The second part of our short series is about the numbers behind the green future from hydrogen promoted by the European Commission in relation to its own steel industry. We also pull in the analysis of the major consulting agency McKinsey and take a look at it. And also explore the question of where the blueprint or script for European green steel comes from.
European steel to become clean – with green hydrogen
Because steel production as a whole is unbelievably dirty (1 ton of steel = 2 tons of CO2 – a value that has not changed for decades), European steel producers are to make their contribution. EU steel is also to become CO2 neutral in stages by 2030/2050. This involves costs, but the European taxpayer is apparently happy to subsidize them to the tune of billions. After all, this is about the green transformation and the switch from dirty coking coal to clean hydrogen from renewable energies.
8 billion euros for a green steel mill
For this, 8 billion euros of taxpayers’ money can be thrown down the throats of ailing steel companies such as thyssenkrupp. Thyssenkrupp has not yet stated what share of the changeover to hydrogen technology it is prepared to take on. But where there is no money, perhaps there is no contribution.
Expensive conversion from coking coal to hydrogen
The figure of 8 billion euros illustrates the sums that will be needed to manage the green transformation. We are only talking about one steel mill and its conversion to hydrogen feed-in. Not the necessary electricity infrastructure, the 3,000 wind turbines that would theoretically be needed, or the electrolyzer plants for hydrogen production that would have to be set up for this purpose and which also only theoretically exist to date.
Blast furnaces: but in the end only 30% CO2 reduction possible
According to the current technological status, however, the emissions of a BF-BOF steel mill can only be reduced by around 30%. And that is only on condition that sufficient green hydrogen and production capacities for Direct Reduced Iron (DRI) are available.
No significant hydrogen infrastructure in the EU
So far, there is no significant infrastructure for the production of green hydrogen from renewable energies in Europe. There are a few experimental plants in the 10 MW range and plans to commission a 100 MW plant at the North Rhine-Westphalian energy producer RWE by 2024. In Hamburg, there is a first application to the EU to build ONE 100 MW electrolyzer by 2025, which should then be one of the largest in the world – but only if the EU pays for it. The newest and most modern plant of the energy company Shell and the European Union creates just 10 MW and 1,300 tons of green hydrogen per year.
German industrial demand alone (excluding refineries) is estimated to be 1.7 million tons of hydrogen per year by 2030. Where is it supposed to come from? No one seems to know exactly. According to our calculations, it would take more than 830 100 MW electrolyzer power plants just to decarbonize the EU steel industry, but more on that later.
In any case, the EU still expects to be able to produce ten million tons of clean hydrogen from renewables by 2030. And for hydrogen electrolysers, it comes to a total capacity of 40 GW – with renewable energies. At least that’s what the European Commission writes in its Hydrogen Fact Sheet from July 2021. That is a total of 400 100 MW hydrogen electrolysers by 2030.
EU and member states at odds over hydrogen demand
Even the EU and the German government disagree about how much hydrogen German industry will need to make the transformation. In its National Hydrogen Strategy, the BMWi sees a total German industry demand for hydrogen by 2050 of “only” 80 TWh. The EU, on the other hand, calculates a minimum requirement for hydrogen of 100 TWh for the decarbonization of German steel production of 42 million tons per year alone.
And that’s just for the German steel industry.
Green steel from Europe – a calculation
The available figures from the European Commission, the international trade press and the German government, have raised questions in our minds. Is green hydrogen actually a viable solution to decarbonize European steel?
How much green hydrogen does it take to make EU steel clean?
We took a closer look at the numbers. To supply the total EU steel production of more than 250 million tons per year with green hydrogen, it would take a whopping 12.5 million tons of it (50 kg of hydrogen = 1,000 kg of steel).
Based on current knowledge, this would require 596 TWh of new alternative energy, such as solar and wind power, across the EU. This means that EU27 energy production would have to grow from the current level of about 2,900 TWh to almost 3,500 TWh. Just for green steel production.
60,000 new wind turbines for Europe
If we take only the currently largest 10 GW offshore wind turbines as a basis, we would have to plaster the North Sea and the Baltic Sea with almost 60,000 turbines. With the modern onshore turbines, this would bring us to 120,000 to 180,000 new wind turbines that would have to be built on the European mainland by 2050.
120,000 soccer fields with new wind turbines
Germany was once a pioneer in wind power expansion. Together with the other member states, the EU today produces about 15% of its energy needs from renewable energy forms. By 2050, this is to become 100%. And in Germany, just 3 new turbines were approved in the state of Bavaria in 2020 – an extreme example. In North Rhine-Westphalia, the net number of new plants added was just over 40.
The wind turbines alone would require 1,200 square kilometers of land.
Lawsuit madness of wind power opponents
The German wind power industry is on the brink of collapse. New laws and the German’s lawsuit rage – whether justified or not – against every new “wind power asparagus” massively hinder the expansion. Even every new power line that would make it possible to transport renewable energy through Germany is under legal attack.
It’s hard to imagine what the situation is like in other EU countries – despite the slump in expansion, they are still lagging far behind German wind energy.
If we now assume that only 120,000 new wind turbines would have to be built and that only 50% of these would be challenged and that each case (which it does not) would take only 6 months, then we would be talking about 30,000 years of legal action before already overburdened European courts.
Has the European Commission calculated the demand on a smaller scale?
So far, we have calculated on the basis of the European Commission’s publications. If we now take the very fresh McKinsey on Climate Change Report from December 2020, we have to ask ourselves whether the figures at the EC and in Germany have not been deliberately glossed over.
72 kg instead of 50 kg of hydrogen per ton of steel
McKinsey assumes that the production of green steel will require the use of 72 kg of hydrogen per 1,000 kg of steel. The EC, on the other hand, calculates only 50 kg of hydrogen per 1,000 kg of steel. The McKinsey analysts thus assume a 44% higher demand for clean H2 from renewable energies.
Energy demand 84% higher than EU calculation
But it gets even better. According to McKinsey, the energy required to produce green hydrogen for a ton of steel is 84.8% higher than assumed by the European Commission. Instead of about 600 TWh, we are now already at 1100 TWh for the green steel future.
Electrolyzer plants with very different capacities
Contrary to the assumption from the Climate Change Report, which postulates that nine 100 MW electrolyzer plants are needed for 2 million tons of steel, the current 10 MW plants come to just 1,300 tons of H2 annual production. If there are no major technological breakthroughs in the near future, 11 plants will be needed instead of 9.
1100 electrolyzers by 2050 – for steel only
Currently, a 20 MW electrolyzer plant costs about 7.2 million euros. If you convert that to a 100 MW plant, it’s about 36 million euros. With 11 plants we are then already at 396 million euros. According to these figures, we would need a total of more than 1100 of 100 MW electrolyzers by 2050, i.e. almost 40 billion euros just for the steel industry. Without infrastructure and renewable energy. The money should not be so important. Where will we get the trained workforce? And not only for the electrolyzers, but also for the a hundred thousand wind turbines?
Incredible number of wind turbines
The report comes up with more or less the same numbers for wind turbines as we did in our calculation. However, McKinsey seems to assume more powerful turbines than we assumed. According to the report, the consultants arrive at 110,000 small or 30,000 very large wind turbines with a capacity that is 84% higher than ours.
Expansion rate for wind power must be increased eightfold
However, this would require a drastic increase in the rate of expansion. By a factor of about 8. Let’s briefly collide with reality and take a look at the German Renewable Energy Sources Act.
Germany’s Renewable Energy Law makes expansion almost impossible
The EEG from 2020 has brought wind power expansion in Germany to a standstill. Already heavily criticized in advance, the German wind power industry assumes that while 14 GW of new larger turbines will be built by 2025, roughly the same amount will be decommissioned over the same period. And only 30% of these will be able to be replaced at all. New sites are difficult to obtain, as in many German states minimum distances of 1,000 m from residential areas must be observed.
Other peculiarities also make the expansion of renewable energies in Germany less interesting with the EEG, e.g. solar power. But this should only be mentioned here in passing.
EC and steel lobby have copied from the McKinsey script
All in all, the McKinsey report on climate change, especially with regard to steel, reads like the script for the activities of the European Union and the steel lobby. Meticulously, the press coverage of the EU and domestic steel companies in recent months can be traced back to this report.
Report is used like a blueprint
From the phased path to CO2 neutrality with Fit for 55, to the Green Deal, from the EU Carbon Border Tax (which the report mandatorily recommends) to the announced conversion of blast furnaces for pig iron production, the need to produce green hydrogen, the lobbying activities regarding CBAM, the planned switch to EAF and DRI technology, and the efforts of EUROFER to have the EC ban exports of European scrap. The Climate Change Report reads like a blueprint for the European path towards a green future.
The main thing is to sell the numbers
The only thing is that, as is so often the case, the figures have been made to look good. Because in the face of more than a hundred thousand wind turbines in the neighborhood, a green transformation is hard to sell. It also becomes clear why the German government and the Federal Minister of Economics, Peter Altmaier, have written the 1,000-meter distance regulation into law.
Energy consumption is supposed to fall by 2050
The argument is often made that the EU’s energy consumption will decrease by 2050 and that therefore not so many new plants need to be built. If you look at the figures from Eurostat on energy production in the EU up to 2019, then electricity consumption in Europe has rather increased or at least remained constant. As recently as July 2021, the German Federal Ministry of Economics raised Germany’s total annual energy demand by another 75 tWh (13%) by 2030. So much for energy savings.
Always remember: This is all about green steel!
DRI: the wonder weapon in the battle for green steel
In the third part of our report on the Green Steel Lie, we would like to take a look at the miracle cure in the fight against CO2 emissions that exists alongside hydrogen: Direct Reduced Iron or DRI. Why it could lead us into a green future. What CBAM has to do with DRI and in the end green steel from clean hydrogen is just a pretext for a new market protection measure by the EC.
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