Decarbonizing Steel Industry via Hydrogen: A Techno-Economic Evaluation

The iron and steel industry is one of the most carbon-intensive industrial sectors and therefore faces an urgent need to transition toward low-carbon production technologies such as hydrogen-based metallurgy. This study presents a techno-economic and environmental assessment of converting the 6 Mt/yr (suggested) Taranto steel plant in Italy from a legacy blast furnace-basic oxygen furnace (BF-BOF) route to a green hydrogen direct reduced-iron electric-arc-furnaceconfiguration. A model integrating hydrogen production, process simulation, discounted cash flow analysis, optimization, and Monte Carlo uncertainty analysis is developed. The proposed system uses a 2.16 GW anion exchange membrane water electrolysis facility. Under the stated baseline assumptions EUR 750/kW electrolyzer CAPEX and an electricity price of EUR 50/MWh, the estimated gross and net levelized costs of hydrogen are 2.92 and EUR 2.52/kgH2, respectively, after accounting for oxygen byproduct revenue. The resulting levelized cost of green steel is approximately EUR 603/t. Under an optimized scenarios with EUR 500/kW CAPEX and electricity at EUR 30/MWh, the net LCOH decreases to EUR 1.39/kgH2 and the green-steel cost to approximately EUR 536/t. The proposed route reduces emission from 1.80 to 0.20 tCO2/t steel, corresponding to an 88.9% reduction and approximately 9.60 MtCO2/yr of avoided emissions at full production. A break-even carbon price of approximately EUR 68.5/tCO2 is estimated relative to the BF-BOF route. Monte Carlo analysis indicates a market competitiveness probability of 61.9% under the specified uncertainty assumptions.