[Energy Odyssey] 11: Molten Iron Made with Hydrogen, Naphtha Made with Electricity

II. Overcoming the Energy Crisis Through Technological Innovation

The Era of Conventional Fossil-Fuel Power Generation Has Run Its Course

A Paradigm Shift in Steel and Petrochemical Production Is Inevitable

Hydrogen-Based Ironmaking and Electrified Naphtha Cracking Are Global Challenges

Editor's NoteSupply chain crises caused by recent wars in the Middle East and the government's mega-projects have made energy more important than ever. South Korea faces the difficult task of achieving energy security, carbon neutrality and economic growth simultaneously, while relying on overseas sources for most of its primary energy. Reporters covering energy issues on the ground across government and industry will examine a range of pressing issues and explore possible solutions in a series of feature articles.

South Korea has a higher share of manufacturing than other countries. According to South Korea's Economy 2026, published by the National Assembly Budget Office on October 11, manufacturing accounted for 27.4% of South Korea's gross domestic product (GDP) in 2024, the second-highest share among members of the Organisation for Economic Co-operation and Development (OECD), after Ireland's 31.1%. The figure is also high compared with those of major manufacturing powers such as Germany (19.9%) and Japan (19.0%).

With its high manufacturing share, South Korea consumes more electricity and energy than other countries. It also relies on imports for nearly all the energy sources used to generate power, leaving it vulnerable to geopolitical risks and fluctuations in energy prices.

The steel and petrochemical industries are prime examples. Steel and petrochemicals are core foundational industries for manufacturing, and their development has relied on massive quantities of fossil fuels. Fossil fuels have been an efficient and inexpensive energy source for producing molten iron in blast furnaces and for cracking naphtha.

But as the war in Ukraine has dragged on and crises in the Middle East have continued, reducing reliance on fossil fuels can no longer be put off. A paradigm shift is needed to sustain production using new energy sources. Hydrogen and electricity are prominent examples of alternatives. They can also dramatically reduce carbon emissions.

A Major Shift in Steelmaking: Producing Iron with Green Hydrogen Instead of Coal

The main source of carbon emissions in the steel industry is the blast furnace. Traditional steelmaking uses large quantities of coke, a coal-based fuel, to remove oxygen from iron ore and melt the iron. When iron ore and coal are fed into the blast furnace and hot air is blown in, the coke burns and produces carbon monoxide. The carbon monoxide triggers a reduction reaction that removes oxygen bound to the iron ore, converting iron oxide into pure iron. At the same time, the temperature inside the furnace rises above 1,500 degrees Celsius, and a melting reaction turns the reduced iron into molten iron. This process releases very large amounts of carbon dioxide through chemical reaction byproducts and energy combustion.

Hydrogen-based ironmaking is an alternative that overturns this established approach. Simply put, it is an innovative technology that uses hydrogen instead of fossil fuels as a reducing agent to produce iron.

Hydrogen-based ironmaking must also use green hydrogen in the reduction process. Hydrogen is classified along a spectrum based on how it is produced and the level of carbon emissions it generates. Brown and gray hydrogen are extracted from fossil fuels such as coal and natural gas, releasing large amounts of carbon dioxide during production. Blue hydrogen is produced by capturing the carbon dioxide generated during gray hydrogen production using carbon capture and storage (CCS) technology. Green hydrogen is produced by splitting water through electrolysis powered by renewable energy. Green hydrogen is a carbon-free energy source that produces no carbon dioxide emissions.

Hydrogen-based ironmaking requires green hydrogen to break down iron ore. So far, no reduction furnace operating entirely on hydrogen has been commercialized anywhere in the world. Swedish steelmaker SSAB is reported to have successfully completed a demonstration project, but the technology has not been commercialized.

In South Korea, POSCO Group is developing hydrogen-based ironmaking technology as a government project. POSCO Group is advancing the demonstration phase of HyREX, its Korean hydrogen-based ironmaking technology. The process reduces carbon emissions by separating the reduction and melting equipment, which operate simultaneously in a conventional blast furnace. In the reduction furnace, iron ore is brought into contact with hydrogen heated to a high temperature to produce solid iron. The iron is then melted in an electric furnace to produce molten iron. POSCO Group is also moving ahead with securing a site and building infrastructure for the demonstration, having completed approval for changes to the industrial complex plan to prepare a site for the hydrogen-based ironmaking facility in March.

Changing production processes to maintain the steel industry's competitiveness is a global challenge. The European Union (EU) is improving access to the power grid by promoting power purchase agreements (PPAs), while the United Kingdom is providing £500 million (900 billion won) in support for the transition to electric furnaces and easing the burden of energy costs. Japan is also working to strengthen its competitiveness through technology development, facility investment and tax measures to support shifts in production processes, including hydrogen-based ironmaking. This trend is expected to accelerate further with the implementation of the EU's Carbon Border Adjustment Mechanism (CBAM).

A Radical Shift in Petrochemicals: Production Using Only Electricity, Without Fossil-Fuel Heating

Efforts to electrify the naphtha cracking process, the foundation of petrochemical production, are also being put to the test. Naphtha is typically cracked at temperatures above 800 degrees Celsius to produce basic chemicals such as ethylene and propylene. Operating the furnaces for this process consumes enormous amounts of fossil energy. By contrast, electrified naphtha cracking uses an electric furnace to crack naphtha instead of burning fossil fuels. The electricity used must be generated from renewable energy.

In the field of electrified naphtha cracking, German chemical company BASF, together with companies including SABIC and Linde, has become the first in the world to successfully demonstrate electric heating at a large-scale steam-cracking facility. The demonstration plant uses two methods: direct and indirect heating. Direct heating sends electricity through the coil that the naphtha passes through, raising its temperature through the coil's electrical resistance. Indirect heating places heating elements around the reaction tubes and heats them indirectly with radiant heat. As in the conventional process, the hydrocarbon chains break as the temperature rises, producing basic chemicals.

In South Korea, LG Chem is carrying out the project as a government-funded initiative. Research and development of the technology has been completed, and it has reached the demonstration stage. The goal is to build the facility in South Jeolla Province by 2028 and ultimately complete a successful demonstration.

The Remaining Challenges: The Cost of Hydrogen and Electricity

Several conditions must be met for hydrogen-based ironmaking and electrified naphtha cracking to succeed. First and foremost is a stable power supply. These processes require large amounts of electricity to be supplied reliably, and industry officials say that the power generated by current renewable energy infrastructure alone will not be sufficient.

An industry official said, "We need to explore ways to use renewable energy, but to ensure a reliable supply of electricity for industry, we should also consider electrification using small modular reactors (SMRs), in addition to renewable energy."

Securing a hydrogen supply is another major challenge for hydrogen-based ironmaking. Supply must be expanded to lower prices and make large-scale use of hydrogen possible. Green hydrogen in South Korea is said to cost about 10,000 won per kilogram. The Ministry of Climate, Energy and Environment has also announced that it will lower the price of hydrogen for industrial use to 2,500 won, one-quarter of the current level.

Lee Seunghoon, an adjunct professor at Yonsei University, said, "In Europe and Japan, for example, support is provided through schemes that compensate for the difference between the cost of hydrogen production and the price of natural gas. South Korea has no such institutional support, nor does it support projects to produce hydrogen overseas, leaving companies unable to invest."

This content was produced with the assistance of AI translation services.