How much clean energy does it take to make green steel?

When the Biden administration pledged up to $1 billion in awards for two “green steel” projects earlier this year, it signaled an important step in the emerging effort to decarbonize one of the world’s dirtiest industries. Before the announcement, the United States was largely seen as a laggard globally, with steelmakers in Europe and China already pursuing green steel projects of their own.

Initially, many of the finer details about the new U.S. projects were unclear. Since then, however, more information has emerged, allowing analysts to start assessing the outsize energy needs of the facilities, which will be built in Ohio and Mississippi.

Both are eventually expected to run on clean hydrogen, which requires copious amounts of renewable electricity and water to make.

In Ohio, the manufacturer Cleveland-Cliffs is planning a hydrogen-based ironmaking facility at its existing steel complex in Middletown, just north of Cincinnati. Meanwhile, the Swedish steelmaker SSAB is developing a facility at a new site in Perry County, Mississippi. These commercial demonstration projects are intended to significantly reduce the planet-warming emissions that come from making steel — not just at the two individual facilities but also at future sites that replicate their pioneering approaches.

“We’re talking about gigawatts of hydrogen and gigawatts of renewables” for the facilities, said Nick Yavorsky, a senior associate in the climate-aligned industries program at RMI, who led a recent analysis of the Cleveland-Cliffs project’s energy requirements. (Canary Media is an independent affiliate of RMI.)

Fully running Cleveland-Cliff’s plant with clean hydrogen could mean doubling the amount of wind and solar power installed in Ohio. Mississippi would potentially need the equivalent of a five-fold increase in renewables for SSAB’s plant. That’s on top of the additional capacity that will be needed to meet rising electricity demand from new data centers, semiconductor factories, electric cars, and electrified buildings — all of which, as it happens, require steel to make.

“These are big numbers,” Yavorsky said of green steel’s energy needs.

Many other details aren’t yet decided or publicly known, given that Cleveland-Cliffs and SSAB are both still negotiating award contracts with the U.S. Department of Energy. Still, the outcome is likely to remain unchanged: The U.S. steel industry will need dramatically more renewable energy capacity, and soon.

Curbing CO₂ and toxic pollutants in southwest Ohio

Cleveland-Cliffs said it plans to build a “hydrogen-ready” ironmaking plant at its existing steel complex in southwest Ohio. The company will replace an older, coal-fueled blast furnace with a new facility that’s capable of making 2.5 million metric tons of iron per year. The entire project could cost around $1.3 billion and be completed by 2029.

Blast furnaces are responsible for the lion’s share of steel-related emissions. The scorching-hot vessels use iron ore, purified coal, and limestone to produce molten lava — a step that creates carbon dioxide. A separate furnace later turns iron into steel, which is used in everything from construction beams and cargo ships to car frames, solar-panel racks, and kitchen appliances.

All told, steel production generates as much as 9 percent of global CO₂ emissions every year, more than any other industrial sector.

An alternative approach to making the metal is a “direct reduced iron” (DRI) furnace. Simply put, the process involves using a reducing gas to convert iron ore into hot briquettes of iron — no coal directly required.

Cleveland-Cliffs said it initially plans to run the new DRI plant on fossil gas, gradually mixing in clean hydrogen as supplies become available. But using only clean hydrogen would deliver much bigger climate benefits, potentially curbing CO₂ emissions from ironmaking by up to 90 percent, according to RMI.

To run the Ohio plant exclusively on hydrogen, the steelmaker would need approximately 160 kilotons of H₂ annually. Making that clean hydrogen could, in turn, require 8.3 terawatt-hours of renewable power per year, RMI estimated. This could potentially be produced in Ohio with 1.5 gigawatts of new wind capacity and 2 GW of solar capacity.

Ohio had about 3.5 GW in total installed renewable capacity as of February 2024, according to federal data. Still, Yavorsky noted that all of the renewable energy assets wouldn’t necessarily have to be built in Ohio.

“We don't expect it to all just fall out of the sky,” Yavorsky said of the clean hydrogen, very little of which is produced commercially in the United States today. But, he said, the goal should be to move the facility away from fossil gas and “get them to hydrogen as fast as possible,” so the steel produced will be cleaner.

It’s not yet clear who will build the renewables or install the electrolyzers needed to produce the hydrogen, though Cleveland-Cliffs said it’s considering making its own hydrogen at its Middletown steel complex. The lucrative 45V hydrogen production tax credit — funded by the Inflation Reduction Act — is expected to encourage steel producers and other industrial manufacturers to invest in on-site hydrogen production.

“We hope it’s going to be a much better process for the people in Middletown, who have been dealing with pollution from the blast furnace,” said Marilyn Wall, a longtime Sierra Club leader in the region. Along with emitting CO₂, coal-based furnaces spew a toxic soup of heavy metals and air pollutants, which often land directly on the homes and properties of residents living near the steel mills.

“There’s still a lot of questions about what the actual emissions might be,” she said of Cleveland-Cliff’s planned facility. “But we hope this project shows that you can make steel without using coal.”

The estimated need of 8.3 TWh of renewable electricity accounts only for the power to run hydrogen electrolyzers, not other operations, so the actual energy requirements will be even greater. For example, Cleveland-Cliffs plans to install two 120-megawatt electric melting furnaces at the site. Iron briquettes from the DRI facility will head to the furnaces to be melted down, then move into an existing basic oxygen furnace to finally be turned into steel.

The setup is unique for the global steel industry. Typically, electric melting furnaces are used instead to make relatively smaller batches of metal alloys. The idea is to make use of some of the company’s existing infrastructure in Middletown while still shuttering the biggest CO₂ culprit: the blast furnace.

Because this approach is novel, RMI didn’t include the electric melting furnaces in its analysis. But it’s possible they will consume as much electricity as the more conventional electric arc furnace — which needs between 0.4 and 0.5 megawatt-hours of electricity to produce 1 metric ton of steel, Yavorsky said.

Launching America’s first hydrogen-only plant, with Swedish tech

In Mississippi, the Swedish steelmaker SSAB plans to skip fossil gas altogether and go directly to using clean hydrogen.

Today, only one commercial ironmaking operation in the world uses hydrogen made from renewables: the Hybrit pilot plant in Sweden, which SSAB is involved with.

As part of its U.S. project, SSAB will deploy Hybrit technology at a new DRI facility in southeast Mississippi, which is slated to begin operating in late 2027. SSAB also signed an exclusive letter of intent for Hy Stor Energy to supply “zero-carbon renewable” hydrogen. That company plans to use on-site, off-grid wind, solar, and geothermal power to produce H₂, which it will then store in underground salt caverns to deliver energy around the clock.

“When you look at the quantities of energy that large industrial sectors like steel need in order to decarbonize, salt cavern storage is really going to be key to get that scale and 24/7 duration,” said Claire Behar, chief commercial officer of Hy Stor Energy, which is based in Jackson, Mississippi.

SSAB hasn’t specified how large the DRI facility will be, though a typical plant produces 2 million metric tons of material every year. The company said it plans to invest $3.5 billion for the fossil-free iron production and a related expansion of its steelmaking facility in Montpelier, Iowa, where SSAB currently melts scrap metal in an electric arc furnace.

For its part, Hy Stor Energy aims to begin producing and storing clean hydrogen in late 2026. The company is working with partners to develop over 4 GW of off-grid renewable capacity and over 2 GW of electrolyzer capacity in the region, not just for SSAB’s ironmaking plant but also for other potential customers, including chemical and plastics producers and heavy-duty transportation operators.

Mississippi has installed about 730 MW of clean-energy capacity as of February, primarily from solar power, federal data show.

Yavorsky said RMI hasn’t done a detailed analysis for the Mississippi project. Still, he expects SSAB’s DRI facility will require similar amounts of clean hydrogen and renewable electricity as the Ohio plant.

Some of the details on these mega-sized, federally funded projects still “remain a bit vague,” he noted. Cleveland-Cliffs, for instance, hasn’t identified its plans for storing hydrogen for the Middletown complex, a step that will influence the Ohio project’s overall energy requirement.

“Moving forward, we’re going to be trying to answer questions like, ‘Where is all this renewable power and hydrogen going to come from?’” Yavorsky said. “And, ‘How can we help facilitate faster permitting and siting of these assets in these specific states?’”