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EXCLUSIVE-ArcelorMittal, Vattenfall form hydrogen consortium with Shell, Airbus, others

* Blue chip companies serious about building up green hydrogen

* Local project may save 1 mln T CO2 per year by 2030

* Seek to close cost gaps to diversify, secure future (Adds more details of ArcelorMittal, Vattenfall plans)

FRANKFURT, April 26 (Reuters) - ArcelorMittal, the world’s top steelmaker, and Swedish utility Vattenfall have teamed up with Shell, Airbus and other heavyweights to cut emissions in industrial processes by using hydrogen, two executives said.

One focus of the 12-member consortium, which also includes Japan’s Mitsubishi Heavy Industries and logistics group Hamburger Hafen und Logistik, will be the production of carbon-neutral steel in the port city of Hamburg, they said.

“Within the Hamburg hydrogen co-operation, we will be able to save one million tonnes of carbon dioxide (CO2) annually (up to 2030),” said Uwe Braun, who heads ArcelorMittals’s business in Germany’s second-largest city.

Hydrogen is considered a green fuel when electricity from renewable energy sources is used in its production.

As part of the plan, Vattenfall will idle its Moorburg coal-to-power plant and convert the site to green hydrogen made from renewables while steelmaker ArcelorMittal will be one of its anchor consumers.

For Airbus and Shell, being part of a hydrogen cluster in Hamburg will help them to develop new products and avoid stranded assets once green legislation puts a stop to carbon-intensive activities, such as manufacturing and refining.

“For Airbus, hydrogen is a key technology for the aviation industry of the future. This is not only about the propulsion of aircraft, but also about the infrastructure of our production site,” said Andre Walter, Head of Airbus Commercial, Germany

European steelmakers, among the biggest global polluters, are under intense pressure to cut CO2 while maintaining profitability amid fierce competition, mainly from China.

Utilities, for their part, are keen to develop production routes for hydrogen from wind and solar power, creating an alternative fuel for a multitude of applications and getting out of legacy coal, nuclear and gas.

Hamburg emits 16 million tonnes CO2 per annum and Germany 749 million.

The European Union and member states have pledged to back green hydrogen with billions of euros in support programmes.

Green hydrogen’s initial role will be to replace “grey” hydrogen in industry, which is produced from natural gas, but its applications go far beyond that as it can be used in energy provision for heating and mobility.

Green hydrogen is two to three times more expensive than grey hydrogen but, with subsidises, could become competitive within 10-12 years, said Oliver Weinmann, managing director, Vattenfall Europe Innovation.

Vattenfall would need to invest between 100-200 million euros ($120.91-241.82 million) in the transition at Moorburg, where a 100 megawatts (MW) electrolyser is planned for 2025, he said.

Braun said that ArcelorMittal would successively replace the grey hydrogen in its Hamburg operations with green hydrogen from Vattenfall and build up electrolysis capacity of its own.

“We have a set-up here where we can become a pioneer of climate neutral steel,” he said.

$1 = 0.8271 euros Reporting by Vera Eckert and Tom Käckenhoff; Editing by Christoph Steitz and Jane Merriman

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