SEOUL - South Korea's POSCO plans to eventually halt carbon emissions by switching to a hydrogen-based steelmaking process from 2021, company officials said on Friday.

POSCO, the world's fourth-largest steelmaker, accounts for 10 percent of the country's total carbon emissions.

Our ultimate goal is to develop steel production technology not to emit any carbon dioxide, Park Ki-hong, executive vice president at POSCO, told a green technology seminar earlier the week.

No steelmaker yet uses the hydrogen steelmaking process, while industry experts noted some Japanese might also study it.

We are currently studying the hydrogen-steelmaking process, Choi Doo-jin, a senior spokesman at POSCO, told Reuters. We hope to get hydrogen gas from small or mid-sized nuclear reactors, which are also under study by us.

Currently, iron ore is melted in a furnace using super-heated air from burning coal. In addition to this fuel role, coal is also used as a critical component in steel production because the carbon from burning coal captures oxygen from the molten iron ore, emitting carbon dioxide in the process.

POSCO hopes to switch from carbon to hydrogen gas to capture oxygen, a step that results in water produced as a byproduct instead of planet-warming carbon dioxide.

POSCO officials said the steelmaker is considering supplying hydrogen gas from its SMART nuclear reactors. It is looking at participating in a consortium for developing small or medium-sized nuclear reactors.

The steelmaker, however, has not yet decided which energy resources they will use instead of coal as fuel to heat the furnace.

EFFICIENCY DRIVE

In the short-term to 2012, POSCO plans to cut emissions by improving process efficiency, Park said in the seminar, while declining to disclose the emission reduction volume expected through such efforts.

Under the mid-term plan through 2020, the steelmaker will introduce breakthrough new process technology for carbon dioxide reduction, Park said without elaborating.

In addition to steelmaking process changes, POSCO is looking for new business opportunities in low-carbon green growth areas, for instance, stationary fuel cells and synthetic natural gas.

POSCO earlier this year said it would spend 3.35 trillion won ($2.90 billion) in a venture with the country's top refiner SK Energy to convert coal to synthetic natural gas, chemicals and liquids to cut South Korea's huge oil and gas import bill.

POSCO's plans come after South Korea this month set a voluntary 2020 emissions reduction target from 2005 levels. The target aims for a 30 percent reduction from a business as usual scenario.

The government's emissions reduction pledge for the OECD's fastest-growing carbon polluter was aimed at trying to meet demands from developing nations for wealthy South Korea to rein in its carbon pollution.

It also came weeks before crucial U.N. climate change talks in the Danish capital start on Dec 7 meant to agree on the broad outline of a future legally binding global agreement to fight climate change to replace or expand the existing Kyoto Protocol from 2013. ($1 = 1,156.8 won) (Editing by David Fogarty)

South Korea Energy