Decarbonizing Steel Production: Economic and Environmental Implications of Green Hydrogen-Based Direct Reduction

The steel industry is a major contributor to global carbon emissions, necessitating urgent shifts toward sustainable production methods. This study evaluates the economic and environmental feasibility of replacing fossil fuels with green hydrogen in the direct reduction process for steel manufacturing. Using scenario analysis—pessimistic, regular, and optimistic—projected until 2050, we assess cost competitiveness, technological advancements, and policy impacts. Our findings indicate that while green hydrogen-based steel production remains costlier than conventional methods in the short term, decreasing renewable energy costs, improved electrolyzer efficiency, and carbon taxation can drive cost parity. By mid-century, hydrogen direct reduction (HDR) could become a viable, low-emission alternative, supporting global decarbonization goals.