McKinsey: European Steelmakers Might Have to Re-Examine DRI Investments
06/21/2022 - European steelmakers who have natural-gas-fired direct reduction plants in their decarbonization plans might have to rethink those investments due to the Russia-Ukraine war, according to a new report.
According to management consulting firm McKinsey & Co., the war could, over the longer term, reduce the availability of natural gas or drive up its price as well as make electricity more expensive.
“Together, these factors mean that the feasibility, timeline, and competitiveness of natural gas DRI investments need to be reassessed, acknowledging the impact on the decarbonization road map and ability to reach CO2-reduction targets set out by steel players,” McKinsey wrote.
As a result, steel producers likely will slow natural-gas-fired direct reduction investments, jump directly to hydrogen-fired direct reduction plants, or shift resources to building either carbon capture projects or scrap-based electric arc furnace projects.
“Together, these factors mean that the feasibility, timeline, and competitiveness of natural gas DRI investments need to be reassessed, acknowledging the impact on the decarbonization road map and ability to reach CO2-reduction targets set out by steel players,” McKinsey wrote.
As a result, steel producers likely will slow natural-gas-fired direct reduction investments, jump directly to hydrogen-fired direct reduction plants, or shift resources to building either carbon capture projects or scrap-based electric arc furnace projects.
