Unlocking green iron, without locking in gas: Renewables could take lead position via direct reduced iron at existing plants

A new study from the Institute for Energy Economics and Financial Analysis (IEEFA) reveals the potential for steelmakers to transition to low-emissions iron production using existing facilities, by harnessing renewable electricity instead of natural gas. The briefing note, "Leapfrogging gas: How renewables can unlock new DRI on brownfield sites," highlights the use of coke oven gas (COG) as a pathway to decarbonize iron and steel manufacturing.

COG, a byproduct of metallurgical coal production, is rich in hydrogen and methane. Traditionally, it has been burned at steelmaking sites to generate electricity or provide heat. By shifting COG use to renewable electricity and electrifying certain heating processes, steelmakers could free up COG for direct reduced iron (DRI) production, a process widely seen as crucial for reducing the carbon footprint of iron and steel manufacturing.

The research notes that steelmakers should not rely on natural gas to move away from blast furnace ironmaking. Instead, electrification at existing sites could provide a more cost-effective and emissions-free alternative. Lachlan Wright, Energy Finance Analyst at IEEFA, explains that burning COG for electricity is inefficient and expensive. Renewable energy sources can offer a cheaper solution, while electrifying certain heating processes could lead to improved output and reduced energy requirements.

The IEEFA briefing cites the example of Thyssenkrupp's Duisburg facility in Germany, which plans to produce 2.5 million tonnes of DRI annually, initially using natural gas. By transitioning to renewable electricity generation and electrifying reheat furnaces, the plant could potentially release more COG than needed, reducing its direct emissions by 10%.

However, the feasibility of this approach depends on securing sufficient renewable energy. The project would require approximately 2.8 gigawatts of solar capacity to unlock the necessary COG. Additionally, power purchase agreements and long-term planning may be necessary to secure the required investment.

While the COG DRI approach faces challenges, including uneven treatment of imports under EU carbon pricing legislation and limited commercial deployments of COG DRI plants, the potential benefits are significant. Widespread adoption of this method could lower the demand for metallurgical coal in major markets like the EU, China, and India by 10-15%, which would have implications for met coal exporters like Australia.

The study emphasizes that COG DRI is a transitional strategy, not a long-term solution to decarbonizing iron and steel manufacturing. However, its widespread adoption could lower carbon emissions while reducing reliance on fossil fuels, preparing the industry for a future that will likely transition to green hydrogen-powered DRI production.