Techno-Economic Assessment of Hydrogen Integration for Decarbonizing the Steel Industry: A Case Study

Abstract

The iron and steel industry is one of the largest industrial sources of greenhouse gas emissions. This paper examines the potential of green hydrogen as a reducing agent for decarbonizing primary steel production, focusing on the Taranto integrated steelworks in southern Italy. Producing about 3.5 Mt of crude steel annually, the plant is also among the country’s biggest emitters, with CO2 emissions of roughly 8 Mt per year at typical blast furnace intensity (2.2 tCO2/t steel). The analysis quantifies the hydrogen demand required to replace fossil fuels in iron ore reduction and evaluates the techno-economic feasibility of meeting it with green hydrogen. Using DWSIM (open-source chemical process simulation software, v9.0.2) for water electrolysis powered by renewables, the study estimates both the CO2 emission reductions and cost impacts of hydrogen-based steelmaking. Results show that integrating green hydrogen at Taranto could achieve deep decarbonization by cutting emissions by over 90%, with a base-case levelized hydrogen cost (LCOH) of 3.6 EUR/kg and green steel production cost 653 EUR/t. With optimistic assumptions (renewable electricity at 40 EUR/MWh and electrolyzer CAPEX halved to 500 EUR/kW), hydrogen cost could be reduced to 2.3 EUR/kg, making green steel cost-competitive with conventional steel and implying a breakeven carbon price of under 60 EUR/t. Sensitivity analyses highlight that falling renewable electricity prices, supportive carbon policies, and successful demonstration projects are key enablers for economic viability. The findings underscore that renewable hydrogen can be a viable decarbonization pathway for steel when coupled with continued technological improvements and policy support.