The groundbreaking climate action of Sweden’s century-old industry

This blog was contributed by BSc Economics student Linus Kask and was originally written as an assignment for the module Quantitative Techniques for Applied Economics.

In Viking mythology, Thor, the god of lightning, wore iron gloves to manage his famous hammer Mjolnir. Known as the guardian of humankind, Thor used his hammer and gloves to protect the world from giants. Now a new saviour of the world as we know it is lighting up in the land of the Vikings.

For over a thousand years in the northern parts of Sweden, blast furnaces have burnt coal to create iron for steel production. This technique is still standard practice today, thus making the steel industry one of the world’s greatest emitters of carbon dioxide. In a world that lusts for steel to expand economies and an industry sticking to its business-as-usual approach, its emissions are only set to rise. However, a group of businesses from north of the Arctic Circle in Sweden have now formed a vanguard and are looking to turn the industry status quo on its head.

In 2016, the Swedish state-owned mining company LKAB, the state-owned power company Vattenfall and the privately owned steel producer SSAB joined forces to start HYBRIT, Hydrogen Breakthrough Ironmaking Technology, an initiative to create zero-emission steel. In 2026, the first emission-free steel will be on the market and a full-scale operation is expected to be running by 2035. The common goal of all three companies is to be fully carbon neutral by 2045.

Today, coal is burnt in blast furnaces in order to reduce oxygen from iron ores and extract iron for steel production. HYBRIT aim to replace coal with hydrogen in this process, as when hydrogen reacts with the released oxygen, the only residue product remaining is water instead of carbon dioxide. Hydrogen is the most common element on earth but it is seldom found in its pure form in nature because it is so reactive. This means that it must be extracted from a composition of elements. The most common way is to separate hydrogen from carbon in natural gas, but the residue product then is carbon dioxide. Instead, HYBRIT use water, separating it into oxygen and hydrogen through electrolysis. This is an extremely electricity intense technique and will, when HYBRIT’s technology has reached its full potential, require 10% of Sweden’s current energy consumption. Due to the immense amount of electricity needed in the production of hydrogen, it is paramount that the power is not produced using fossil fuels. This is quite easy to achieve in Sweden, as the country’s energy mix consists of only 1% fossil fuels. In comparison, the rest of the world’s energy mix includes a staggering 65% fossil fuels.

Bar chart showing fossil fuel consumption in Sweden vs the rest of the world.Because of the vast amount of electricity needed to make this groundbreaking shift in the steel industry, the world’s energy mix must contain a greater proportion of renewables. This huge infrastructure investment will be justified by the fact that the steel industry is accountable for 7% of the world’s emissions, releasing more carbon dioxide than India alone, or Africa and South America combined. The development of the technology is not a small investment either, estimated to cost 15 billion Swedish kronas, 1.8 billon US dollars, per annum for the next 20 years. This expenditure is validated because HYBRIT will play a crucial role in reaching the goals set in the Paris Agreement for the whole world. In Sweden, HYBRIT’s new technology will be fundamental in achieving the country’s commitment to net-zero emissions by 2045. The steel industry in Sweden today accounts for 10% of its emissions.

Graph showing the CO2 emissions of the steel industry.Booting the coal in steel production has its economic advantages as well. Carbon prices are set to rise, and McKinsey & Company, a consultancy, estimate that unless they reduce their carbon emissions, steel companies will risk 14% of their value as a result of this increase. With steel demand on a steady rise driven by increasing urbanisation and world population, the industry has a lot to gain by switching to hydrogen.

Line graph showing rising global steel demand.Time is of the essence. If the steel industry does not find an alternative route to production without coal, it could account for 25% of carbon emissions by 2050, thus crushing any possibility of keeping the global temperature within the goal of 1.5 ˚C above pre-industrial levels.

For the first time since the Viking ages, Thor’s iron gloves could be made using sustainable production. HYBRIT’s technology is the best promise available for emission-free steel and if they succeed, a supreme shift has occurred in this ancient practice. North of the Arctic Circle in Sweden, a status quo is about to be turned on its head.

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