Posted on 29 Sep 2023
Swedish steelmaker H2 Green Steel (H2GS) is already seeing future customers willing to pay a premium for green steel amid a push to decarbonize the industry globally, according to chief technology officer Maria Persson Gulda. H2GS is working to build a 2.5mn metric tonnes (t)/yr green steel mill in Sweden by 2025. The company believes it can reduce steelmaking CO2 emissions by 95pc by using green hydrogen produced by renewable energy rather than coal-powered blast furnaces. Gulda discussed with Argus her thoughts on how the steelmaking industry needs to change, where her company sits in the carbon transition and how markets will drive the industry. Edited highlights follow:
Are people willing to pay a premium for green steel?
We have sold 1mn t of steel into very many different industries, on an annual basis, in 5-7 year take-or-pay contracts that are unheard of in the steel industry.
For those we are getting a 20-30pc premium compared to brown steel prices, a blast furnace-based steel. We abate 95pc (of carbon) compared to that route, so that is where the premium comes from.
We have a capacity by 2025-26 of 2.5mn t/yr of steel, and the 1mn t sold is 40pc of that capacity. We do not believe we should sell more now because we think that premium will only increase with time.
With your latest round of funding, what is next in the construction of your mill?
We have already got our building permit and also our operational permit so we have been leveling the ground and doing the piling for the past year. Now we are beginning work on the foundations and the buildings. Our equipment contracts like steel and DRI have been signed for over a year, which means that the engineering for those is about to finish.
What are your thoughts about natural hydrogen versus electrolyser-derived hydrogen?
We welcome all types of technologies, breakthroughs, developments, exploration, everything that can help us actually solve the climate crisis that we are in. In our position it is important that we learn as much as possible about these different breakthroughs, understanding in what locations you can get the cheapest hydrogen and how do we, in our expansion, look at those places.
There's no doubt that our electrolyser will be much more expensive than what you will be able to procure in five or 10 years.
But we will learn so much from designing it, installing it, running it, and we will be able to optimize that in a way together with the grid that we will have a head start and knowledge that we can apply at other places no matter what technology they're using to produce the hydrogen.
What do you think about how carbon standards are being set around the world?
What you will see in the future is a product, when delivered to the customer, that will show exactly how it has been processed and you will have a track record in terms of the CO2 emissions.
Just like today when you are reporting on your balance sheet and income statement, you will also have to do that as a company when it comes to CO2 emissions.
I am worried when standards come into place and they are not ambitious enough, and I'm also worried when standards are being set up in a way that it takes a long time to agree on something and then what was initially discussed is outdated.
Who should push transparency around carbon intensity?
I think a lot of it can be driven by the capital market. A lot of it can be driven by players like us. If we believe that we are the best in the world in order to abate CO2, then it is in our interest to develop that type of tracking, and show to the customers what is possible, and then it is up to the customers to say to their other suppliers, we want to see the same thing.
If we were to wait for government regulations or approvals or pushes, then H2GS would not exist and you would have the old timelines of making a green transformation after 2035 and by 2050 in Europe. I think H2GS has accelerated the European steel industry to go green and cut down the timeline by 10 years.
What about H2 Green Steel's future plans?
H2GS always starts with the customer. It is the customer demand that started our project and that is making us a company today.
The other thing that H2GS does is we do things in partnerships, so the site will depend on a lot of different parameters. Where can we get the best partnerships in order to put up a site? Where do we get the continuous flow of green electrons at a low price? Is there a power outlet for 1-2GW of electricity, because that is a problem in a lot of the world. Is there a port where we can ship out our products to close customers that would like to have it?
Currently we are looking at five hot spots that we see across the world that could be our next site in North America, South America, and additional places in Europe.
Source:Argus Media
