Vattenfall together with steel manufacturer SSAB and mining company LKAB have formed a joint venture to continue to drive the Hybrit initiative, which is seeking to develop a steelmaking process that emits water instead of carbon dioxide.

The three companies will each own one third of the company.

The initiative was launched in spring 2016 with the aim of replacing the blast furnace process that uses coal and coke with a process based on hydrogen gas.

It is divided into three phases: a preliminary study up to the end of 2017, followed by research and pilot plant trials up to 2024.

Finally, up to 2035 the plan is to perform trials in a full-scale demonstration facility.

The JV has started a recruitment process to appoint a chief executive.

Vattenfall president and chief executive Magnus Hall said: “By taking this step, we are making clear our activities and determination to find solutions to the climate issue.

“Vattenfall can see that electrification of the industry and climate-smart hydrogen gas have an important role to play.”

Meanwhile, Vattenfall together with Fortum and Statkraft have proposed a change to the EU carbon trading system that would automatically regulate the amount of allowances issued in relation to real greenhouse gas emissions.

Under the proposal, as soon as a country reduces its emissions, it has to be reported centrally, and an equivalent amount of allowances removed from future auctions.

“In this way, the national measures also have an effect on the climate overall, and it avoids other policy instruments undermining the EU (emissions trading scheme), so the cost per emission allowance becomes a real incentive to invest in climate-smart energy,” said Erik Filipsson policy advisor at Vattenfall.

Surplus allowances in the EU emissions trading scheme (EU ETS) have resulted in the carbon dioxide price not being sufficiently high to stimulate the market into adapting the energy system in line with the objectives of the Paris Agreement, Vattenfall said.

A report by consultancy Pöyry on behalf of Vattenfall, Fortum and Statkraft found that the surplus is largely due to EU member states setting their own targets, which is affecting emissions.

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