South Korean automaking and steelmaking giants Hyundai Motor Group and Posco are collaborating to replace coal fuel with hydrogen to turn out steel under the state-led agenda to achieve carbon neutrality.

Hyundai Motor, eager in hydrogen push, signed a memorandum of understanding with Posco a week ago during a ceremony attended by Hyundai Motor Group Chairman Chung Euisun and Posco CEO Choi Jeong-woo, the companies jointly said Monday.

Their goal is to achieve zero carbon emission from steel mills by 2050 and build hydrogen-powered transportation infrastructure.

Steelmaking typically generates hefty amount of greenhouse gases because of the coke-using iron ore reduction process that utilizes a chemical reaction between iron oxide and carbon monoxide sourced from heating coke fuel in a blast furnace. The coking coal process to reduce iron ore emits nearly 2 tons of carbon dioxide per 1 ton of iron.

Posco has developed Finex iron-making technology that can reduce emissions by a quarter from traditional levels.

When hydrogen gas is used in place of coke, the furnace can emit water vapors only.

Hyundai Motor Group and Posco also plan to use green hydrogen using ammonia for easier transport and storage while collaborating on the technology development.

“Green hydrogen uses renewable energy to produce hydrogen from water, which means other related industries also are able to expect benefits,” said an official from Hyundai Motor Group.

By Seo Jin-woo and Lee Ha-yeon

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