With rising concerns over climate change, the steel industry is increasingly exploring more sustainable pathways to reduce CO₂ emissions. One of the most transformative solutions is the use of green hydrogen instead of fossil fuels in the Direct Reduction of Iron (DRI) process.
But what is the cost of this transition?
- Hydrogen Production via Electrolysis
To produce 1 kg of green hydrogen via electrolysis, approximately 50 to 55 kWh of electricity is required. Assuming a renewable electricity price of around $0.06 per kWh, the estimated production cost of 1 kg of hydrogen ranges between $3 to $5.
This includes:
Capital investment in equipment
Operational and maintenance costs
This means the majority of costs lie in the hydrogen production stage.
- Iron Ore Reduction with Hydrogen
In this stage, hydrogen acts as the reducing agent to remove oxygen from iron ore. Compared to hydrogen production:
✅ Lower energy consumption
✅ More reasonable operating costs
- Cost Breakdown in Green Hydrogen Steelmaking:
70–80% of total costs: Hydrogen production
20–30% of total costs: Direct reduction of iron ore
Conclusion:
If green steel is to become an economic reality, it is essential to:
✔️ Optimize electrolysis technology
✔️ Reduce the cost of renewable electricity
Only then can green hydrogen pave the way for a sustainable future in the steel industry.
Sources:
- Techno-economic analysis of low-carbon hydrogen production
- Hydrogen Production Cost from PEM Electrolysis – 2019
- Direct reduced iron costs? – Thunder Said Energy
- Clean Hydrogen Production Cost Scenarios with PEM Electrolyzer
- Green Steel Economics – Solutions for Our Climate
- Green steel: design and cost analysis of hydrogen-based DRI
- Clean Air Task Force, ScienceDirect, MDPI, Global Efficiency Intelligence
