Steel manufacturing clusters in a hydrogen economy - Simulation of changes in location and vertical integration of steel production in Northwestern Europe

With the move to a hydrogen-based primary steel production envisioned for the near future in Europe, existing regional industrial clusters loose major assets. Such a restructuring of industries may result in a new geographical distribution of the steel industry and also to another quality of vertical integration at sites. Both implications could turn out as drivers or barriers to invest in new technologies and are thus important in respect to vertical integration of sites and to regional policy. This paper describes an approach to model production stock invest for the steel industries in North-Western Europe. Current spatial structures are reproduced with capacity, technical and energy efficiency data on the level of single facilities like blast furnaces. With the model developed both investments in specific technologies and at specific production sites can be modelled. The model is used to simulate different possible future scenarios. The case with a clear move to hydrogen-based production is compared to a reference scenario without technological shift. The scenarios show that existing trends like movement of production to the coast may be accelerated by the new technology but that sites in the hinterland can also adapt to a hydrogen economy. Possible effects of business cycles or a circular economy on regional value chains are explored with a Monte-Carlo analysis.

Automated summary

This paper investigates the potential impacts of shifting primary steel production to hydrogen-based processes in Europe, focusing on the restructuring of existing industrial clusters and changes in vertical integration. A model is developed to simulate investments and different future scenarios, which show that the adoption of hydrogen-based production may accelerate the movement of production to coastal areas while also allowing inland sites to adapt to the hydrogen economy. The study also explores the effects of business cycles and a circular economy on regional value chains using a Monte-Carlo analysis.