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Can Europe decarbonize its heavy industry?

yessteel in swedish It is considered the toughest in the world. Soon you can become your greenest. In Boden, a town near the Arctic Circle, a startup called H2 green steel (Htwogs) is building a new 4 billion euro ($4 billion) plant, Europe’s first in nearly half a century. It will not be powered by the usual coal or natural gas, but by green hydrogen, produced on-site by the region’s abundant wind and hydroelectric power. When fully built in a few years, it will employ up to 1,800 people and produce 5 million tons of steel a year.

The project matters far beyond the sparsely populated north of Sweden. The consequences could be transcendental for the producers of steel and other basic materials on the continent, such as cement and chemicals, which between the three directly contribute around 1% of the EU‘s gdp. It would spread through the supply chains of companies, from automakers to builders, who make up another 14% of EU output, according to Material Economics, a think tank. It would boost Europe’s energy independence, the importance of which has been laid bare by Russia’s energy blackmail in response to Western sanctions against its war in Ukraine. And it would be a boon for the climate, since basic materials industries spew around a fifth of Europe’s greenhouse gas emissions. In short, thinks Ann Mettler of Breakthrough Energy, a venture capital fund backed by Bill Gates, it could mark the renaissance of Europe’s heavy industry for the post-fossil fuel era.

For a long time, heavy industry has seemed hopelessly carbon intensive. Reducing iron ore to make steel, heating limestone to make cement, and using steam to break down hydrocarbons into their component molecules requires a lot of energy. On top of that, the chemical processes involved emit a lot of additional carbon dioxide. Cutting all those emissions, experts believed, was either technically infeasible or prohibitively expensive.

Both the economy and technology are finally starting to look more favourable. Europe is introducing stricter emissions targets, carbon prices are rising and consumers are showing a greater willingness to pay more for greener products. Several European countries have drawn up strategies for hydrogen, the most promising replacement for fossil fuels in many industrial processes. Germany is launching the hydrogen intermediary network company (behind.co for short), a global trading center for hydrogen and hydrogen products. Most importantly, low-carbon technologies are finally coming of age. The need for many companies to replenish obsolete assets offers a “fast-forward mechanism,” says Per-Anders Enkvist of Material Economics.

Taken together, these developments are allowing European industrial companies that have pledged to be carbon neutral by 2050 – that is, many of them – to start putting money where their words are. Material Economics has identified 70 projects in Europe that commercialize technology to reduce carbon emissions in basic materials industries. Hardly a week goes by without a new company showing up. The decarbonization industry has gone from mission impossible to “mission possible,” says Adair Turner of the Energy Transitions Commission, a think tank.

The steel industry is the most advanced. HtwogsThe Boden plant is cleverly combining proven technologies on a large scale. The firm is building one of the world’s largest electrolysis plants to produce hydrogen. The gas is then pumped into a reactor, where it drives a process called “direct reduction”: under great heat, it strips oxygen from the iron ore, producing nothing but water and sponge iron. This material, so named because its surface is riddled with holes, is then refined into steel using an electric arc furnace, which dispenses with the coking coal.

Half an hour’s drive south of Boden, hybrid—a joint venture between sata steel company, Vattenfall, an electrical company and lkab, an iron ore producer, is piloting a similar process. In July, the board of directors of Salzgitter, a German steel company, gave the green light to a €723 million project called jumps that it will switch its conventional blast furnaces to direct reduction plants by 2033 (it will use some natural gas until it can secure enough hydrogen). Other big European steelmakers, including ArcelorMittal and Thyssenkrupp, have similar plans.

Cement manufacturers are going in the same direction, albeit more slowly. With limestone heating generating about 60% of the sector’s carbon emissions and a replacement technology, such as direct reduction in steelmaking, being lacking, the industry is primarily focusing on reducing post-heat emissions. done, using carbon capture and storage (DC). Many companies are experimenting with a heating process that replaces air with pure oxygen, which produces COtwo suitable for kidnapping. Some are trying to use electricity instead of fossil fuels to heat the limestone. The most ambitious are developing new types of cement with less carbon.

HeidelbergCement, the world’s fourth-largest manufacturer of the material, has launched half a dozen low-carbon projects in Europe. They include a DC in the Norwegian city of Brevik and the world’s first carbon-neutral cement plant on the Swedish island of Gotland. Ecocem, an Irish startup, is making cement that uses less clinker, the intermediate material derived from heated limestone, and therefore emits less carbon. Some companies are trying to recover cement from old concrete in demolished buildings.

The chemical industry faces perhaps the biggest challenge. While powering steam crackers with electricity instead of natural gas is simple in principle, in practice it is not a piece of cake, given the limited supply of low-carbon electricity. In addition, the chemical business breathes hydrocarbons, from which many of its nearly 30,000 products are derived.

Still, it’s not giving up. essentiala colossus of chemistry, is working with two rivals, I knew and Linde, to develop an electrically heated steam cracker for its city-sized factory in Ludwigshafen. He wants to make the site of him in Antwerp, which emitted 3.8 million tons of COtwo last year, net zero by 2030. To achieve this goal, essential recently bought part of a wind farm off the Dutch coast to provide carbon-free electricity. The company, like its cement counterparts, is also looking seriously at recycling, in particular a process called pyrolysis, where plastic waste is burned in the absence of oxygen and broken down into its hydrocarbon components. Other companies are imagining different types of greener raw materials. afyreema French startup, is obtaining hydrocarbons from biomass.

Several dozen pilot projects, even large ones with proven technology, do not equate to a green transition. The hard part is scaling them, the necessary infrastructure is either a work in progress (clean electricity generation) or barely exists (hydrogen production and distribution). Costs remain high: Green steel mills are still two to three times more expensive to build than conventional ones. Attracting workers can be difficult, especially to places rich in renewable energy that are often, like Boden, remote. And rivals in other countries are not sitting still; a couple of giant Indian conglomerates in particular are betting big on green hydrogen. Europe needs to hurry if it wants to maintain its lead, warns Frank Peter of Agora Energiewende, a think tank.

These are all real obstacles. But they don’t have to be insurmountable. To understand why, once again consider Htwogs. It has convinced companies including BMW, a car manufacturer, and two appliance manufacturers, Electrolux and Miele, to sign contracts for 1.5 million tons of green steel. That backlog serves as collateral for banks to finance two-thirds of the project (with the rest coming from equity investments from backers that include venture capital firms and industrial giants like Scania and Mercedes-Benz).

To attract hundreds of skilled workers and their families to remote Boden, meanwhile, he’ll help them find housing in a complex that, if its architects have their way, will look like a posh resort. To ensure the other important input, hydrogen, Htwogs has partnered with Iberdrola, a Spanish energy company, to build a large factory in Western Europe to produce the gas, with a view to supplying some to other industrial users.

HtwogsThe thinking is that if it can establish its steel and hydrogen platforms early, it can secure significant advantages ahead of competitors elsewhere. These include things like setting standards and getting a piece of potentially lucrative business, like software to control hydrogen and steelmaking equipment. For Europe to become a green industry superpower, its governments and industrial giants will need to show similar ingenuity and ambition.

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