steel production between now and 2050 based on a CO₂ reduction options analysis. These scenarios include business as usual, continued retrofitting, current projects with low-CO₂ energy, alternative low-CO₂ energy, current projects with CO₂-free energy, and alternative pathways with CO₂-free energy. Emission reductions ranging from 10% to 95% by 2050 compared to 1990 levels could be achieved depending on the scenario, with energy, raw materials, and carbon storage being critical factors. The scenarios highlight the need for the steel industry to undergo significant changes to reduce its emissions in all energy channels (gas and electricity) used in the steel-production process [16].

Once several promising decarbonization technologies have been identified, they can be grouped into four technological routes and subdivided based on some specific actions [3,10,51]:

• The optimized blast furnace–basic oxygen furnace (BF-BOF) route (Route 1).
• A route based on direct reduction (DR) (Route 2).
• Reduction by smelting (Route 3).
• The electrolysis of iron ore (Route 4).

Route 1 is subdivided into the use of alternative carbon sources, CCUS, and other actions (Route 1A, 1B, and 1C, respectively). The DR route is divided into NG (Route 2A) and hydrogen-based reduction (Route 2B). Potential CO₂ reduction ranging from 17% to 95% could be achieved depending on the technological route between 2030 and 2050 [51]. Optimized BF-BOF routes (Routes 1A/B/C) and direct reduction-based routes (Routes 2A/B) are considered to reach TRL 9 in 2030–2035 and would start industrial deployment, while smelter reduction (Route 3) and iron ore electrolysis (Route 4) could become options for later industrial deployment in 2050 [51]. Of course, the use of scrap as a raw material must be considered for all routes, as well as HBI for routes where an EAF is present.

2.1. Energy, Raw Materials, and Carbon Capture Overview

The industrial sector, including the iron and steel, chemicals, petroleum refining, and cement subsectors, accounts for a significant portion of energy-related CO₂ emissions in the United States. The industrial sector is considered challenging to decarbonize due to its diverse energy consumption and complex processes. In the US steel industry, electricity consumption constitutes around 17% of the total energy consumption [10], with NG being the dominant resource used, making up 37% of the final energy used [54]. Furthermore, NG represented less than 1% in China [24]. Process heating is the largest energy-consuming process in the steel industry, representing around 63%, followed by electric drives at 12% [54]. The future steel sector will have a substantial energy demand, estimated to be around 400 TWh/year in the EU, requiring low-carbon electricity, 162 TWh/year, and green hydrogen, 234 TWh/year, for a production of 5.5 million tons in 2050 [16]. However, there are challenges in terms of the availability of emission-reduction technologies, such as CCS, which may not be universally accessible in the EU. The lack of CCS could limit CO₂ reduction to 67% instead of the targeted 74% [16]. Alternative pathways may require increased CO₂-free electricity and H₂, as well as an enhanced CO₂ storage capacity.

Another challenge that arises is the lack of suppliers for key emission-reduction technologies. The availability of an adequate quantity and quality of scrap is also crucial for the decarbonization pathways. Ensuring a steady supply of scrap is essential for achieving the desired emission-reduction targets in the steel industry. Additionally, the development of advanced technologies that enable the efficient use of scrap and promote circular economy principles will be critical for addressing this challenge [55,56].

Table 1. Developments in the scrap domain.

Development	Description	Literature
Scrap Recycling Technologies	Advancements in the scrap recycling technologies, such as shredding, sorting, and separation techniques, have improved the efficiency and effectiveness of scrap processing. These technologies help maximize the recovery of valuable materials from scrap, reducing the reliance on virgin resources.	[57,58,59,60,61,62]
Scrap Sorting and Classification	Innovations in scrap sorting and classification systems enable more precise identification and segregation of different types of scrap. This allows for better material utilization and enhances the quality of the recycled steel. Automated sorting technologies, including sensors and artificial intelligence, are being employed to optimize the scrap sorting process.	[57,58,62,63,64,65]
Scrap Quality Assessment	Quality assessment techniques for scrap, such as spectroscopic analysis, enable the determination of the chemical composition and the impurity levels. Accurate assessment of the scrap quality helps optimize steelmaking processes, maintain product quality, and reduce rejections and waste.	[58,62,63,66,67,68,69]
Scrap Management and Traceability Systems	Digital solutions and software platforms are being developed to facilitate scrap management and traceability. These systems enable better tracking of scrap from the collection to processing, ensuring transparency, compliance with regulations, and verification of sustainability claims. They also enhance supply chain efficiency and ease the selection of the most suitable scrap that meets specific steelmaking requirements.	[64,70,71,72,73]
Scrap Supply Chain Optimization	Optimization tools and algorithms are being employed to optimize the entire scrap supply chain, including collection, transportation, and processing. These tools help minimize logistical costs, reduce carbon emissions, and improve overall operational efficiency. They consider factors such as scrap availability, transportation routes, and processing capabilities to streamline the supply chain and maximize the resource utilization.	[64,69,73,74,75,76]

tackles these challenges by demonstrating the primary research strategies to address them, enumerating multiple analyses, solutions, and studies.

Collaboration between stakeholders, including steel producers, scrap suppliers, and policymakers, is necessary to overcome these obstacles and establish a sustainable and low-carbon steel industry.

2.2. Hydrogen

Hydrogen is emerging as a critical component in the decarbonization of the steel industry [31,32,53,77,78]. It serves as a versatile resource, finding applications in the production of DRI as well as in various processes that require thermal energy provided by burners, such as the reheating furnaces and the refractory heating in the ladles. By using or increasing the use of H₂ to replace NG in these processes, the industry can significantly reduce its carbon footprint. Currently, 70 million tons of H₂ are directly produced, 76% of which are derived from NG, 23% from coal, and 1–2% from electrolyzers, while 48 million tons of H₂ are produced as byproducts. Considering that almost all these tons of H₂ are produced from fossil fuels, the annual production of H₂ results in the emission of approximately 830 million tons of CO₂ per year [79]. The analysis of CO₂ emissions associated with various H₂ productions reveals important insights into both production technology and energy origins, as revealed by the inclusive dataset [79,80]. Electrolysis with 100% renewable energy is the greenest option, emitting no CO₂. In stark contrast, coal-based electrolysis emits a significant 51.6 kg CO₂/kg H₂, while NG and nuclear energy emit 23 kg and 1 kg CO₂/kg H₂, respectively. Among the steam methane reforming (SMR) technologies, those based on biowaste and landfill gas exhibit the lowest CO₂ emissions. Alternative gasification methods feature numerous variations, wherein waste wood and solid recovered fuel (SRF) emit less than coal-based techniques. This exhaustive analysis highlights the pivotal significance of factoring in both the technology and energy source to create a carbon-neutral course for hydrogen production, thus supporting the reduction in CO₂ emissions [81]. Onsite renewable-based hydrogen production could drive 35–45% of steel production by 2050, demanding 52–75 million tons of H₂ yearly [22,82].

In 2018, Europe had a total annual H₂ production capacity of 11.5 Mt [51]. The International Energy Agency (IEA) [83] estimates a range of 47–68 kg H₂/t DRI for hydrogen-based DRI production, so assuming a H₂ demand of 60 kg H₂/ton of crude steel through direct reduction, this H₂ production capacity would only cover 0.2% of the primary steel-production demand [51,84]. Current H₂ production capacities are either onsite for self-consumption in commercial production facilities or in plants where hydrogen is a byproduct coming from other processes. The distribution of production capacities varies among different countries, with Germany leading in hydrogen production, followed by the Netherlands, Poland, and Italy [51]. Thus far, most of the produced H₂ has been used in oil refineries and chemical synthesis production (ammonia and methanol, among others), with only a small portion, around 2%, being utilized by other industries [9,54].

Hydrogen-production methods differ in technology and energy sources, leading to varying CO₂ emissions. Produced hydrogen is categorized and classified with different colors based on the method used [85,86]. “Green” or “renewable hydrogen” is made through water electrolysis with renewable energy, resulting in minimal CO₂ emissions [24,82,87]. Water-based production is less than 1%, using Alkaline, PEM, and the less-mature SOEC electrolysis [79]. Currently, the EU primarily produces grey hydrogen, with steam methane reforming being the most common production process [9,87]. Depending on the technology and feedstock used, fossil-based processes emit between 12 and 30 t CO₂-eq./t H₂ [82].

It is important to emphasize that H₂ production, transportation, storage, and corresponding infrastructure are crucial for the successful deployment of hydrogen-based technologies. Assuming a strong grid connection to supply the necessary electricity, steel producers can potentially produce hydrogen onsite, significantly reducing transportation costs [51]. Other options for H₂ production include locations with easy access to large quantities of low-cost renewable electricity or locations where electricity availability fluctuates drastically and H₂ production can be used for grid balancing, such as large offshore wind farms connected to the national grid [88]. The main drawback of H₂ is its low density, which makes its storage and transportation complex. A classification of the different technologies for storage and transportation is presented in [89].

Currently, there are approximately 1500 km of hydrogen pipelines in operation in Europe, but most H₂ is currently produced at the point of demand [88]. According to the Hydrogen Backbone Initiative [90], a hydrogen network of 6800 km is projected for 2030, expanding it to 22,900 km by 2040 [51]. The EU and several countries have already published hydrogen strategies to foster its development by 2050 [85]. Other national strategies are still under development [9,51].

2.3. Electricity

This decarbonization paradigm leads to the highest-ever need for affordable and CO₂-free electricity. The 5700–6700 TWh/year of clean electricity required by the global steel sector by the midcentury would be more than twice the total energy production of the European Union member states in 2020 [22]. Providing a robust and secure supply for these enormous amounts of clean energy represents a critical factor in unlocking decarbonization in the steelmaking industry and will require extensive infrastructure construction and improvement [91]. Given the high level of planning required for this infrastructure, as well as for the transmission and the distribution networks and the generation assets, preparation must start now.

In 2020, the total electricity production in Europe was 2760 TWh, 38% of which was generated from renewable sources, 25% from nuclear power, and 37% from fossil fuels [51,92]. Most of the energy generated in the past was based on fossil fuels. However, in recent years, the share of electricity generation from fossil fuels has decreased in all European countries due to the development and expansion of renewable energy generation, as well as the decommissioning of several thermal power plants [92]. Since cross-border electricity flows account for less than 10% of total electricity production in the EU-27 [93], electricity generation was assessed at the national level.

From 2010 to 2020, the average annual growth of wind and solar energy was 38 TWh, which means that the annual increase would need to nearly triple between 2020 and 2030 to achieve the European Green Deal target for 2030 [94]. According to the literature, national energy and climate plans currently reach around 72 TWh/year, which would mean that the necessary increase of 100 TWh/year and the associated energy targets would not be met [51,92].

Alongside the increase in renewable energy generation, carbon intensity has decreased in the EU from an average of 317 g of CO₂/kWh in 2015 to 226 g in 2020 [51]. This represents a 29% decrease between 2015 and 2020. In addition to considering the CO₂ intensity of electricity production and its price, the overall availability of electricity must be considered. Approximately 43% of steel plants are in areas with access to low-cost renewable energy and resources, including locations that also have access to low-cost NG. On the other hand, up to 39% of the current steel plants may not be situated in optimally suited areas for low-cost renewables, NG, or CO₂ storage. The remaining 17% is attributed to plants that have access to low-cost CO₂ storage [91].

Forecasts for the year 2050 estimate a demand of approximately 400 TWh/year of CO₂-free electricity solely for the European steel industry. This quantity also includes the production and use of hydrogen and is equivalent to 15% of the current total electricity production in the EU-27 [51].

Although the trajectory of scenarios is to achieve net zero by 2050, early advancements in the 2030s are essential. Gradual improvements in current steel technology and the progressive decarbonization of electricity grids could reduce emissions by 10% in 2030 compared to 2020, with a reduced additional cost. However, incentivizing an early transition to technologies with a higher reduction potential could achieve much more pronounced reductions in this decade and drastically reduce cumulative emissions [22].

2.4. Policy and Decarbonization Barriers

Decarbonizing the steel industry is crucial, but it faces numerous complex challenges. It is essential to integrate decarbonization technologies into existing steel plants due to their extended investment cycles, coupled with the need for energy, material, and cost efficiency in mixed integrated facilities. Nevertheless, the staggering cost, potentially amounting to EUR 20 billion per year, presents a significant financial hurdle [7]. Although funding opportunities have expanded, there is still a significant shortfall. Creating a policy environment that promotes low-carbon steel production through funding mechanisms is crucial. Moreover, ensuring the availability of affordable renewable electricity is essential, despite facing obstacles such as permitting procedures, electricity storage, and regional pricing disparities.

Decarbonization strategies entail CCUS, yet face regulatory-, infrastructural-, and consciousness-related obstacles. Tackling these difficulties calls for more flexible regulations, enhanced infrastructure, and greater public awareness. Vital components of steel decarbonization comprise the Carbon Border Adjustment Mechanism (CBAM) and green procurement. The CBAM stimulates demand for low-carbon steel, ensuring equitable pricing and generating revenue. Public procurement constitutes a significant share of the EU’s gross domestic product and can bolster the demand for low-carbon steel by integrating environmental criteria. An enabling policy framework is necessary to promote the circular economy, specifically with regard to high-quality steel scrap. It is highly desirable to have public support for research and to restrict scrap exports. Stakeholders have highlighted the considerable challenges posed by financial barriers to decarbonization. Addressing these obstacles requires policy-driven solutions, which are of critical importance. In addition, stakeholders have stressed the need to ensure the availability of renewable energy and long-term environmental legislation. Overcoming these obstacles requires policy adjustments at both national and European levels [7,95].

To overcome the challenges of decarbonizing the steel industry, a thorough policy framework, innovation, and cross-sectoral collaboration are indispensable. The European Union Emissions Trading System (EU ETS) is a significant factor in this regard, as it has a considerable impact on carbon emissions [96]. Figure 5 shows the progression of EU ETS prices from the beginning of 2021 to the end of 2022. Although the steel industry has been shielded from carbon pricing by the allocation of free emission allowances within the EU ETS, it has not been incentivized to adopt low-carbon technologies [97]. Innovative breakthrough technologies may be disadvantaged, and low-carbon investments have been hindered by low and volatile carbon prices [8]. The introduction of the CBAM is proposed as an alternative to free allowances to mitigate carbon leakage risks and integrate the carbon cost into production [98]. This is especially pertinent to the steel sector. Addressing the decarbonization challenges faced by the steelmaking industry necessitates the implementation of wide-ranging policy measures that properly align carbon pricing, encourage innovation, and promote investments in low-carbon technologies.

3. Decarbonization Strategies by Top Steel Producers

In the second decade of the 21st century, overcapacity became one of the main concerns from the industrial benefits’ point of view due to the global economic situation. This concern needs a major focus on innovation to face the new challenging scenario. Apart from this, the need for new measures to abate global climate change is provoking a new shift in the steelmaking paradigm as the steel industry is responsible for 7–9% [100] of the 40 Gt of CO₂ emitted by human activities each year. Consequently, the international steel industry is under immense pressure to lower its CO₂ emissions.

Top steel producers have already set ambitious goals to become carbon neutral in the coming years (EU by 2050 [101] and China, by far the largest steel-producing country, by 2060 [102]). To fulfill these goals, many technologies are being proposed, developed, and evaluated.

The proposed roadmap of some of the main steelmakers [103,104,105,106,107,108,109,110,111] can be simplified as follows:

• Short term: sinter replacement by pellets, ferrous scrap usage’s increase, increase the energy efficiency of the processes, and start replacing NG with H₂.
• Midterm: include CCS and start using pure H₂ as a reductant.
• Long term: full deployment of H₂ technologies to produce steel and use renewable energy sources.

Within this context, H₂ plays a critical role in the decarbonization pathway in steelmaking, and this can be seen by looking at some of the ongoing hydrogen-based projects in Europe [107].

Although replacing NG with H₂ as a reductant element seems to be one of the main pillars in the decarbonization roadmap, no technoeconomic feasibility study nor the industrial gas volume availability for coping with future steel demands are assured for the time frame set by the steelmakers. Moreover, all the models are based on predictions over energy markets, CO₂ taxes, and novel technologies’ prices’ evolution.

Apart from the hydrogen-based technologies, near-net-shape casting, smelting reduction, top gas recycling in the BF, CCU, and iron ore electrolysis are other technology near-zero-emissions options [111].

Table 2. Low-emission steelmaking technological pathways by different steel technologies [21,44].

Energy Source	Steel Technology	Horizon	Challenges	Incremental Cost
Renewable Energy	Iron electrolysis	Long-term 2050	High energy requirements and cost. Transition to electrolysis.	High
Green hydrogen	DRI with green hydrogen	Medium-term 2040	Scalability of production and cost. Integration of DRI with green hydrogen.	Moderate
Smart Carbon	Utilizing circular carbon and hydrogen (green or blue), carbon-based products manufactured from waste gases	Medium-term 2040	Scaling up and commercial viability. Transition to Smart Carbon.	High
Blue Hydrogen	DRI with blue hydrogen (from reformed NG)	Near-term	Carbon capture and storage infrastructure and cost. Integration of DRI with blue hydrogen.	Moderate
DRI and Carbon Capture	DRI current technology with CCS	Near-term 2030	CCS infrastructure, integration, and cost.	High
Blast Furnace and Carbon Capture	BF current technology and incorporate CCS	Near-term 2030		High

depicts a simplified technological view of different decarbonization strategies, highlighting the main challenges, the time horizon for implementation, as well as the cost impact.

The other main driver for achieving decarbonization is steel recycling. The endless cyclic use of scrap as a raw material is one of the most important characteristics from a sustainability point of view and one of the strengths of steel. In fact, when scrap is recycled, the new steel inherits the properties of the original materials, and these can be modified during the steelmaking process or through ulterior thermal processes.

Consequently, scrap-based steelmaking and the replacement of the BF-BOF route with the DRI-EAF route seem to be the industrial trend for most steelmakers.

Although scrap-based processes will gain importance in future steelmaking, primary steel production will be kept. One of the main reasons for this is the scrap’s availability, which is defined by the past production and the current recycling rate. Nowadays, steel’s recycling rate is around 85% since there is some low-quality scrap that is not being reused.

To increase the recycling capacity and energy efficiency, innovative technologies to “treat” the scrap before it reaches the steelmaking reactors need to be implemented; impurities in postconsumer scrap should be reduced before melting the scrap with a better-classified one. In this way, scrap use would increase while achieving the same quality in the finished product. To achieve this, the following goals have been proposed [55]:

• Identify and characterize new opportunities to use and reuse lower-quality scrap by having a better understanding of the scrap market and the opportunities.
• Select and integrate the best available technologies to upgrade, sort, and characterize lower-quality scrap to enhance the scrap quality.
• Create industrial demonstrators of scrap sorting/cleaning based on innovative combinations of BATs.
• Define valorization routes of the waste generated by the upgrading schemas.

To outline a path towards climate-neutral steelmaking,

Table 3. Pillars for achieving near-zero CO₂ emissions in the steelmaking sector [10].

Pillar	Description	Literature
Energy efficiency	Improve system efficiency, process performance, and thermal energy recovery. Expand energy management practices. Increase application of smart manufacturing strategies to reduce energy consumption. Transition from high-carbon process heat technologies to low-carbon energy sources.	[113,114,115,116,117,118,119,120,121,122,123,124,125,126,127,128]
Industrial electrification	Electrify thermal processes to reduce emissions from fossil fuel combustion.	[113,129,130,131,132,133]
LCFFES	Adopt clean energy technologies that do not release GHGs. Develop low-carbon or carbon-free energy sources, including clean hydrogen and synthetic fuels.	[32,53,77,113,114,115,134,135,136]
CCU	Implement CCUS as a primary source of long-term emission reductions. Utilize carbon utilization and storage to achieve additional carbon reductions.	[4,137,138,139,140,141,142,143,144]

shows the four pillars for decarbonizing: (1) efficiency; (2) industrial electrification; (3) the adoption of low-carbon fuels, feedstocks, and energy sources; and (4) carbon capture and utilization [10]. Energy efficiency pillars offer the greatest opportunities for short-term decarbonization solutions. In many cases, it does not require major changes in the industrial processes and can immediately contribute to emission reductions. Regarding industrial electrification, more than 50% of all energy is used for thermal processes, and less than 5% of these operations are electrified [112]. Low-carbon fuels, feedstocks, and energy sources (LCFFES) propose the adoption of clean energy technologies that do not release GHGs into the atmosphere from energy production or use. Finally, the energy efficiency, LCFFES, and electrification pillars can be implemented before CCUS and, together, can reduce 40% of the projected emissions [14]. These pillars offer a framework for implementing sustainable practices and achieving near-zero CO₂ emissions.

4. Use Cases

The decarbonization of the steel industry necessitates exploring various vectors; hydrogen has emerged as a promising solution, and electricity is considered one of the key pathways. This section describes the incorporation of hydrogen and the advantages of integrating renewables and storage and their impact on efficiency and emissions. By exploring these use cases, valuable insights are gained into the transformative potential of hydrogen and new electrification approaches in driving decarbonization and shaping the future of the steel industry.

4.1. Hydrogen in the Steel Sector

Nowadays, the steel industry demands 4 million tons of H₂ per year through the DRI route. Additionally, in the integrated route (BF-BOF), approximately 14 million tons of H₂ are produced annually as a byproduct of steel gases, mainly coke oven gas (COG) and blast furnace gas (BFG). Of all the H₂ produced as a byproduct, around 9 million tons of H₂ are consumed internally, while the remaining amount is exported to other sectors. The primary use of this internal H₂ is for combustion or electricity generation. However, the use of H₂ contained in COG for injection into the BF or for chemical synthesis purposes is gaining importance [79]. Currently, around 60% by volume of COG is H₂ gas.

Figure 6 shows different applications of hydrogen in the steel sector, ranging from direct reduction processes to combustion, injection into blast furnaces, synthesis gas production, and participation in chemical reactions. Each utilization method offers unique benefits in terms of CO₂ emission reduction, energy efficiency, and process optimization, contributing to the overall goal of decarbonizing the steel industry.

Focusing on the DRI route, the goal is to gradually decarbonize the process. Several stages have been identified to achieve this objective:

• Utilize renewable energy for the EAF operation.
• If fossil fuels such as NG are still being used:
  • Gradually increase the H₂ content.
  • Capture CO₂ emissions from the DRI process.
  • Reuse the captured CO₂ within the process.
• Incorporate H₂ in the DRI process:
  • Use blue hydrogen.
  • Transition to 100% green hydrogen.
  • Achieve the goal of complete decarbonization.

On the other hand, for the BF route, various initiatives to decarbonize this pathway using H₂ include:

• Injecting H₂-rich streams or biogas to replace coke consumption.
• Fix CO₂ into a chemical compound by using additional H₂.

These strategies aim to progressively reduce carbon emissions in the steelmaking industry, both in the DRI and BF routes. By implementing these steps, the sector can move towards its decarbonization goals while considering the specific challenges and opportunities associated with each process. It is important to note, as stated in Section 2.2, that a thorough evaluation of the carbon emissions related to hydrogen production necessitates a dual approach. This entails examining both the production technology and the energy source used in the process with equal consideration.

4.2. Use Case 1: Hot Rolling Mill

4.2.1. Average Values of Electrical Energy Demand in a Hot Rolling Mill

For the calculation of the average values of the electrical energy demanded, an average consumption of between 70 and 80 kWh/t_steel is considered; it is also considered that the rolling mill is capable of rolling between 20 and 30 slabs/h, that each slab has a weight of between 22 and 26 t-steel/slab, and that between 470 and 530 slabs/day are rolled daily. The result of these numbers means that the average daily consumption of electrical energy is 1 GWh. The annual electricity consumption of a classical hot rolling mill is thus estimated at 365 GWh.

The heating furnace serving the rolling mill is assumed to consume 1.2 GJ/t_steel [145,146] or 333 kWh/t_steel. Multiple parameters (some related to the dimensions of the steel slabs, others to the characteristics of the furnace itself) affect the average energy consumption. Depending on the type of fuel and the combustion technology, energy consumption is also different (air-fuel combustion using methane as fuel would demand 400 kWh/t_steel while conventional oxyfuel using methane as fuel would demand 290 kWh/t_steel and flameless oxyfuel using methane as fuel would demand 270 kWh/t_steel) [147]. Considering that an average of 500 slabs are rolled daily and that each slab has a weight of 24 tons, this means the average consumption is 3.9 GWh/day. The slab heating can be optimized with existing techniques and achieve a reduction in the heat losses in the furnace by up to 20%. An average daily consumption of 3.2 GWh is therefore considered, which results in an annual energy consumption of 1100 GWh. Figure 7 depicts a standard layout of a hot rolling mill, with the consumption values justified above.

4.2.2. Hydrogen as a Reheating Furnace Fuel

To ascertain the required quantity of green hydrogen to achieve the target of 1100 GWh illustrated in Section 4.1, it is imperative to account for the energy content inherent in the hydrogen. The lower heating value (LHV) of hydrogen is approximately 33.6 kWh/kg. It is important to note that this value may vary slightly depending on the production method and the purity of the hydrogen. However, as a general approximation, 33.6 kWh/kg is commonly used as the specific energy of green hydrogen. Thus, to obtain 1100 GWh of energy, 32,738 tons of hydrogen would be required.

On average, modern electrolyzers have an electrical energy consumption of approximately 45 to 60 kWh per kilogram of hydrogen produced [80]. This value represents the amount of electrical energy required to split water molecules into hydrogen and oxygen through the electrolysis process. It should be emphasized that Figure 8 solely reflects the energy consumption attributed to the electrolysis process and does not encompass any supplementary energy losses occurring during hydrogen compression, storage, or transportation. Thus, to obtain the required 32,738 tons of hydrogen, 1310 GWh of green electrical energy would be needed. Nevertheless, it is noteworthy to mention that continuous advancements in electrolyzer technology and ongoing system optimizations are steadily enhancing the energy efficiency of green hydrogen production. Newer electrolyzers may achieve higher efficiencies and reduce the energy consumption required per kilogram of hydrogen produced.

Figure 8 presents a summary of the energy requirements and hydrogen levels needed to decarbonize the reheating furnace based on the given assumptions.

One observation to make is that while H₂ is employed as a fuel in other sectors like petrochemical or steam production, manufacturers of air burners for reheating purposes have recently begun improving their best low NO_x technique burners to operate solely on 100% H₂. This is due to a spike in NO_x during the combustion process for H₂. Many industrial suppliers have conducted successful trials and integrated these new burners, along with innovative advancements for H₂ combustion applications [148,149,150,151].

4.2.3. New Electrification Approaches

The steel industry is actively pursuing decarbonization strategies, and one promising avenue is the incorporation of new power system approaches. This section explores renewable energy production, battery storage systems, drive upgrading, and the use cases of direct current (DC) buses with a focus on two inspiring concepts [152,153] and energy-management optimizers. The emission reductions resulting from the incorporation of these cases are quantified and presented in Section 4.2.4. These concepts and innovative technologies leverage these advantages in use cases to revolutionize steel production and minimize its environmental impact.

Renewable-Energy-Production Systems

Overall, as outlined in Section 4.2.2, the hot rolling mill and the reheating furnace would require 1675 GWh of electrical energy annually from renewable sources. Four renewable-energy-production systems are evaluated to meet this energy requirement.

This includes two wind farms. Each wind farm consists of 25 wind turbines with a rated power of 4.5 MW/turbine that forms a wind farm with a rated power of 112.5 MW. The wind farms are in an area where the average annual wind speed has been estimated at 7 m/s. Under these conditions and considering that the manufacturer’s estimated annual production for that wind speed is 13.5 GWh (Figure 9), each wind farm could potentially generate 337.5 GWh/year, thus covering 20.15% of the electricity needs. Globally, the two wind farms would cover 40.3% of the energy needs.

A solar photovoltaic plant consists of two plants with a peak power of 60 MWp. Based on the annual peak sun hours (PSH) forecast for the chosen location (1800 PSH) and the global average performance ratio (of an approximate value of 85%), each of them would cover 91.8 GWh/year. Overall, the solar plant would produce 183.6 GWh/year, which would provide 11% of the energy needs of the rolling mill.

A biomass power plant is capable of producing 50 MW of electrical power from agricultural and forestry byproducts from areas near the facility. The biomass power plant produces 400 GWh/year, which would provide 23.88% of the energy needs of the rolling mill.

The remaining energy required to meet the demand will be acquired from a power plant that uses residual gases from the steel-manufacturing process as fuel to drive a 125 MW gas turbine. The capacity factor of gas turbines in industrial plants that use residual gases can vary greatly. It may vary from as little as 20% to as much as 80% or more, depending on the following factors. Maintaining a reliable and abundant supply of high-quality residual gases and optimizing the gas turbine for the specific gas composition can result in a higher capacity factor for the industrial plant. However, the limited availability of residual gases or inferior quality with lower heating values can lead to a lower gas turbine capacity factor. Given a capacity factor of 40%, the residual gas-based system can generate up to 438 GWh/year, accounting for approximately 26.15% of the plant’s energy requirements. Together, the three systems can provide 101.3% coverage of the energy demand. The surplus of 1.3% is consumed during storage system charging and discharging processes and energy-distribution periods. Obviously, with the current technology and considering an ambitious scenario in which all the energy used is of renewable origin, the rated power of the generation units required is, at present, high.

Figure 10 summarizes the integration of renewable energy systems in production, highlighting the high energy demands and the requirement for various systems to address the annual production of a hot rolling mill.

Battery Storage Systems

Wind and photovoltaic systems rely on highly variable primary sources of energy throughout the day and year. Therefore, to fully utilize the energy they generate, it is essential to have energy-storage systems to stock energy during periods of low demand and incorporate that energy into the grid during periods when energy generation does not meet the demand. It is important to consider that the power demand from the rolling mill also varies, depending on the position of the slab in the roughing and finishing mill. During those hourly periods when the rolling mill stops to change the rolls or simply due to production needs, the energy generated can exceed the energy consumed. To take advantage of the possible energy generated during these periods of stoppage or low demand, it is proposed to transfer this surplus to the energy-storage system.

The power-generation unit based on the utilization of residual gases would be manageable, just like the storage system.

Upgrading of the Rolling Mill Drives

The transformation of the electrical system of the rolling mill, within the framework of decarbonization, is not only based on the incorporation of renewable energy generation systems, but also considers an update of the drives of each of the rolling mill stands, replacing the classic drives based on cycloconverters by multilevel back-to-back converters with active rectification stages capable of controlling the facility’s displacement factor, minimizing harmonic distortion and even helping to cancel pre-existing distortion rates, and with inverter stages capable of performing regenerative braking. Between the two converters, there is a DC bus operating under standardized voltage. In this way, the DC bus is connected to the existing DC distribution circuit in the plant. The remodeling of a traditional hot rolling mill plant by incorporating new technology into its mill drives makes it possible to improve the efficiency and productivity thanks to (a) the elimination of the passive filtering stages responsible for maximizing the displacement factor and minimizing the harmonic distortion rate in the classic installation based on cycloconverters; (b) the dynamic adjustment of the reactive injection/demand according to the reactive setpoints integrated in the facility, which would allow the reactive flows to be canceled, leading to a reduction in the rms current value and therefore a reduction in the losses and an adjustment in the voltage according to the setpoint conditions; and (c) an improvement in the efficiency of the AC/AC conversion and improvement in the controllability of the driven synchronous motor [118].

Figure 11 illustrates the integration of the proposed new topologies into the electrical installation to address the system updates that facilitate all the previously mentioned improvements in efficiency and productivity.

Integration of Renewable Energy Sources into the Distribution Network

To facilitate the integration of solar power plants, wind power systems, and energy-storage systems, it is proposed that AC and DC distribution systems be deployed simultaneously. To this end, two types of distribution networks are built, one in DC and the other one in AC. The objective is twofold. On the one hand, unnecessary DC/AC transformations are avoided, which would subsequently require AC/DC conversions, thus improving the performance of the installation by reducing losses and eliminating maintenance costs. On the other hand, the DC distribution network to which the storage system is connected might have a direct connection to the DC bus of the back-to-back converters of the rolling mill drives, offering backup in the event of anomalies in the AC distribution network (such as a voltage sag) and a more efficient distribution network of energy recovery during braking processes.

Figure 12 depicts the integration of the proposed electrical systems with the back-to-back converters of the rolling mill in a simplified manner, using a DC bus.

Energy-Management Optimization

The need for the correct management of the grid’s energy resources requires a control system that charges the storage batteries when surplus power is generated. This same control stage will facilitate the discharge of this available stored energy in those periods of time when power demand exceeds generation. Additionally, the storage system can perform load leveling or frequency-regulation tasks.

Similarly, reactive power management is also possible, considering the different systems that participate in the grid with the capacity to control this variable. With the new configuration, it is possible to manage reactive power with the power margins of the rolling stands, solar inverters, and DFIG-type wind turbines. The appropriate management of reactive power can obey different setpoints: the minimization of losses in the distribution network, minimization of voltage variations at certain nodes of the network, or maximization of the displacement factor at the point of coupling to the network.

The management algorithms can be based on metaheuristic techniques, neural networks, or genetic algorithms. The reactive power references sent to the various dispatchable elements in the virtual plant must be updated in a few seconds to maximize the positive impact of this solution. Some studies have shown that it is possible to reduce the consumption of losses in the distribution network of a steel plant by up to 20% by managing the reactive power flow with such algorithms [115].

4.2.4. CO₂ Emissions

CO₂ emissions per kWh are determined by the primary energy source used in power generation. Consequently, a wind farm emits 6 g of CO₂ per kWh. The Intergovernmental Panel on Climate Change (IPCC) has reported that the median life cycle emissions for rooftop solar energy, based on peer-reviewed studies, stand at 41 g of CO₂-eq./kWh for electricity production. Biomass (BM) is generally regarded as a carbon-neutral fuel source. According to data released by the CNMC on 20 April 2022, the carbon emissions associated with the Spanish electricity grid’s energy mix amount to 259 g CO₂-eq./kWh.

Carbon footprint estimates for high-temperature industrial heating distinguish emissions according to the primary source. In the case of methane, the carbon footprint varies depending on the efficiency (and age) of the different systems. The range in the variation is between 200 and 330 g of CO₂-eq./kWh [155].

If it is considered that the 365 GWh of electrical energy consumed by the rolling mill is provided by a distribution network that is supplied by the Spanish energy mix, this 365 GWh represents 94,535 t of CO₂-eq emitted annually. However, if 40.3% of this energy is covered by wind energy (WF) (882.5 t CO₂-eq), 11% comes from the solar generator (PV) (1646 t CO₂-eq), and 26.15% comes from the use of waste gases (WG) (23,862 t CO₂-eq), the 365 GWh would result in 26,390 t CO₂-eq. Thus, with this new energy-supply scheme, a saving of 68,145 t CO₂-eq is achieved.

The 1100 GWh consumed by the reheating furnace is obtained from the natural gas distribution network, amounting to 247,500 t CO₂-eq emitted annually. If the primary source is replaced by electricity from renewable sources as described in Section 4.2.1, 1310 GWh would be required. With the same distribution ratio as in the previous section (40.3% WF, 11% PV, 26.15% WG, and 23.88% BM), emissions of 86,152 t CO₂-eq would be achieved (3167 t by WF; 5908 t by PV; and 77,077 t by WG). Thus, with this new energy-supply scheme, a saving of 161,350 t CO₂eq is achieved. Overall, the emission savings achieved are in the order of 229 kt CO₂-eq per year.

4.3. Use Case 2: DRI Production—CO₂ Emissions and H₂ Break-Even Price for H₂-DRI

The H₂ break-even price is the maximum cost that H₂ has to be to be competitive in the scenario of the NG and CO₂ selected. This study assumes the MIDREX™ process [156,157,158,159,160] harnessing full H₂ for the iron ore reduction; for heating requirements, we assume the use of part of the purge, and for the remaining energy requirements, we assume the use of different heat sources [161]. The NG-MIDREX™ process is the most widely used technology for DRI production [162]. In this analysis, a portion of the exiting top gas in the shaft furnace, following the water removal step in the scrubber, undergoes purging to serve as fuel for heating the fresh reducing gas injected into the shaft. However, the purged gas alone does not provide sufficient energy to heat the reducing gas entirely. To compensate for this shortfall, additional energy is sourced from fuel or electricity. Table 4 illustrates a simplified diagram depicting the gas flow, wherein a volume of gas is recycled, another portion is consumed within the shaft furnace, and the remainder is purged for use in the heater. Considering that some H₂ is consumed during the process, it is replenished with fresh H₂. Fresh H₂ is not pure but rather part of a stream with its composition and characteristics.

Before proceeding with the analysis, it should be noted that the carbon (C) content of DRI using 100% H₂ as a reducing agent is virtually zero, which is a significant advantage in terms of reducing carbon emissions in the steel industry. However, most EAF steelmakers prefer to use DRI with a carbon content of 1.5–3% to have adequate conditions in the EAF fusion process [160,163]. As the amount of H₂ in the reduction increases, it is necessary to add hydrocarbons somewhere in the process to achieve the required carbon levels. There are several options for injecting natural gas into the DRI process [163,164]. By injecting natural gas in appropriate percentages, the reduction conditions can be controlled and, as a result, the carbon content of the final DRI can be adjusted [160,163].

The main carbon input in the DRI process with NG is through the NG used in gas reduction or heating. In the case of H₂-based production, the main input is also via NG for the carburization of DRI if this is used. Then, through this simple approximation, the CO₂ associated with the NG is calculated. The first step is to fix the composition of the NG. Table 4 shows an example of a typical NG composition.

Table 4. NG composition [165,166,167].

Component	Composition (%)	Mass (kg)	LHV * (MJ/Nm3)	Element	Mass (kg)	Mass (%)
Nitrogen	0.03	0.84	12.6	N	0.8	0.05
Methane	91.21	1459.36	35.8	H	422.8	24
Ethane	6.43	192.9	63.73	C	1337.3	75.94
Propane	1.95	85.8	91.16
Butane	0.38	22	118.6
Total	100	1760.9	38,979.32		1760.9	100

* Lower heating value.

Table 4. NG composition [165,166,167].

Component	Composition (%)	Mass (kg)	LHV * (MJ/Nm3)	Element	Mass (kg)	Mass (%)
Nitrogen	0.03	0.84	12.6	N	0.8	0.05
Methane	91.21	1459.36	35.8	H	422.8	24
Ethane	6.43	192.9	63.73	C	1337.3	75.94
Propane	1.95	85.8	91.16
Butane	0.38	22	118.6
Total	100	1760.9	38,979.32		1760.9	100

* Lower heating value.

Several scenarios can be envisaged. The carbon content of DRI can vary between 1.5 and 3% [162]. Based on [81,156,160,163,164,168], the following assumptions are made:

• Around 10 GJ of NG is needed per ton of DRI.
• Data coming from Table 4:
  • The NG LHV is 38,979.32 MJ/Nm³.
  • The NG density is 0.79 kg/Nm³.
  • 75.94% is the NG carbon mass in %.
• In total, 1 mol of C is equal to 1 mol of CO₂.
• The ratio of kmol of CO₂ to kg of CO₂ is 44.
• H₂ harnesses and electricity are green.

Table 5. CO₂ associated with DRI.

GJ/tDRI	Nm3 NG/tDRI	kg NG/tDRI	kg C/tDRI	Scenario	kg C in DRI	Total C out	kg CO2/tDRI
10	257	203	154.1	1	−15	139.1	510
				2	−35	119.1	437
				3	0	154.1	565
	50	40	30	4	−15	15	55

shows the CO₂ emissions for several scenarios that were studied. The first three scenarios refer to DRI that uses NG for gas reduction and heating. Scenario 4 refers to DRI considering a H₂-based production that uses NG to maintain the desired reduction temperature [163]. Scenario 1: DRI containing 1.5% carbon corresponds to −15 kg C in the DRI (the value is negative because the carbon stays inside the DRI, it does not “leave”). Scenario 2: for DRI with 3.5% carbon, it is −35 kg C. Scenario 3: as the CO₂ is finally released to the atmosphere in the later steelmaking processes, the value set can be 0. Scenario 4: the addition of 50 Nm³/t_DRI of NG for temperature control leads to a DRI carbon content of approximately 1.4–1.7% in H₂-DRI production [160,163]. Equation (1) relates the volume of NG used per ton of DRI, Vol_NG, to the ratio between the energy input of NG per ton of DRI, E_NG, and the LHV of the NG, dE_NG. Equation (2) then calculates the kilograms of NG per ton of DRI by multiplying the equality by the density, ρ_NG. A similar exercise is carried out to determine the mass of CO₂ per ton of DRI. It is first necessary to determine the amount of carbon present, which is dependent on the composition of the NG (see Table 4) and the mass percentage of C extracted. To calculate the required mass of carbon (kg) for a particular case, one can use the straightforward ratio of the mass of a compound or mixture to the % mass of the element:

$${Vol}_{NG}=\frac{E_{NG}}{{dE}_{NG}},$$

(1)

$${Vol}_{NG} ·{r }_{NG }=\frac{E_{NG}}{{dE}_{NG}} ·{r }_{NG }.$$

(2)

This simple approximation shows that by partially replacing NG with H₂, it is possible to achieve a CO₂ reduction of 89.2% per ton of DRI for DRI with a carbon content of 1.5% (a comparison between scenario 2 and 4). The production of H₂-DRI with an appropriate addition of NG results in DRI containing an acceptable percentage of carbon for steelmakers whilst also significantly reducing CO₂ emissions [163].

A comparative analysis of the MIDREX™ process with H₂ instead of NG is presented. Three key parameters are considered: the NG amount, which is substituted by H₂; the CO₂ emissions associated with this NG; and finally, the H₂ cost per kg. Based on the literature reviewed [79,80,81,84,156,158,163,168], the following assumptions are made:

• Around 10 GJ of NG is needed per each DRI ton. NG prices usually oscillate between 1 and 12 EUR/GJ [169].
• CO₂ prices oscillate between 0 and 100 EUR/t_CO2 [93], and per GJ of NG, 56 kg of CO₂ is associated, considering 257 Nm³ NG/t_DRI, 1 mol C = 1 mol CO₂, and around 500 kg of CO2/t_DRI.
• A total of 550 Nm³ H₂/t_DRI is fixed. Additionally, up to 250 Nm³ H₂/t_DRI or other heat sources, e.g., NG or electricity, are required as fuel for the reduction gas heater.
• H₂ harnesses and electricity for heating is green; therefore, no CO₂ emissions are associated.
• The theoretical energy required for H₂ heating is set to 450 kWh/t_DRI (considering that the electrical heating efficiency is 85%, 530 kWh/t_DRI, using gas and with an efficiency of 60%, 750 kWh/t_DRI is needed).
• The cost of electricity is set at 100 EUR/MWh.

Applying a relation between H₂, the price of electricity, the NG required per ton of DRI, and the associated CO₂, Equation (3) is obtained. Then, by adjusting (3) as a function of H₂, a ratio of euro/kg H₂ is acquired. Based on the literature [160,163,164] and using NG as a reference, replacing NG with H₂ in the process results in reduced electricity consumption:

H₂ required t_DRI + Δ Electricity_NG-H2 per t_DRI = NG required per t_DRI + CO₂ associated per GJ_NG.

(3)

Table 6. Energy and gas flow required for different DRI production processes [160,163,164].

Energy	100% NG	H2 with NG as Fuel (1.5% C in DRI)	100% H2 with Only H2 as Fuel	100% H2 with Only Electrical Heating
NG process (GJ/tDRI)	7.5–7.9	-	-
NG fuel (GJ/tDRI) 1	2.1–2.9	2–2.5	-
H2 process (GJ/tDRI)	-	6.1–7	5.9	5.9
H2 fuel (GJ/tDRI) 1	-	-	2.7	-
Electricity (kWh/tDRI) 2	90–135	80–125	80–125	530–620
tCO2/GJ NG	0.0565	0.0565	-
The gas flow required (Nm3/tDRI)	255–300	60 (NG)/600 (H2)	800	550

¹ Efficiency 60%. ² Efficiency 85% for heating, including auxiliary needs.

and

Table 7. Comparison between NG-DRI and H₂-DRI with NG to guarantee 1.5% DRI C content.

Energy	100% NG	H2 with NG as Fuel (1.5% C in DRI)	Comparison
NG process (GJ/tDRI)	7.7	-	-
NG fuel (GJ/tDRI)	2.5	2.1	0.4
H2 process (GJ/tDRI)	-	6.5	-
H2 fuel (GJ/tDRI)	-	-	-
Total NG (GJ/tDRI)	10.2	2.1	8.1
Total H2 (kg/tDRI) 1	-	54.2	-
Electricity (kWh/tDRI)	120	90	30

¹ 0.12 GJ per kg is considered [170].

provide the required information to calculate the price of H₂ according to Equation (3) and perform the analyses presented. Figure 13 and Figure 14 show the various scenarios discussed in this section.

Table 8. H₂ break-even price for H₂-DRI with NG as fuel providing DRI 1.5% carbon content.

NG Price (EUR/GJ)	CO2 Price (EUR/tCO2)
	0	20	40	60	80	100
1	0.20	0.37	0.54	0.71	0.87	1.04
2	0.35	0.52	0.69	0.86	1.02	1.19
3	0.50	0.67	0.84	1.01	1.17	1.34
4	0.65	0.82	0.99	1.16	1.32	1.49
5	0.80	0.97	1.14	1.30	1.47	1.64
6	0.95	1.12	1.29	1.45	1.62	1.79
7	1.10	1.27	1.44	1.60	1.77	1.94
8	1.25	1.42	1.59	1.75	1.92	2.09
9	1.40	1.57	1.74	1.90	2.07	2.24
10	1.55	1.72	1.88	2.05	2.22	2.39
11	1.70	1.87	2.03	2.20	2.37	2.54
12	1.85	2.02	2.18	2.35	2.52	2.69

shows the H₂ break-even price results for the comparison between 100% NG and H₂ with NG as fuel. This exercise helps in identifying the highest cost at which H₂ should be available, based on the price of NG and CO₂, to produce DRI with a percentage of carbon that is acceptable to those involved in steel production.

The cost of green hydrogen is currently 3.5–5 USD/kg, but projections suggest it could be around 1.8 EUR/kg by 2030 [44,54,87]. Green hydrogen production costs for 2050 vary from 17 EUR/MWh to 84 EUR/MWh [82]. In comparison, grey hydrogen costs 1 to 2 EUR/kg H₂, while electrolysis-based hydrogen ranges from 3 to 6 USD/kg H₂ [9,87]. For ArcelorMittal, achieving green hydrogen costs of 1.5 EUR/kg through initiatives like the Hydeal consortium [171] is crucial for competitive steel [44]. This value of 1.5 EUR/kg puts the focus on the middle of Table 8 to set the price limit values for NG and CO₂ at 7 EUR/GJ and 60 EUR/t, respectively.

5. Conclusions

The steel industry is at a crucial turning point, driven by the challenges of overcapacity and the imperative to address climate change by meeting the EU, USA, and China’s carbon targets. As a significant contributor to global CO₂ emissions, decarbonization in the steelmaking sector has become a priority. In this context, the present work reviews the existing steel production pathways, highlighting their current limitations and comparing them in terms of CO₂ emissions versus production levels according to the current global situation. For a complete evaluation and contextualization, an extensive bibliography is analyzed to show in a clear and forceful way the decarbonization paths that are and will be considered in the steel industry. After presenting the technologies that have been implemented, their level of impact is assessed and compared under different scenarios, providing a clear vision of the prospects and the impact they will have. For the three main pillars, scrap utilization, hydrogen, and electricity consumption, a more in-depth assessment is presented, supported by a review of the main industrial–scientific contributions. Conversely, the article suggests that achieving carbon neutrality requires navigating complex technical, economic, and regulatory landscapes. CO₂ emissions are significantly influenced by the EU ETS and have the potential to have an impact on them. Implementing the CBAM as a substitute for free emission allowances could prove advantageous for the steel industry. These topics are also explored in detail.

Major steel manufacturers have set out ambitious goals to achieve carbon neutrality, requiring a comprehensive review of the industry’s operations. This article assesses the decarbonization roadmap proposed for leading steel producers, emphasizing strategies to be implemented in the short, medium, and long term. These include measures such as increasing the use of ferrous scrap and its characterization, improving the process’s energy efficiency, and the gradual integration of hydrogen. While hydrogen is a promising abatement alternative, its widespread adoption depends on the evolution of energy markets, the dynamics of CO₂ taxation, technological developments, and availability.

In addition to hydrogen, there are alternative decarbonization technologies, including near-net-shape casting, smelter reduction, and iron ore electrolysis, which can result in significant emission reductions and energy savings. These technologies, each with their own TRL, are presented in this paper and demonstrate their potential to reduce emissions and save energy.

Two specific use cases are explored in the text. The first pertains to the hot rolling mill, which implements new methodologies for electricity, such as renewable energy sources, battery storage, advanced drives, innovative distribution systems, and optimized energy management. This use case also considers the energy necessary to produce H2 for the reheating furnace. On the other hand, the second use case addresses the production of DRI incorporating H₂. All of this provides important ways to further reduce emissions. The first approach for the case of the rolling mill, which is connected to the reheating furnace mentioned earlier, achieves an emissions savings of 229 kt CO₂-eq per year, which involves the rolling mill’s annual electricity consumption of 365 GWh/year. For the second case, the analysis shows that for DRI production in which NG is partially replaced with H₂, providing an energy of 10 GJ/t_DRI, a CO₂ reduction of more than 90% per ton of DRI with a carbon content of about 1.5% occurs. For this case, the studies end with an analysis of the result of the equilibrium price of H_2, comparing a typical DRI production with 100% NG and H₂ with NG as fuel. A price of 7 EUR/GJ NG and 60 EUR/t CO₂ are justified so that the steel produced is competitive. These accomplishments represent a significant step forward in the decarbonization of the industry.

The steel industry’s journey toward decarbonization involves a complicated mix of technological innovation, economic realignment, and sustainable energy sourcing. To achieve carbon neutrality, the principal steel producers must carefully negotiate delicate technical, economic, and regulatory landscapes. Continuous advancements, collaborative efforts, and adaptive strategies are necessary to pursue sustainable steel production and to align with global climate objectives for a more environmentally responsible future.