Modelling the market diffusion of hydrogen-based steel and basic chemical production in Europe – A site-specific approach

Climate-neutral hydrogen is a promising option to replace fossil fuels and reduce greenhouse gas emissions in energy-intensive industries. At the same time, spatial and timely dynamics of hydrogen market diffusion are uncertain. This study simulates the market diffusion of hydrogen-based production routes for the entire European plant stock of primary steel, high-value chemicals, methanol, and ammonia production sites. The model includes a total of 158 plants at 96 sites and explicitly considers hydrogen infrastructure, plant ages, production capacities and reinvestment cycles. Sixteen scenario sensitivities were defined to analyse various future hydrogen and carbon dioxide price pathways. The results show that one investment opportunity remains until 2050 for all plants, while 36% of plants require reinvestment before 2030. The cost-competitiveness of hydrogen-based production varies across products: Methanol and high-value chemicals can only be competitive with hydrogen prices below 60 €/MWh. For steel, a high carbon dioxide price and natural gas-fired direct reduction can mitigate fossil lock-ins using natural gas as bridging option towards full use of hydrogen. The study highlights the risk of reinvesting in fossil technologies without additional policies. The maximum technical hydrogen demand potential is 1000 TWh, but considering techno-economic limitations in the sensitivities, only 64 to 507 TWh can be reached. The planned future hydrogen network matches most reinvestment needs.