As heavy industry moves toward decarbonization, Allegheny County, Pennsylvania has a unique opportunity to become a global leader in producing green steel. Green steel is manufactured using hydrogen to directly reduce iron rather than traditional coal-based blast furnaces. If the hydrogen used to produce the steel is generated by electricity from renewable energy sources, such as wind or solar, then the process becomes effectively emissions-free, reducing greenhouse gas emissions and improving nearby air quality.
Green steel has tremendous economic potential. A transition to green steel would help to reshape the local economy and allow the region to regain its leadership in steel production. Additionally, investments in renewable energy and hydrogen infrastructure can provide a first-mover advantage for the region as other industries seek to decarbonize. Given the current upheaval in the traditional steel industry, globally and domestically, and the potential sale of U.S. Steel to Nippon Steel or another steel company, both the industry and the region are ripe to benefit from such a transition.
Green steel will likely dominate steel production this century, given the urgent need to decarbonize this industrial process. Steelmaking is responsible for 7% of global carbon emissions and, alongside cement production, is one of the most difficult to decarbonize. Only Chemicals and Refining emit more energy-related CO2, according to the US Energy Information Administration (EIA). The Department of Energy (DOE) has targeted steel as a key industrial sector for emissions reduction in its 2022 “Industrial Decarbonization Roadmap.”
Throughout the world, governments, investors, and private firms are investing billions in green steel production, thanks to the ability to manufacture hydrogen with near-zero emissions by splitting water molecules via renewable energy-powered electrolysis. Green hydrogen does not produce CO2 as a byproduct. The US has taken the lead in incentivizing green hydrogen production, a key component of green steel production. The tax credits for clean hydrogen in the Inflation Reduction Act, known as the 45V Clean Hydrogen Production Tax Credit, provide potential credits up to $3/kg. The tax credit is expected to make low-carbon hydrogen cost-competitive with, or cheaper than, hydrogen produced from fossil fuels.