With the steel industry’s ambitious plans to cut emissions by at least 80% by 2050, compared with 1990 levels, it will call for an increasing amount of hydrogen-based steelmaking, which bodes well for platinum demand.
The World Platinum Investment Council (WPIC) says the steel industry is responsible for about 5% of carbon dioxide (CO2) emissions in the European Union (EU) and 7% globally.
The council cites a report by the European Commission’s Joint Research Centre, which states that the EU steel industry has announced various projects aimed at replacing traditional steel production processes with new steel plants based on the direct reduction of iron-ore (DRI) using hydrogen.
This dovetails with the EU’s energy independence aims, with the region’s renewable energy plan highlighting the expectation that 30% of primary steel production in the EU will be decarbonised using renewable hydrogen by 2030.
For example, steel group Voestalpine is pioneering a project called H2Future using proton exchange membrane electrolysis (PEM) to generate green hydrogen for its steelmaking plant in Austria.
The DRI process using hydrogen instead of natural gas or coal has the potential to completely avoid the use of fossil fuels in the steelmaking process – if the hydrogen used is green hydrogen produced by electrolysis.
Platinum is a key ingredient in PEM electrolysers.
The WPIC points out that hydrogen is already being used in many other industrial processes, including ammonia and petrochemicals production, with current demand exceeding 80-million tonnes a year and poised to grow by 9% a year up to 2030.
This demand is, by and large, being met through the steam methane reformation of natural gas.
The council explains this process releases between nine and ten kilograms of CO2 for every kilogram of hydrogen produced. Green hydrogen has the potential to decrease this environmental impact by up to 95%.
The WPIC says the pre-existence of a robust and growing hydrogen market adds further momentum to the development of green hydrogen projects, giving investors the confidence to proceed. “Indeed, installed production capacity for green hydrogen is doubling every two years, as are plans for new production capacity.
“Additionally, government subsidies for low-carbon hydrogen projects between 2022 and 2030 amount to $146-billion,” the council notes.
TheWPIC estimates further that if all planned green hydrogen projects are developed with PEM electrolysers, the cumulative platinum demand to 2030 would be more than 2.7-million ounces.