Grounded by cost

In a recent white paper, Dr. Joe Fournier asks the question

Is so-called green steel, defined here as hydrogen-based direct reduction of iron (H₂-DRI), followed by melting in renewable-powered electric arc furnaces (EAF), a viable route to largescale low-carbon primary steel production, or does its promise rest primarily on demonstration projects, policy momentum, and naive optimism? [1; p.3]

In other words, can “green steel” replace Blast Furnace-Basic Oxygen Furnace (BF-BOF) as the primary means to produce steel production? The answer is it is unlikely.

At present, world steel demand is dominated by steelmaking coal which is converted to coke to use in the BF process. Over 70% of global steel production depends on it— and the second most used steel production method, electric arc furnaces fed with scrap steel, indirectly rely on it.  This 70% amounts to nearly 1.3 billion tonnes of steel per annum. Steelmaking coal is the most important feedstock in our most used metal. That importance simply cannot be unstated.

Dr. Fournier asserts that due to the intense energy demand of the green steel pathway, 5,200 TWh of energy would be needed to create enough steel to replace the current steel output from BF-BOF production. To achieve this would require “planetary-scale resource mobilization” and trillions of dollars in subsidies [1; p.11].  Though not stated in the paper, it can be assumed that these the bulk of these subsidies would need to be made by taxpayers. Just how much is 5,200 TWh?  Well, the United States produced 4,200 total TWh in 2024 alone. As can be seen, the energy needs for green steel are staggering.

For added complexity, the United States, China and other major countries are prioritizing energy security, critical minerals, and massive investments in power-hungry AI data centres. A full transition to green steel for a country like China, who produces half of the worlds steel [3; p.15], would require infrastructure capable of generating thousands of additional TWh of zero-emission electricity while competing with the priorities stated above. Clearly, a global shift to green steel is not right around the corner.  

And proponents of DRI seem to seem to be equally dubious of hydrogen’s  efficiency, over 90% of all planned DRI facilities plan to use natural gas as their feedstock— with some planning to wait and see if hydrogen is ever economic.

Furthermore, the macroeconomic markets reinforce the thesis that hydrogen bears little threat to steelmaking coal’s dominance.  India has its sights set on increasing steel production and  is increasing its BF-BOF capacity.  China’s current steel production heavily favors BF-BOF [4] .  Natural gas dominates DRI‑EAF steelmaking—not hydrogen—and the route still supplies just 5–7% of global steel.  With energy scarcity at the forefront of world policy, many countries including the European Union are wisely declaring metallurgical coal the critical mineral it is.  Lastly, according to Wood Mackenzie [5], global steel production is expected to grow 0.7% annually to 2050. While the BF‑BOF route has been used for more than a century, it remains a proven and continuously modernized technology, and steel producers favour these established methods over rapid adoption of green steel alternatives.

Green steel is a fledgling technology that is even having trouble holding the confidence of its proponents [1; p.11] green steel is not “just around the corner” – it’s barely on the same map.  It has not prevented investment into new and upgraded blast furnaces, it has not caused a march away from metallurgical coal, and it is incapable of meeting growing steel demand due to the immense amount of additional renewable energy that it would require.