Leapfrogging gas: How renewables can unlock new DRI on brownfield sites

The transition to low-emissions iron and steel can be accelerated, while avoiding the risk of a prolonged dependence on natural gas, through the targeted deployment of renewable electricity to free up other energy sources at existing production sites. 

Coke oven gas (COG) offers significant potential as a fuel source for the production of direct reduced iron (DRI) – widely recognised as a key pathway for decarbonising iron and steelmaking. DRI uptake is gaining momentum worldwide, with a large rise in project announcements and construction activity since 2020. 

However, the projects in development have often been designed to initially run on natural gas, potentially locking them into long-term use of the fossil fuel. Moreover, many of these projects have struggled as natural gas prices have increased – particularly in Europe. 

Renewables could unlock an alternative at existing sites, reducing exposure to volatile gas markets, while laying the groundwork for near-zero-emissions iron production. Steelmakers do not need to build a new dependence on natural gas to start moving beyond blast furnace ironmaking.

A by-product of the production of coke from metallurgical (met) coal, COG is rich in hydrogen and methane. It is typically burned at steelmaking facilities to generate electricity or provide heat. Replacing these uses with renewable electricity and targeted electrification could make the COG available for DRI production instead. This could reduce costs and emissions, while preparing steelmakers for a future switch to green hydrogen. 

The COG DRI approach is already operating commercially in India and China: using gases from neighbouring coke-making or smelting operations to supply DRI plants. 

Burning coke oven gas to generate electricity is an inefficient use of a relatively expensive fuel. Renewable generation sources can provide a cheaper alternative, while electrifying selected heating processes can deliver additional benefits through improved output and lower energy requirements

One example of this is Thyssenkrupp’s Duisburg site in Germany, where a planned facility is expected to produce 2.5 million tonnes of DRI per year – initially using natural gas. IEEFA calculates that shifting onsite electricity generation to renewables and electrifying reheat furnaces could release more than enough COG to supply the plant. By avoiding natural gas use, the facility’s direct emissions could also be reduced by 10%.

The COG DRI approach does face several constraints – notably in obtaining sufficient renewable energy. The Duisburg plant would require about 2.8 gigawatts of solar capacity to free up the amount of COG required. Long-term power purchase agreements could help steelmakers bring forward the necessary investment. Another issue is the uneven treatment of imports compared with domestic production under EU carbon pricing legislation. 

The wider application of COG DRI remains uncertain, with only two new plants deployed in China in recent years. Moreover, COG is still a derivative of coal, meaning it is not a long-term solution to decarbonising iron and steel. However, widespread adoption could lower demand for met coal in the EU, China and India by 10%-15% – with implications for met coal exporters such as Australia.

COG DRI is a strategy for transition, not an argument for prolonging long-term use of coal. The opportunity it presents is to use renewables to reduce costs and emissions now, avoid perpetuating demand for gas, and lay the foundations needed for a future transition to DRI produced using green hydrogen.