Decarbonising Russian steel: interview

Steel manufacturing is among the most energy intensive and therefore more difficult to decarbonise industries, but Russian steelmaker Severstal is striving to lower its emissions through the use of blue hydrogen and carbon capture and storage (CCS).

Severstal signed two memoranda of understanding this month with oil and gas companies Novatek and Gazprom on developing blue hydrogen supply for its steel production plants. They will also work on CCS solutions, for the CO₂ emitted when blue hydrogen is produced and the CO₂ that is released anyway at its facilities.

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Novatek, Russia's second-biggest gas producer, already supplies Severstal with natural gas, which can be used to produce hydrogen through steam methane reforming. When the resulting CO₂ is captured and safely stored, that hydrogen is classified as blue. Novatek is already researching blue hydrogen production at its Arctic LNG projects, both as an export and as a fuel for powering the remote facilities.

Gazprom Neft, meanwhile, is endowed with significant gas resources of its own and also brings to the table its experience of CO₂ capture and storage at oilfields in Serbia.

This makes the pair good candidates to help Severstal address its emissions, the steelmaker's head of decarbonisation projects, Ilya Pavlov, tells NGW.

"As a metallurgical company we already consume a huge amount of natural gas for our furnaces, and this makes our operations cleaner than most metallurgists around the world that use pulverised coal," Pavlov explains. "But we have some projects ongoing, mostly at the R&D phase, to decarbonise the furnaces further using hydrogen."

Hydrogen is a solution for use in blast furnaces, but it is even more viable when steel is produced from direct reduced iron (DRI) in electric arc furnaces. Steam methane reforming is already employed in the DRI plant to produce hydrogen and carbon monoxide, which together serve as syngas to reduce the iron.

CO₂ from these steam methane reformers can be collected and stored at underground sites with the right geological conditions, while additional low-carbon hydrogen can be added to the syngas from an external source, Pavlov explains, which is where Gazprom Neft and Novatek could come in.

Hydrogen colours

A number of European countries have rejected blue hydrogen in favour of green hydrogen, produced from water using electrolysers powered by renewable energy. Pavlov sees potential in Russia for green hydrogen production, but believes the more viable option is blue, given the considerable renewable energy capacity needed for green. Blue hydrogen is also roughly three times cheaper than green, depending on gas and power costs.

"Currently here in Russia we don't use as much renewable electricity as in Europe or the US, but we have plenty of natural gas and place to store the CO₂, and also the forests to offset more emissions," he says.

Pavlov also sees so-called yellow hydrogen, produced at electrolysers but using nuclear power, as a strong prospect in Russia, given the spare capacity at its nuclear power plants.

"We need to talk about the carbon footprint of the hydrogen and be technologically agnostic," he says.

Severstal is also looking for opportunities to invest in methane pyrolysis, which produces hydrogen and carbon black, a valuable commodity in a number of industries, Pavlov explains. Should a hydrogen market take off, there are also opportunities for the company in supplying the new types of steel necessary for building hydrogen pipelines, he says.

The European Commission unveiled a landmark strategy for hydrogen energy last year, calling for up to 40 GW of hydrogen-producing electrolyser capacity to be up and running by 2030. But Brussels acknowledges that hydrogen imports will be needed as well, and Russia is keen to establish itself as a key supplier. But while the Russian government has published a roadmap for hydrogen's development, it is yet to introduce demand and supply-side support measures to boost the industry.

Carbon neutral steel

Severstal aims to reduce its greenhouse gas intensity by 3% over the next three years versus the level in 2020, and plans to work out realistic targets for further reductions by the end of the decade. Looming ahead, the EU is preparing to introduce carbon taxes on steel and other imported goods.

"This is the reality we're going to be living in very soon; whether or not it is fair is a philosophical question," Pavlov says. "Of course this will mean difficulties in Russia and elsewhere, but I talk about it more from the position of opportunities rather than problems."

Asked whether he could envisage carbon-neutral steel production in the future, Pavlov says this would be expensive and difficult to produce, although a significant reduction from today's level of emissions would be an excellent long term result.