Europe faces a dual infrastructure crisis that few are connecting: the need to decarbonise heavy industry and the growing risk of supply shortages for materials the continent depends on. Steel must shift to low-carbon production, but critical minerals in Europe remain largely imported from geopolitically concentrated sources.
This creates a safety issue, as guaranteeing supply is impossible. The very materials needed to build renewable energy systems, batteries and green infrastructure depend on supply chains that are fragile and geographically exposed. Circular hydrogen steel offers a way to address both challenges simultaneously. By converting sewage sludge into hydrogen and biocoal while enabling recovery of phosphorus and potassium, the project demonstrates how waste-to-resource processes can reduce Europe’s industrial dependency while cutting emissions.
Phosphorus is the best example. Europe imports nearly all of the phosphate rock it needs for fertilisers, yet sewage sludge (treated as waste) contains significant quantities of this strategic element.
The EU has designated phosphorus as a critical mineral precisely because of this import dependency and its central role in food security. The EU’s approach to materials independence includes mandatory recovery targets: from 2029, Germany will require phosphorus recovery from municipal sewage sludge, with other Member States expected to follow.
But recovery alone is not enough. These materials must also feed into value chains that support climate goals. This is where circular hydrogen steel approaches, such as H2STEEL’s multi-output model, become strategically valuable.
Phosphorus recovery from waste: linking nutrients and clean energy
Sewage sludge has historically been viewed as a disposal challenge. But studies suggest that phosphorus recovery from waste in the EU could cover around 20% of total phosphorus consumption, potentially reaching 40% or higher in some countries. Germany’s leadership on mandatory recovery targets creates both urgency and opportunity: the country generates approximately 50,000 tonnes of phosphorus annually from treatment plants, enough to meet more than 40% of agricultural demand if recovered properly.
However, traditional sewage sludge spreading on fields carries risks. Heavy metals, microplastics and other contaminants concentrate in sludge. Advanced recovery processes can extract clean phosphorus for controlled reuse in agriculture and chemicals.
H2STEEL’s contribution lies in its integrated approach. The process does not just extract phosphorus. It simultaneously produces hydrogen and bio-coal, two critical products for green steel, reinforcing a circular hydrogen steel model. All while preparing nutrient-rich streams for agricultural recovery.
Circular fertilisers industry as a lever for circular hydrogen steel
The linkage between circular fertilisers industry development and climate targets is becoming explicit in EU policy. The Clean Industrial Deal emphasises strategic autonomy across value chains. Reducing phosphorus imports strengthens food system resilience; producing hydrogen and biocoal from domestic biowaste reduces steel’s dependence on imported coal and grid electricity.
These are not separate goals. They converge in projects that turn waste into multi-output platforms.
H2STEEL’s biochar-based catalytic process uses catalytic cracking to turn biomethane into hydrogen and solid carbon. The biochar can be used in steelmaking as a coal substitute. In parallel, the project applies extraction steps to the residual streams to recover phosphorus and potassium from the original sludge and digestate, so these nutrients can return to fertiliser production instead of being lost in waste.
This creates value for multiple actors. Wastewater utilities reduce disposal costs and generate revenue. Steel producers gain low-carbon hydrogen and biocarbon. Fertiliser companies access domestically sourced phosphorus. Farmers reduce reliance on imported phosphate rock.
Materials resilience enabled by circular hydrogen steel systems
Steel itself depends on alloying metals like manganese, nickel, chromium, and zinc, several of which are now on the EU’s materials watch list. The Critical Raw Materials Act targets 10% domestic extraction, 40% EU processing, and 25% recycling by 2030 for all strategic materials. Yet recycling rates for most metals remain low because end-of-life infrastructure and circular design are still developing.
H2STEEL demonstrates a different principle: circular hydrogen steel decarbonisation can itself function as a circular economy solution when nutrient recovery and material upgrading are integrated. By linking wastewater treatment, biogas upgrading, hydrogen production and steel manufacturing into one value chain, the project shows how industrial symbiosis can reduce dependency on both fossil fuels and imported minerals.
Research on decarbonisation pathways shows that hydrogen-based direct reduced iron (DRI) achieves cost-competitiveness starting around 2026 in competitive renewable locations such as Scandinavia, Portugal and Spain. When coupled with circular nutrient recovery, the economic case strengthens further. Multi-output processes reduce overall costs by spreading capital and operational expenses across multiple revenue streams.
EU dependency reduction in fertilisers through circular hydrogen steel
The urgency of dependency reduction cannot be overstated. In 2024 alone, the EU imported phosphorus fertiliser worth close to one billion euros from Russia, representing 25% of total phosphorus imports. Sanctions and geopolitical tensions make this dependence particularly acute for agriculture. Simultaneously, the steel sector faces pressure to decarbonise while managing hydrogen supply, electricity costs and carbon pricing.
Recovering nutrients from sewage for agriculture is now recognised as a strategic priority, not an environmental side benefit. Projects like H2STEEL position sewage treatment plants as resource hubs where sludge becomes the feedstock for hydrogen, biocarbon and recovered nutrients simultaneously. This “waste-to-multiple-products” model aligns with the EU’s circular economy agenda and its dependency reduction strategy across energy, materials and food systems.
Turning waste into circular hydrogen steel resources
The integration of circular hydrogen production from biowaste with nutrient recovery and green steel represents a systems shift. It moves European industry from a model where sludge is disposal waste, hydrogen is imported or produced via grid electrolysis, and fertilisers are mined abroad—to one where these materials flow within regional, closed loops.
H2STEEL’s advances in biochar-based catalysis, feedstock upgrading and nutrient separation now position the technology for scale-up. The project expects to soon show results with real-world sludge and biogas, validating that circular hydrogen steel is not an experimental concept but an industrial pathway.
For policymakers, industry planners and communities managing both sewage and green steel investment, H2STEEL offers a tangible model: waste streams can simultaneously solve climate, resource security and economic resilience challenges. As Europe tightens both climate and materials targets, such integrated approaches become essential.