ArcelorMittal pioneers green hydrogen use in Spanish steel reheating amid German setbacks

ArcelorMittal, one of the world’s largest steel producers, has taken a significant but measured step towards industrial decarbonisation by installing a green hydrogen combustion system at its Olaberria rolling mill in Spain. The plant, which processes scrap steel using electric arc furnaces and casts and rolls it into construction materials, has replaced its natural gas-fired reheating furnaces with units designed to combust 100% green hydrogen oxyfuel. This system, developed by Spanish firm Sarralle in partnership with Nippon Gases, represents a practical deployment of hydrogen technology in steel reheating, a notably energy-intensive phase within the steel production chain.

The substitution of fossil fuels with green hydrogen in the rolling mill points to the potential of hydrogen as a decarbonisation agent outside of direct ironmaking. Experts such as Mark Allan, group leader for green metals research at the Materials Processing Institute, assert that hydrogen combustion aligns well with the demands of steel rolling, where rapid and even heat transfer at high temperatures is required, something difficult to achieve consistently with electrical heating alone. This deployment is thus framed as a viable, immediate application of green hydrogen to reduce carbon emissions in steel production processes that do not involve virgin iron making.

ArcelorMittal’s adoption of green hydrogen technology in Spain follows a contrasting and highly publicised move away from more ambitious hydrogen-driven plans in Germany, which reveal the complexities and challenges of scaling hydrogen to decarbonise heavier steel production. The company recently rejected €1.3 billion in public subsidies intended for converting two German blast furnace sites to hydrogen-based direct reduced iron (DRI) production, a core technology for producing green virgin iron. The German projects were scrapped largely due to the country’s high and unpredictable energy costs, which ArcelorMittal cited as economically untenable. This decision has raised questions about the viability of Germany’s green hydrogen strategy, especially in the face of energy market volatility exacerbated by the loss of Russian gas supplies.

The rejection of the German DRI projects has spurred criticism from local stakeholders, including workers’ representatives in Bremen, who accuse ArcelorMittal of shirking responsibility in industrial transformation. Meanwhile, other German steel producers such as Thyssenkrupp and Salzgitter continue to pursue hydrogen-based decarbonisation pathways. Thyssenkrupp, for instance, reaffirmed its €3 billion green steel plant investment in Duisburg, emphasizing the need for improved infrastructure and affordable energy prices to make such projects commercially viable.

The divergence in ArcelorMittal’s approach between Spain and Germany reveals the nuanced calculus companies face in decarbonising heavy industry. While hydrogen use in reheating furnaces offers a more immediately deployable route to emission reductions, transitioning blast furnaces to green hydrogen direct reduction remains more complex and financially demanding. Industry data underscore the scale of the challenge; ironmaking consumes considerably more energy, up to 14 GJ per tonne, compared to reheating processes at 2.4 GJ per tonne, making the former a far more energy-intensive and capital-heavy target for decarbonisation.

The Olaberria project, with its capacity of 0.95 million tonnes per year, may not produce virgin iron but serves as a crucial demonstration of green hydrogen’s readiness for certain industrial applications. Its success could provide a foundation for broader hydrogen adoption in steelmaking operations focused on finishing and rolling. It simultaneously highlights how regional economic conditions and energy market structures heavily influence strategic decisions on investing in cutting-edge green technologies in the steel sector.

ArcelorMittal’s CEO of its Belgian operations indicated to the Financial Times that hydrogen’s commercial viability in Europe remains some years away, adding to the perception of a cautious industry approach amid ongoing technology and policy uncertainties. The company’s silence when asked to reconcile the feasibility of green hydrogen in Spain versus Germany suggests ongoing internal evaluations and a pragmatic balancing of ambition with operational and financial realities.

Germany’s economy ministry expressed regret over the withdrawal of the hydrogen steel projects but acknowledged the broader difficulties posed by energy costs and market conditions. While no subsidies had been disbursed, the cancellation of projects linked to climate goals underscores the pressing need for stable, affordable energy infrastructure to underpin Europe’s industrial energy transition.

In summary, ArcelorMittal’s contrasting decisions underline the multifaceted challenges of industrial decarbonisation through hydrogen. While green hydrogen combustion in secondary steelmaking processes shows immediate promise, widespread commercialisation of hydrogen in core ironmaking remains contingent on overcoming significant economic and infrastructural barriers, as evidenced by the current state of flagship German projects. The evolving landscape stresses the importance of tailored local strategies, energy market reforms, and continued technological innovation in achieving large-scale low-carbon steel production.