Paying a Premium for “Green Steel”: Paying for an Illusion?

Abstract The iron and steel industry generates around 10 % of global greenhouse gas emissions. bulk the emissions originates from ore reduction. In this reduction, coal is used as a reagent. Steelmakers could switch to hydrogen-based direct reduction using hydrogen instead reagent reduce pig iron. This would eliminate CO 2 equivalent process in traditional blast furnace. However, requires massive amounts electricity. paper looks at economics such “green steel.” We assess marginal increase production hypothetical green steelmaker. also undertake an investment appraisal plant, based on ongoing installation Northern Sweden, but briefly consider possible/planned US. complemented by computing survival function for net present value systematic sensitivity analysis. It seems highly unlikely that plant can be socially profitable. If displaces conventional produced within European Union’s cap-and-trade system gases, total remain more or less unaffected; permits are simply reshuffled. Hence, if end-users pay premium, they might illusion.