Fact check: IS GREEN STEEL CHEAP

1. Why hydrogen price is the headline number — and what studies say

Hydrogen-based direct reduced iron (H2‑DRI) dominates cost sensitivity analyses because hydrogen often becomes the largest variable operating cost in green steel routes. Multiple analyses identify a threshold hydrogen procurement cost that determines competitiveness: a widely cited figure is about $1.63/kg H2 to match state‑of‑the‑art natural gas DRI, but other recent modeling finds parity moves with different assumptions and can be higher or lower depending on capital costs and ore quality ^{[2] [1]}. This divergence explains why one paper finds green steel still ~50% more expensive at $3.5/kg H2 while other concepts show potential parity as hydrogen and electricity markets evolve ^{[1] [5]}.

2. Electricity matters — geography can make or break cost claims

The cost competitiveness of green steel also hinges on electricity prices for electrolysis and electrolyzer capacity factors; renewable power at very low prices can flip the economics. The Rocky Mountain Institute modeled scenarios where electricity at roughly $15–20/MWh makes hydrogen‑DRI competitive with blast furnaces, a level attainable in regions with abundant low‑cost renewables ^[4]. Combined process designs such as SOE‑DRI that integrate solid oxide electrolysis and renewables can cut natural gas use and show levelized costs approaching conventional routes in favorable locales, demonstrating strong geographic variance in outcomes ^[3].

3. Different green routes change the math — not all “green steel” is the same

“Green steel” covers multiple technologies—H2‑DRI, electric arc furnaces fed by scrap, and hybrid SOE‑DRI pathways—and each has distinct capital, energy, and feedstock profiles. Some studies find SOE‑DRI designs reduce gas consumption and emissions substantially while producing levelized costs comparable to conventional steel under optimistic assumptions about renewables and electrolyzer performance ^[3]. In contrast, hydrogen‑DRI papers emphasize the steep sensitivity to hydrogen cost and often conclude current markets make it more expensive without low hydrogen prices or supportive policy ^{[5] [2]}.

4. Policy and demand signals change the competitive landscape quickly

Economic assessments consistently flag carbon pricing, subsidies, and corporate demand commitments as decisive in bringing green steel to market at scale. Studies note that without policy incentives or buyer premiums, incumbents face few near‑term incentives to invest in low‑CO2 technologies; conversely, strong demand signals from automakers, construction firms, or renewables buyers can derisk investments and lower costs through scale ^{[7] [6]}. The interplay of carbon costs and subsidies can close the price gap faster than purely technical improvements in electrolyzers or steelmaking.

5. Reconciling contradictory numbers — methodology and assumptions explain the gap

Differences between studies—some showing parity, others a 50% premium—stem from assumptions about hydrogen price, power costs, capital expenditure, ore grades, and timeline. For example, a January 2025 techno‑economic assessment found the cheapest green pathway ~50% more expensive at a $3.5/kg hydrogen assumption but moving toward parity as hydrogen costs shift, while other analyses set much lower hydrogen cost thresholds for competitiveness ^{[1] [2]}. Comparing studies requires aligning these inputs; without that, conclusions appear contradictory although they are consistent within their own assumptions.

6. Who gains, who pays — agendas behind the numbers

Stakeholders present numbers to support particular policy or commercial aims: suppliers of electrolyzers and renewables emphasize achievable low power costs and long‑term parity ^{[4] [3]}, researchers and environmental advocates emphasize emissions benefits and long‑run feasibility ^[8], while some techno‑economic reports stress current cost gaps to argue for sustained transitional support ^[1]. These agendas matter: claims about “cheapness” often reflect beneficiary interests, so readers should weigh assumptions and funding contexts when interpreting conclusions ^{[7] [6]}.

7. Bottom line — when green steel will be cheap enough to displace conventional steel

Green steel is not broadly cheap today; it becomes competitive in specific contexts—low hydrogen and electricity prices, strong carbon pricing, or robust buyer commitments. Multiple modeled pathways show potential parity if hydrogen approaches low single‑dollar per‑kg levels or electricity falls to $15–20/MWh, and hybrid process innovations could shorten timelines ^{[2] [4] [3]}. Policymakers and large buyers determine how fast that transition occurs: without policy or demand pull, cost gaps persist; with them, green steel can be cost‑competitive within this decade in favorable geographies ^{[7] [6]}.