This new technology could kill the business case for hydrogen in green steel production
Molten oxide electrolysis may prove to be a cheaper option than direct iron reduction — if start-up Boston Metal can demonstrate it works at scale
It has been a long-held view that the only possible way to decarbonise steel production is to use green hydrogen to extract iron from ore, and then use electric arc furnaces to turn the iron into steel.
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Massachusetts-based Boston Metal has invented a technology it calls molten oxide electrolysis (MOE) that blasts a liquid electrolyte containing iron ore pieces with large amounts of clean electricity, heating it to 1,600°C (the melting point of iron) via an electrode able to withstand such high temperatures.
At this temperature, the iron oxide in the ore splits into pure molten iron and oxygen; impurities such as silica and magnesium rise to the top of the furnace, and the liquid electrolyte remains in situ to continue the process.
It is a good job that Boston Metal has been well-funded — it has been working on MOE technology since its formation in 2013, and the company’s potential is so large that it has continued to attract high-profile investors.
Breakthrough Energy Ventures — the tech venture capital firm funded by billionaires such as Bill Gates, Jeff Bezos and Richard Branson — was one of Boston Metals’ early financial backers, and continues to support the company, contributing an undisclosed amount last September to a Series C funding round that raised a staggering $262m.
Estimates suggest green hydrogen-based steel will be 20-40% more expensive than grey steel made with coal-fired blast furnaces and basic oxygen furnaces.
“We want to make a better metal at a lower price without a subsidy,” he said. “A premium means you failed. Your technology is not market-ready.”
Nevertheless, plenty of offtakers have been willing to pay a premium for hydrogen-derived green steel. For example, H2 Green Steel has already signed binding offtake agreements with Mercedes-Benz, Porsche, truck maker Scania, US conglomerate Cargill, German auto technology firm ZF, German auto parts supplier Kirchhoff Automotiv, Italian steel maker Marcegaglia, UK-based SPM and Germany’s Bilstein Group.
Replacing grey steel made using coal with the more expensive green variety will cost about €300 ($326) per car, according to estimates — an increase that can be fairly easily absorbed by customers already paying five figures for new vehicles.
Hydrogen in direct-reduced iron production
Green steel producers are planning to use green hydrogen to decarbonise their steel mills, which together account for 7-8% of all global carbon emissions.
Traditionally, iron has been extracted from iron-oxide ore by burning carbon-rich coking coal in a blast furnace, where the fossil fuel produces high-temperature heat while simultaneously removing oxygen from the ore by converting it to carbon dioxide.
This highly polluting method can be replaced with green hydrogen in a direct-reduced iron (DRI) facility, where the H2 reacts with the oxygen to produce steam (H2O) rather than carbon dioxide.
In fact, hydrogen-based DRI is currently the only proven pathway of decarbonising steel production, when paired with an electric arc furnace powered by renewable energy.
Policymakers want producers to eliminate emissions from the sector by using green-hydrogen DRI that is then turned into green steel using renewables-powered electric arc furnaces, but with green H2 costing in excess of €5/kg in Europe, it would result in significantly more expensive steel that will require offtakers to pay a premium.