Spain starts with an advantage in the race to forge green steel

The document points to our country as a firm candidate to lead the first wave of projects that manufacture renewable steel on the planet, that is, with zero emissions. And it offers illuminating recommendations to encourage the industry and investors to embark on that path.

Although the analysis has focused on Spain, its conclusions can be extrapolated to Portugal and Italy. A ‘hub’ of green steel would be created between the three countries to satisfy the demand of Europe, where the pressure to decarbonise the steel sector is greater, since this activity is responsible for 9% of CO2 emissions globally and 7% in the Old Continent. This would make it more difficult for competitors from third countries to enter this market. “The region could be the first to capture new markets for low-emission iron and steel, growing the regional industry, creating skilled jobs and securing national supply chains for existing factories,” the study reads.

new solution

The proposed route is to use renewable hydrogen from clean energy sources to produce the steel. “As Spain has a lot of renewable resources, the country is in a very good position to manufacture green steel at more competitive costs. It is a developed country with good infrastructure for the production and transmission of electricity, which makes it easier and faster to start these projects and start exporting steel. Although to meet the demand it will also be necessary to invest in new electricity and hydrogen infrastructure”, underlines Marc Farre Moutinho, lead author of the report and member of the ETC Energy Commission.

Even so, manufacturing green steel will not be easy, as Andrés Barceló, general director of Unesid, the steel industry employers, points out. “The technology can be achieved,” he says, “but there are two problems: producing renewable steel and selling it. On the one hand, today there is no hydrogen either in quantity or at a competitive price. And if you don’t develop a market for these products, you won’t have buyers.”

Hence, the study proposes a series of measures to promote these developments. The role of the Government will be “essential” (he mentions). “The most favorable way to support the projects is through direct subsidies to face the high initial costs of the equipment”, Farre clarifies. For this, Spain has tools such as the Industrial Decarbonization Part. “Governments and public banks must also give guarantees to investors and private banks that lend capital to this type of project,” she adds.

In addition, the rules of the game will have to be balanced by establishing a carbon tax for steel imports. If this is not done, “European green steel projects will have a hard time competing with high-emissions steel imported into the EU,” Farre says.

In Spain, steel is produced in 22 plants and there are 50 rolling and first transformation facilities, according to Unesid data. And it is manufactured in two very different ways. One is from the scrap that is recycled. In this case, the process is carried out in steel mills where these wastes are melted in electric arc furnaces. “Their emissions are much lower and most of these emissions are related to the electricity they consume. If it were to have 90% renewable energy, the emissions from the steel mills would also decrease, “Barceló proposes.

Afterwards, the steel goes to reheating furnaces (with natural gas) to be molded and obtain the final product (beams, coils, wire rod…). «The plan of all companies is to stop using natural gas and electrify. But today it does not seem to be possible due to the extremely high temperatures that steel requires (above a thousand degrees). One solution is to inject natural gas mixed with green hydrogen and progressively increase the percentage of hydrogen until it replaces the gas,” says Barceló.

primary steel

Spain “is a rarity”, as Barceló describes it, since our steel industry is one of the most recycling in Europe. “We recycle around 70-75%,” he says. Of the 14.1 million tons that left our factories in 2021, 11.1 (almost 80%) were scrap that had a second life.

The rest was primary steel, which is manufactured with a very different technology: in blast furnaces and is known as integral steel. “The Germans produce 62% of their steel in this way and outside of Europe there are countries that reach 80%,” Barceló qualifies. The forecasts indicate that only scrap recycling is not enough to cover the world demand for steel, but it must also be produced from iron ore. And it is precisely in this process where new solutions are sought for its decarbonization, because it generates a large amount of emissions. “The best comprehensive plant in Europe produces 1.8 tons of CO2 for every ton of steel,” Barceló details.

In the south of our continent there are two factories of this type: one in Taranto (Italy) and another in Gijón, owned by ArcelorMittal. Both already have plans to carry out the energy transition, as the ETC report mentions. In fact, ArcelorMittal has obtained the go-ahead from the European Commission to receive 465 million euros with which to start decarbonising its blast furnaces in Spain.

Obtaining newly manufactured steel in a clean way is a great technological challenge. Now it is done with the following technique: the first thing is to treat the iron ore, which is reduced (that is, the oxygen and other impurities it contains are eliminated) with coke (a distilled coal) in a blast furnace. Thus, an iron alloy with 4% carbon is obtained. This carbon must also be reduced in an oxygen converter to obtain a steel that acts as a base. Finally, through various technologies, the type of steel that is sought is achieved, because depending on its application, this material is different.

Well then, The proposal to produce green steel is to reduce iron ore with hydrogen in a direct reduction furnace. It is a very different technology from the conventional one. “There are already commercial-scale projects that reduce iron ore with natural gas. It is about using this solution with hydrogen. And integrate an electric arc furnace to produce the steel. This would achieve a comprehensive process with very low emissions”, explains Farre. In Sweden, Germany and Canada there are already initiatives under construction or experimentation with this development.

Initiatives in Spain

In Spain, the foundations of the first projects are also being laid, as highlighted in the ETC report. In Puertollano (Ciudad Real) a consortium, made up of the Helvella holding (as investment company) and the companies Siemens Gamesa, ABEI Energy and Russula Corporación, is developing the Hydnum Steel project: a plant to produce green steel that will occupy an area of ​​1 .3 million m2 (like 130 soccer fields), and will have a total investment of more than 1,000 million euros.

The idea is for it to be operational in the second half of 2026. In a first phase, it will manufacture 1.5 million tons of renewable steel and then double production. Quantities to consider if one takes into account that our country imports four million tons of steel from outside the EU just for the construction and automobile sector, as stated by Eva Maneiro, CEO of the Galician company Russula.

Hydnum Steel “is a huge project, very disruptive and technologically very advanced,” he says. It will be a self-sufficient plant that will be powered by renewable energy. The real revolution is injecting green hydrogen to treat iron ore and then turning it into zero-emission steel.” In the first part of the process, the resulting product is iron ore pellets that are transformed into steel in an electric arc furnace, where it is also mixed with scrap.

Another of its strengths will be the incorporation of cutting-edge technology. «We are going to provide the digital factory 4.0 solution, where the most important thing is the digital twin that models the plant in the different phases of the process. A software will simulate different scenarios and optimizations of the process before building the plant”, adds Agustín Escobar, CEO of Siemens Gamesa Spain. The production process will be automated and monitored and Artificial Intelligence will allow predictive maintenance.

To close the circle, the waste and by-products generated during the steel manufacturing process will be valued. “These are products that can be used in road construction and even in the manufacture of cement. We already have companies that would be buyers,” says Eva Maneiro.

The enclave has also been chosen conscientiously: near the National Hydrogen Center, in an area where hydrogen production projects have already been developed. “Puertollano is an industrial city, with a lot of available land that is key to developing this type of project that needs a lot of space. It has good wind quality and locations for renewables. And from the logistical point of view, it is perfectly communicated with the east and south of Spain and with Portugal, both by road and by rail, so the logistical part to release the product is quite simple. In addition, the initiative has been very well received and institutional support, “defends Agustín Escobar.

innovative solution

Iberdrola and Swedish startup H2 Green Steel also plan to build a large renewable hydrogen plant on the Iberian Peninsula, which will power an iron ore direct reduction furnace. It is intended to be operational in 2025 or 2026. Its production will reach 2 million tons of iron (pig iron) with practically no impurities to be transformed into sustainable steel.

The Spanish company is also working with the ‘spin off’ Boston Metal, which emerged from the Massachusetts Institute of Technology (MIT), on an innovative technology. It is about “separating iron ore from oxygen through electrolysis to make emission-free steel from renewable electricity. This solution allows to simplify the production process and significantly reduces costs. It is a modular technology, applicable to other metals (vanadium, niobium, cobalt…) and more efficient as it consumes 20% less energy than other conventional production methods,” says Francisco Laveron, head of Iberdrola’s Energy Prospects. This solution has already been validated in the laboratory. And it is intended to begin construction of an industrial-scale demonstration steel plant in 2024 and a commercial one in 2026.

At the same time, Iberdrola participates in alliances such as Steel Zero and the First Movers Coalition where various companies are committing to consume renewable steel in 2050.

All innovative solutions to forge the green and clean steel of the future, and in which Spain can be the pole of attraction.