THP-E194: The Industrial Hydrogen Revolution Has Begun And It Starts With Steel. Also, H2 Investment At The G7

March 06, 2023 • Paul Rodden • Season: 2023 • Episode: 194

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Welcome to The Hydrogen Podcast!

In episode 194, Japan prepares to talk hydrogen at the g7 summit this year. And thyssenkrupp Steel invests billions in a direct reduction plant all of this on today’s hydrogen podcast.

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Japan prepares to talk hydrogen at the g7 summit this year. And thyssenkrupp Steel invests billions in a direct reduction plant all of this on today’s hydrogen podcast.

So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden. And welcome to the hydrogen podcast.

In an article in, Katya Golubkova and Yuka Obayashi write, Japan to promote gas LNG hydrogen investment during g7 presidency, the author’s write Japan will stress the importance of investment in natural gas, liquefied natural gas as well as cleaner fuels such as hydrogen and ammonia during its Presidency of the g7 this year, this according to a source but would keep it clean to meet 2050 Carbon Neutral goals. Japan, president of the rich country grouping for 2023 will hold a ministerial meeting on climate, energy and environment in the city of Sapporo on April 15, and 16th, ahead of the main g7 summit in Hiroshima on May 19 through the 21st. Again, according to the source, Japan expects a global energy market to remain tight for years and would emphasize investment in a natural gas LNG hydrogen and ammonia. investments should meet Japan’s goal to be carbon neutral by 2050.

This again, according to the source, Russia ordered a reshuffle of shareholders and it’s far eastern Sakhalin-2 LNG project, including Japan, retaliation for Western sanctions for its invasion of Ukraine a year ago, Russia calls its intervention a quote special military operation. Now Japan relies on supercooled gas from Sakhalin-2 project and would need at least several years to find a substitute this according to market players, Japan imposed its own sanctions on Russia, but still buys its LNG, getting almost 10% of annual LNG imports from Sakhalin-2 with energy self sufficiently at only 11%, the lowest of any g7 member, Japan sees a risk and becoming even more dependent on Russia If natural gas production prospects in the United States don’t materialize. The government plans to launch a so called strategic buffer LNG similar to its strategic oil reserves, which are among the world’s largest.

It has yet to set out details on how it will secure supplies via short and long term deals, nor hasn’t identified a company to handle LNG purchases, and an emergency the chosen company would sell LNG from the SPL to utilities to avoid supply disruption. And the state company JOGMEC would step in to cover for any losses the company might incur this again, according to their source. If LNG supplies from Russia were interrupted before the SPL could be established. Tokyo gas one of the Japan’s top LNG buyers would buy it from the spot markets or its long term deals, and might also ask customers to reduce consumption Atsunori Takeuchi, executive officer and senior general manager for Tokyo gases LNG business told the conference in Tokyo. Okay, so news out of Japan on their continued investment in natural gas LNG, and more specifically hydrogen. Now I’ve said this before in the show, and I’ll say it again. LNG and natural gas are vastly cleaner sources of energy than say coal. And since we know that Japan isn’t going to go nuclear anytime soon, the fastest way that they’re going to be able to get energy into the country is by bringing in these four products natural gas LNG, hydrogen and ammonia.

Next, in a press release on March 1, Thyssen Krupp steel awarded a contract worth billions of euros to SMS group for a direct reduction plant, one of the world’s largest industrial decarbonisation projects gets underway. Thyssen Krupp steel places an order with SMS group Dusseldorf for the engineering delivery and construction of the first hydrogen powered direct reduction plant at their Duisburg location. This marks the start of one of the biggest industrial decarbonisation projects worldwide, which at one stroke will avoid more than three and a half million metric tons of co2 per year in the future. The order volume for SMS amounts to over 1.8 billion euros and also marks the largest single order in history of the company. Moreover, significant additional structural building services will be required in addition to infrastructure and media connections. The preliminary tasks can be started immediately under the scope for an earlier start to work that has been approved. The plant will have a capacity of two and a half million metric tons of directly reduced iron ore DRI, and is scheduled for completion by the end of 2026.

The overall project remain subject to European Union approval under state aid provisions as well as the final funding decision. Both are expected in the coming months, the state of North Rhine Westphalia and the German government have already signaled substantial financial support for the project. The contract award makes a decisive technological turnaround for Germany’s biggest steelmaker, and it’s more than 200 year history. As part of the TK h2 steel transformation concept. The replacement of co2 intensive steel production by climate friendly technologies is now beginning. Up to this point, coal based hot iron production in the blast furnace always involved emitting large amounts of co2, amounting to about 20 million metric tons per year from the Duisburg location alone. Hydrogen based processes in direct reduction plants offer a significant basis for manufacturing carbon neutral steel in the future.

Thyssen Krupp steel is already planning to avoid as much as 6 million metric tons of co2 by 2030, representing well in excess of 30% of its emissions. The transformation to carbon neutral production should be completed by 2045 at the latest. SMS group, a company from North Rhine Westphalia has been awarded the contract for the groundbreaking plant at ThyssenKrupp steel SMS employs a good 14,500 People at around 100 locations. As a specialist for steel industry production plants, it is actively helping shape the transformation of the industry. The order that has now been placed is also historic for SMS It is the largest single order in the company’s history spanning more than 150 years.

And so in pursuit of the best technological solution, Thyssen Krupp will be the first steelmaker in the world to combine a 100% Hydrogen capable direct production plant with innovative melters positioning the two melters immediately adjacent to the direct reduction plant allows the solid input of stock produce there to be converted into molten iron immediately. This makes the entire process particularly efficient. In addition, the spatial requirements and constraints a complex iron and steel plant involves can be taken into account. The direct reduction plan is based on MIDREX Flex technology, SMS will also develop the innovative melters, slag granulation and other auxiliary equipment for example, water recycling, SMS is building the plant on an EPC basis. This means the company bears overall responsibility for the engineering procurement and construction of the plant. In addition, significant further work is required related to structural and civil engineering, infrastructure and media supplying.

The innovative concept ensures consistently high product quality. This is because it is seamlessly integrated into the existing iron and steel plant thereby allowing all subsequent process steps from the steel mill onward to be maintained. As a result, the existing plant structure can be used efficiently. Customers will continue to receive the complete high quality product portfolio in the premium quality they’re accustomed to. The cooperation between Thyssen Krupp steel and SMS also sends a strong signal for North Rhine-Westphalia as an industrial center. In building the direct reduction plant two companies are forming a partnership for innovation and efficient industrial climate change mitigation. At the same time Thyssen Krupp steel is still responsible for two and a half percent of Germany’s co2 emissions. But the first direct reduction plan alone will save over three and a half million metric tons of co2.

This corresponds to 20% of the company’s current emissions more or less and underlines Thyssen Krupp Steel’s leading role in the steel industry is transformation. At the same time, the underlying technological concept can serve as a model for many other decarbonisation projects in the industry in Europe and beyond. Moreover, this step into transformation will preserve many 1000s of high quality and high qualified jobs. The Innovation Alliance between Thyssen Krupp steel and SMS will also call for new qualifications in addition to the jobs created during the construction of Germany’s biggest direct reduction plant.

The detailed planning and preparatory work for construction of the direct reduction plant will commence immediately under the scope for an earlier start to work approved by the German government. One of the tasks on the list involves getting the construction site ready on the plant premise of ThyssenKrupp steel and parallel Under the project ThyssenKrupp steel will enter in to an open and transparent dialogue with neighborhood residents, politicians and the general public to explain the pioneering project that is now being developed to decarbonize steelmaking at the Duisburg site. Okay, so really some big news to come out of Thyssen Krupp SMS and Germany. Now of all the projects that we announce on this show, this one may have one of the best bets of moving through fid and actually getting constructed. Obviously, Germany is very welcoming of hydrogen, and hydrogen initiatives like this one.

And when the country’s biggest co2 producers says they’re going to be dropping their co2 production by 30%, it’s probably going to get passed on the regulatory side. Now, one of the biggest questions surrounding this is are there going to be any regulations surrounding what kind of hydrogen they’re using. But if this press release is right, we should note very soon, whether fit does go through, and this plant actually does get built.

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