Could Electrified Biomethane DRI Make Steel Production Carbon-Negative?

This week, I had the opportunity to participate in TenneT’s scenario planning for its ambitious 2050 Target Grid project. The session was notable for including Professor Heleen de Coninck, one of the Netherlands’ experts on industrial decarbonization and climate change. Her involvement emphasized the critical importance of identifying scalable pathways not just to zero-carbon energy and industry, but ultimately to negative emissions, actively removing carbon dioxide from the atmosphere.

This timely discussion coincided with my own renewed analysis of decarbonization pathways in heavy industry, particularly in steel production, as global steel demand projections shift dramatically due to falling cement use in China.

Electrified biomethane-based direct reduced iron (DRI) is one of the more compelling low-carbon technologies I’m exploring, particularly given its potential for achieving not just carbon-neutral but carbon-negative steel. Unlike traditional blast furnaces, DRI plants don’t rely on coal and coke, instead making iron by directly removing oxygen from iron ore with hydrogen-rich gases.

Typically, natural gas provides this reducing gas, but biomethane, methane derived from biomass waste streams, is a renewable and chemically identical substitute. Electrifying process heat further improves efficiency, reducing the total amount of gas required by 20% to 25% and making the process easier to decarbonize fully. After heat capture, a 95% pure stream of CO2 comes from the DRI plant at temperatures of 30° to 60°, perfect for capture for other uses or for sequestration.

Crucially, when biomethane-derived CO₂ emissions are captured and sequestered, the net result can be negative emissions, given that biomass originally captures atmospheric CO₂.

In the Netherlands context, Tata has a speciality steel plant near Amsterdam. It produces 6-7 million tons of high-end steel a year, exporting them globally as well as fulfilling high-end requirements in Europe. It’s a high-emissions, but high-value sector. Running through the numbers, my napkin math suggests around 4.7 million tons of biogenic would be produced.

The Netherlands’ greenhouse sector consumes 5 million tons of CO2 annually to produce about 1.6 million tons of produce. As a reminder, plants eat carbon dioxide, keep the carbon and return the oxygen, the heavier component, to the atmosphere, hence the mass imbalance. Currently 95% CO2 comes from burning natural gas in combined heat and power generators at the facilities with the rest coming by pipeline from bioethanol and other industrial facilities. That’s the biggest demand segment for CO2 in the country by an order of magnitude.

Tata’s steel plant could provide almost all of the biogenic CO2 the greenhouses required, eliminating two sources of CO2 emissions in the Netherlands. Combined with capturing and sequestering other biogenic CO2, mostly from biofuels fermenters from my perspective, that allows negative emissions.

Despite this appealing potential, electrified biomethane DRI faces several practical hurdles. First and foremost is the sheer scale of biomethane production required. Producing 200 to 300 million tons of steel per year with electrified biomethane DRI — half to three-quarters of my projected end state supply requirements for new steel — would demand between 40 and 60 billion cubic meters of biomethane annually, assuming improved process efficiencies from electrification.

Current global biomethane production stands around just 7 billion cubic meters per year. EU’s REPowerEU targets, foresee scaling to 35 billion cubic meters per year by 2030, sufficient for Europe’s steel industry at least, along with other biomethane industrial demand sectors. My solution mix includes capturing point sources of anthropogenic biomethane and using them as industrial feedstocks where required like this example, as well as putting them into strategic gas reserves for dunkelflaute situations.

Technologically, electrified biomethane DRI is straightforward and builds directly on mature existing DRI systems like Midrex and Energiron. Biomethane’s interchangeability with natural gas means existing infrastructure can transition seamlessly, and is TRL 9. Electrifying heat supply is technically feasible and a much greater requirement in H2 DRI systems, leveraging industrial-scale electric heating equipment well-established in other sectors.

Pilot projects and preliminary demonstrations are underway, though full-scale deployment still awaits long-term operational validation. Integrating electric heaters into DRI plants represents a new but manageable step forward, placing electrified biomethane DRI at a relatively high technology readiness level compared to other emerging steelmaking technologies.

Economically, however, the situation is more nuanced. Biomethane currently commands a significant price premium over fossil natural gas. Without targeted subsidies, carbon pricing, or stringent regulations, biomethane-based steel production faces challenging economics, particularly in regions with abundant and cheap fossil fuel supplies. Additionally, electrifying process heat, while efficient, increases plant electricity demands substantially.

While renewable electricity costs continue to decline, the high consumption involved in industrial-scale steel production still translates into major infrastructure investments and operational costs. Moreover, DRI’s requirement for high-quality, low-impurity iron ore imposes further limitations on global applicability. Access to suitable ores, combined with logistics and ore beneficiation costs, must be factored into overall economic assessments.

That said, a decade of focus on hydrogen instead of biomethane has been based on the false assumption that green hydrogen would be cheap, something that’s continuing not to be true. Previous techno-economic assumptions have low-balled green hydrogen costs and not considered the negative emissions advantages of avoiding anthropogenic biomethane emissions and CCS applied to electrified biomethane DRI. The combination suggests at this stage of my digging through the new steel alternatives that electrified biomethane DRI is going to be a much bigger part of the solution set.

Considering the broader landscape of green steel technologies, electrified biomethane DRI remains just one piece of a larger puzzle. Electric arc furnace (EAF) steelmaking, primarily fed by recycled scrap, is what I expect to dominate global steel production in a decarbonized world, especially as global steel demand  declines with slower infrastructure growth.

Ultimately, the future role of electrified biomethane DRI depends on balancing these resource constraints, technological readiness, and economic realities against the critical need for deep decarbonization, and eventually negative emissions in steelmaking. Policymakers and industrial planners must weigh biomethane’s extraordinary resource requirements and costs against its uniquely potent potential for negative emissions.

In scenarios like TenneT’s 2050 Target Grid planning, such technologies gain strategic value precisely for their ability to offset residual emissions from other sectors that remain difficult to abate completely.

While no single steel decarbonization technology offers a panacea, electrified biomethane DRI holds significant promise as part of a broader portfolio of complementary solutions. Steel is a major climate change problem, and electrified biomethane DRI would make it part of the solution instead.