TOKYO -- Nippon Steel, Japan's largest steelmaker, will strive to replace coal-fired furnaces with hydrogen technology as it chases its goal of carbon-free steelmaking, company President Eiji Hashimoto told Nikkei. This is in line with Prime Minister Yoshihide Suga's goal of cutting greenhouse gas emissions to zero on a net basis by 2050 and with U.S. President-elect Joe Biden's designs on protecting the environment.
Hashimoto also stressed that government support will be crucial if Japan is to compete with the U.S. and China in 21st-century steelmaking.
Q: The Japanese government has set a goal of cutting greenhouse gas emissions to net-zero. Companies will be required to operate free of carbon.
A: In line with the government's objective, we also aim to cut the amount of carbon dioxide [CO2] emitted in the ironmaking process to net-zero by 2050. By March, we will draw up medium- and long-term management plans, looking ahead five years and 10 years. As a pillar of the plans, we will incorporate environmental measures to realize net-zero emissions.
Q: Major steelmakers use a lot of coal. Is it possible to realize net-zero CO2 emissions?
A: To drastically reduce emissions, we have no choice but to use hydrogen in place of coal. The existing blast-furnace ironmaking method uses the carbon of coal to remove oxygen from iron ore. The gas generated in the process is almost entirely used as an energy source within the iron mill. It is a very rational process, but the reaction between carbon and oxygen produces CO2.
The use of hydrogen to produce iron is not yet in practical use, and the method must be developed. Japan's steelmaking industry was the first in the world to start conducting research on the method. However, the industry has set a goal of realizing net-zero emissions by 2100 and has not held to the premise that the economy and the whole of society are aiming at becoming carbon neutral by 2050. In the future, it will be an option for our company to strengthen cooperation with JFE Steel and Kobe Steel.
Q: There are high hurdles in front of that 2050 goal.
A: The cost of development will be enormous. If we use hydrogen, the temperature in a blast furnace will drop, and the high temperature needed to melt iron ore will be difficult to maintain. We must solve problems like this. Developing hydrogen infrastructure is another problem. The steel industry estimates that just under 7.5 million tons of hydrogen will be needed every year to substitute hydrogen ironmaking for all blast-furnace production in the country. At present, Japan uses only hundreds of tons of hydrogen a year. Infrastructure capable of providing such a large volume of hydrogen at a low cost cannot be developed without the help of the government.
Q: Europe and China also plan to invest huge amounts of money in environmental safeguards, including the use of hydrogen. Can Japan compete?
A: It is impossible only with the efforts of private companies. In the U.S., Mr. Biden has announced an investment of $2 trillion in the environmental field. In China, also, the government will provide massive support.
East Asia accounts for three-fourths of global steel production using blast furnaces. Development competition for net-zero emissions will heat up among Japan, China and South Korea. If we do not do "zero-carbon steel" [producing steel without emitting CO2], we will not gain society's understanding. If China moves ahead of us, we will be unable to take the lead. Therefore, the government's support is indispensable for developing hydrogen ironmaking and for capital investment.
Q: It also seems necessary to increase the use of electric furnaces that melt iron scraps with heat generated by electricity, without using coal.
A: Electric furnaces are not used to reduce CO2 emissions. Many blast furnaces were built more than 50 years ago, and it is not reasonable to rebuild them by investing large amounts of funds. If we can establish a technology that enables us to use electric furnaces, which need smaller initial investments, and produce high-performance steel plate and sheet like that produced using blast furnaces, we will have more options when expanding operations abroad. This will also reduce CO2 emissions.
Q: China, which has recovered from the coronavirus outbreak, is increasing its steel production again.
A: It has become clearer that moves in China, which accounts for about 60% of global iron production, are decisively impacting raw materials and market conditions. However, the ongoing increase may not lead to overproduction and excess exports as seen before. This is because China's domestic demand will peak out sooner or later, and a shift to domestic production of iron is rapidly progressing in India and Southeast Asia, which have been major destinations for China's exports.
We are aiming to increase our global crude steel production capacity from 70 million tons a year at present to 100 million tons by acquiring overseas iron mills. Chinese companies are candidates for acquisition. In China, after domestic demand peaks out, the shakeout, reorganization and integration of iron mills may progress further. Since regulations on foreign capital are gradually being eased, we should have more opportunities to form partnerships with influential companies.