In Detail : Swiss Steel Group has launched a new initiative to test hydrogen in steel production as part of its sustainability strategy. The project aims to reduce the sector’s heavy dependence on fossil fuels while addressing one of the most pressing challenges in industrial decarbonization. With this step, the company strengthens its commitment to building a low-carbon future.

The steel industry is one of the largest contributors to carbon emissions globally, responsible for nearly 7% of worldwide CO₂ output. Traditional production methods rely heavily on coal and other fossil fuels, creating environmental concerns. By testing hydrogen as an alternative energy source, Swiss Steel is exploring cleaner pathways to meet rising global demand sustainably.

Hydrogen has emerged as a promising solution in energy-intensive sectors due to its ability to replace carbon-based fuels in industrial processes. When used correctly, hydrogen generates water vapor as the only by-product, making it a zero-emission alternative. Swiss Steel’s decision to invest in this innovation highlights growing momentum across industries to adopt hydrogen for deep decarbonization.

The project also reflects Europe’s broader energy transition goals under the European Green Deal. Governments and industry leaders are encouraging the use of green hydrogen to reduce emissions and achieve net-zero targets by 2050. Swiss Steel’s testing is aligned with these ambitions, showcasing private sector participation in achieving continental climate milestones.

Beyond reducing emissions, the adoption of hydrogen in steel production can also enhance operational efficiency. Hydrogen-based processes could streamline energy use while lowering overall costs in the long term. This creates an opportunity for Swiss Steel to combine profitability with sustainability, offering a model for other steelmakers to follow.

However, challenges remain in scaling hydrogen adoption across the steel industry. High production costs, infrastructure requirements, and limited green hydrogen availability pose hurdles. Swiss Steel’s pilot project is designed to address these obstacles and provide practical insights into future industrial applications.

Industry experts believe that successful integration of hydrogen could reshape global steel markets. Companies pioneering such technologies are expected to gain competitive advantages while contributing to climate goals. Swiss Steel’s move positions it as a leader in innovative steel manufacturing and environmental responsibility.

The project also reflects a growing trend of industrial companies forming partnerships with technology providers and energy firms. Collaboration will be critical in scaling hydrogen adoption and reducing associated costs. By working alongside stakeholders, Swiss Steel aims to accelerate progress and drive industry-wide change.

With this initiative, Swiss Steel Group reinforces its commitment to a greener industrial future. As hydrogen use in steel production develops further, the company is set to play a vital role in advancing sustainable practices. The pilot project not only reduces emissions but also represents a significant step towards transforming one of the world’s most polluting industries.

Plans put in place now may lead to significant emissions reductions.

The transition toward clean energy and decarbonization of the fuel mix is one of the most burning topics in heavy industry. The steel industry is one of the top three contributors to CO2 emissions, and more than 70 percent of greenhouse-gas emissions in the steel industry are directly linked to use of coal as both fuel and reductant.

Steelmakers are taking several steps to decarbonize, targeting this regime for quick results (Exhibit 1).

The first step toward this goal is focused on emissions reduction and the repurposing of steel through a switch to alternate materials in steelmaking and efficient production of long-lasting steel products.

Second, operations can be decarbonized by increasing scrap usage and carbon-free electricity. Some steelmakers use biomass as a reductant instead of coal and implement smart carbon usage to capture and mitigate the release of CO2 emissions.

Recent developments in regulations, along with commitment among some governments to reduce CO2 emissions, have led many steelmakers to set high decarbonization goals in coming years. Steel companies should, therefore, determine their midterm and long-term paths to decarbonization today (Exhibit 2).

While the next decade will likely see process modifications such as carbon capture and storage (CCS) and carbon capture and usage (CCU), implementation of new processes will be critical.

One lever for these transitions will be the reduction of iron ore with hydrogen instead of coal. However, the determining factor for the success of this technology will be the availability of hydrogen at economic level and at scale.

While CCS and CCU are both medium- and long-term economic options, hydrogen is a growing opportunity in the face of ambitious international climate targets.

It is one of the few options for reducing emissions in steelmaking and could provide renewable developers a competitive advantage in the current paradigm. According to McKinsey’s SteelLens, hydrogen-based steel production could enable steel production that is nearly carbon-neutral (Exhibit 3).

Adopting CCS or CCU technology in existing blast furnaces would add operational expenditure of approximately €100 per ton1 of crude steel, and hydrogen-based steel production would cost approximately €170 per ton of crude steel. By 2050, with increases in scaled hydrogen production and carbon taxes, hydrogen-based steel production, CCS, and CCU will provide competitive options for steelmakers (Exhibit 4).

We believe that, starting today, decarbonization of the steel industry would lead to better outcomes for individual companies. Looking toward the long-term horizon of building or retrofitting industrial sites, significant emissions reductions can be achieved more efficiently through investment and plans initiated now.

Source: mckinsey