Indicative production costs for crude steel via electrolytic hydrogen-based DRI in selected regions compared to current references

Sources

IEA (2022), OECD Energy Prices and Taxes quarterly, December 2022 [https://www.iea.org/data-and-statistics/data-product/oecd-energy-prices-and-taxes-quarterly]; IEA (2022), Global Hydrogen Review 2022 [https://www.iea.org/reports/global-hydrogen-review-2022]; IEA (2020), Iron and Steel Technology Roadmap [https://www.iea.org/reports/iron-and-steel-technology-roadmap]; Bloomberg (2022), Commodities [https://www.bloomberg.com/markets/commodities].

Notes

VRE = variable renewable energy ; APS = Announced Pledges Scenario; H2-DRI = hydrogen-based direct reduced iron. The VRE cost range represents electrolysis powered by solar PV, offshore wind or onshore wind. For ammonia and crude steel production, an additional hydrogen storage cost to guarantee a minimum load of 80% is considered. ‘Current reference’ values show production costs using the dominant incumbent means of production today with unabated fossil fuels. Recent prices for natural gas and grid electricity are used to compute the cost ranges in each region where relevant. The cost of capital is assumed at 5%, while the other techno-economic assumptions are sourced from the references below.