FRANKFURT, March 11 (Reuters) - Germany's second-largest steelmaker Salzgitter on Thursday started to produce hydrogen using wind power at its Salzgitter site with view to reducing carbon dioxide emissions (CO2) in its production processes long term.
"We are now technically in a position to achieve significant CO2 reductions using hydrogen," Chief Executive Heinz Joerg Fuhrmann told a press conference.
Germany has started large-scale efforts to develop "green" hydrogen, produced from water by electrolysis using renewable power, to develop alternative fuels and protect key industries from closure when climate protection targets must be met.
Salzgitter has made the decarbonisation of its processes in Germany a strategic goal and predicts it will be 95% decarbonised by 2050.
The steel company cooperated with utility Avacon, part of the E.ON group, to install seven wind turbines with a capacity of 30 megawatts (MW) on the site, which will deliver wind power to an electrolysis plant.
The cost of the turbines and the electrolysers amounted to around 50 million euros ($60 million). State bank KfW partly funded the electrolysers.
The plan is for Salzgitter to successively replace coal-based gases necessary for smelting iron ore with hydrogen generated from fossil-free electricity over decades.
Fuhrmann said that in order to scale-up the input of initially small hydrogen volumes over time while converting workflows, natural gas will have to take on the role of a crucial, already far less CO2 intensive, transition fuel.
The Salzgitter site is responsible for 1% of Germany's CO2 output.
First "green steel" volumes will become available from the end of 2022 and customers are already lined up, Fuhrmann said, adding prices will necessarily have to rise.
"Salzgitter is delivering a blueprint for future climate-friendly production technology in Germany as an industrial location," Lower Saxony state economy minister Bernd Althusmann said. ($1 = 0.8363 euros) (Reporting by Vera Eckert, editing by David Evans)