Evolution of Green Steel Market Dynamics in Europe (key drivers, challenges to meet demand-supply gap, huge

growth of investment trends):

Introduction: Global outlook:

Green Steel is expected to reduce carbon emissions and serve as a valuable tool for achieving the sustainable
development goals of various countries in the future. Green steel is made from green hydrogen, which comes from
renewable sources without the use of fossil fuels. Consumer and producer motivation for sustainable products and
increasing government initiatives around the world have contributed significantly to boosting the growth of the global
green steel market. The global green steel market size was $83.4 million in 2021 and is projected to reach $386 billion by
2031, registering a CAGR of 131.8% from 2022 to 2031.
By Energy Source: The hydrogen segment holds the largest share of the market

By Type: Electric Arc Furnace (EAF) segment is projected to grow at the highest CAGR

By End User: Automotive sectors would hold the key.

European Green Steel Outlook and Market evolution

• Key sustainable Drivers: Green steel is environment-friendly steel with near net-zero Co2 footprint achieved
through steel making process involving non-fossil fuel like green H2, or electricity /energy generated from
renewable resources. Demand for green steel is increasing led by two key drivers 1) Scope 3 emission
reduction targets 2) End consumer demand. Europe’s green steel demand in 2022 stood at 1.23 million tons
and supply was 750kt. Europe’s green steel market projected for 2023 stands at 76 million $ and in 2028/29
forecast value stands at 1.27 billion $ ensuring the growth of more than 70%. Technologies continue to be
developed as the industry moves towards decarbonization and a more sustainable future. This is considered
a positive indicator of the green steel market. Further, the market is expected to increase due to 1) carbon
neutrality 2) certificate-based products 3) premium green steel 4) multiple end users, etc.

• Ground Challenges and threats: 1) Higher cost of production is a major challenge facing the green steel
market. Due to the use of alternative raw materials and energy sources.2) Green steel market is a complex
carbon accounting calculation, energy crisis, etc.3) Green hydrogen large-scale production and storage and
transportation at a viable price 4) Delay in renewable energy projects due to demand-supply lag in solar
equipment 5) higher capital inflow in Hydrogen Projects for electrolyzer 5) the huge amount of renewable
energy need (1million green steel needs 85kt H2 which needs 450 MWh energy) 6) storage complexities of
H2 7) transportation difficulties of H2, Complex issues like 1)H2 prices drop geographically driven by cost
of renewable energy 2) CO2 price increase so that capex becomes more viable 3)improved technique to
produce H2 industrially stabilized

• Investment Trends: Increasing investment in launching green field projects are trending aggressively.
Market players are increasingly investing in launching green field projects and building partnerships and
strategic alliances to transform their businesses in green steel is driving the market. About two-thirds of the
projects (31 out of 47) are in Europe, where the largest investments occur. Swedish companies have
announced the largest share of investment (with US$22-51 Billion for 6 projects), followed by a South
Korean company (US$8.8 Billion) and 11 projects announced by German firms. More trends in the market
 are believed to augment the growth of the green steel market during 2023-2028 including high utilization of
biomass resources, new technologies, etc.

• Role of EU govt support on policies/legislation as enabling factors -vital to transition to Green steel

a) EU needs long-term industrial policy aimed at an equal playing field against the cheap import of
carbon-intensive green steel from third countries

b) EU’s CBAM must ensure that plants emitting less carbon -such as those using Hybrid furnaces are
adequately rewarded

c)support for industrial deployment of H2-the upcoming revised EU legislation on H2 and Gas
decarbonization is a strategic tool that can clearly prioritize the use and supply of H2 to steel sectors

Europe’s Competitive Landscape in Green Steel and Recent Developments:

Europe’s green steel market is concentrated with SSAB, Salzgitter, and ArcelorMittal as best positioned, in Europe. Key
players in the Europe green steel market are:

• ArcelorMittal S.A.

• Salzgitter AG-targets 65% reduction in CO2 emission by 2030

• SSAB AB

• ThyssenKrupp AG targets a 30% reduction in CO2 emissions by 2030

• Tata Steel Europe Limited

• Stahl holding Saar-targets 55% reduction of CO2 by 2030

• Swiss Steel Group (Deutsche Edelstahlwerke Specialty Steel GmbH & Co. KG)

• Voestalpine AG

• H2 Green Steel

• GFG Alliance (Liberty Steel Group)

As the European market transitions there is a clear first-mover advantage with SSAB and Salzgitter ahead of peers and
aiming to fully shift to green steel by 2030 and 2033, respectively, vs peers’ targets of 2050. SSAB has taken this one step
further identifying the transition to green steel as an opportunity to take share in high-value automotive markets by also
investing in new downstream finishing capacity. The key players are constantly investing in strategic initiatives, such as
new product launches, introducing their products to emerging markets, and more, to maintain a competitive edge in this
market.

Fortum and H2 Green Steel have signed a frame agreement for electricity trading for the supply of CO2-free electricity
for H2 Green Steel’s operations in Northern Sweden. Significant volumes of electricity are needed to power the 700-
800MW electrolyzer that will generate green hydrogen. The green hydrogen will be used to reduce iron ore to sponge
iron that will feed the steel production at H2 Green Steel’s plant. The plant is expected to start operation in Boden in
2025. The frame agreement is initially planned to include two deals for 2.3 TWh per year: an index-based Power
Purchase Agreement (PPA) of 1.3 TWh annually (from 2026) with a five-year hedging horizon, and a fixed price PPA of 1
TWh for up to nine years (from 2027)

European green steel market segmentation by Technology, End-user, and Regions (marginal green steel players ) :

➢ According to the report, the Europe green steel market is segmented into Molten Oxide Electrolysis (MOE) and
Electric Arc Furnace (EAF).

a) Molten Oxide Electrolysis (MOE) segment growth will be higher as it runs with iron ore which is
dissolved in a liquid electrolyte solution at a temperature of about 1,600oC before an electrical current
is passed through the solution, reducing the iron ore into a liquid in an endothermic reaction. Hence
removes the need for coking ovens and blast furnaces.
b) Whereas the Electric Arc Furnace (EAF) segment is expected to have the highest CAGR in the future.
These furnaces run on recycled steel, scrap, or DRI/HBI with NG and will eventually use green hydrogen
(H2), reducing the plant’s carbon emissions.

➢ Green steel forecast by End User/Customer:

a) According to the report, the Europe green steel market is segmented into four end users: Automotive,
Construction, Electronics, and Other End Users.

b) The automotive segment acquired the majority of the share in the market in 2022, as green steel is now
being used by automakers to ensure a cleaner, greener manufacturing ecosystem. Moreover, international
automakers like GM, Volvo, Mercedes, etc., have pledged to become carbon neutral by 2040. Forecast also
shows >50% of the market of green steel demand will be from the Automotive sectors.

➢ Green Steel forecast by Region:

a) According to the forecast, the Europe green steel market can be divided into five sub-regions:1) Sweden
2) Germany 3) France 4) the UK 5) the Rest of Europe. Sweden’s green steel market enjoyed the highest market
share in 2022, primarily owing to aims for climate neutrality by 2045, and accounts for the biggest investment
volume that has been announced.

b) Swedish steel venture H2 Green Steel - founded in 2020 - announced that some of the most prominent
European financial institutions have decided to support the hydrogen-based steel plant construction in northern
Sweden. These investments and funding would increase the supply as many players would establish green steel
plants in Europe.
 c)Swedish steel companies will ramp up the country’s steel production over the next few years as green
hydrogen helps drive the transformation of one of the hardest industries to decarbonize.
Decarbonization of the European steel industry required fundamental changes in the industry

a) Out of 153 million tons production qty (2021 number),56% works on the BF route, and 44% works on
the EAF route. The energy demand is 296 Twh. The Hydrogen demand for decarbonization requires 4.5
million tons of H2, equivalent to 180 TWh H2, for which we need to have approx. 37-60 GW electrolyser
capacity. The Renewable energy requirement would be 275 TWh per year which is quite huge.

Sources :

1) https://www.researchandmarkets.com/reports/5726040/european-green-steel-market-analysis-and-forecast

2) https://www.fortum.com/media/2023/03/fortum-and-h2-green-steel

3) European Steel Association

4)World Steel Association

5)European parliamentary research service

6)www. alliedmarketresearch.com/green-steel-market -A31690