Steel is the backbone of modern infrastructure and one of the world’s most widely used materials. It is also one of the largest culprits of the climate crisis, responsible for about 8% of total global emissions. Yet despite its significance, there is still relatively little action from corporations to address this carbon bomb. The good news is that technological pathways are emerging to decarbonise steel. All that’s needed is investment and dogged commitment from public and private partners to create meaningful demand signals.
Technical pathways to low-carbon steel
The majority of steel is made in blast furnaces. The process requires two inputs: iron ore and coal. They lead to an output of molten iron and carbon dioxide (and other impurities that may be in the ore, including sulphur, phosphorus and silicon). This process produces an impressive amount of emissions. For every ton of crude steel, close to two tons of CO2 are created. What’s more, the global appetite for steel is on the rise. Demand in 2023 is expected to increase 2,3% year over year, up to 82 billion tons, according to the World Steel Association.
Strategies to reduce these emissions can be broadly divided into five buckets:
• Reuse steel: Using recycled steel scrap, rather than virgin-based production, reduces CO2 emissions by 70%. The reason? Raw iron ore requires more energy to remove impurities and creates more process emissions. And we’re already pretty good at recycling steel, as it’s the most recycled metal in the world, saving money, energy and time. Ultimately, recycling alone won’t get us to where we’re going. There is a limit in availability − when steel goes into product, it tends to stay there for a while.
• Carbon capture, use and storage (CCUS): Capturing emissions from industry, either to safely store or repurpose to create new products, will play a critical role in addressing climate change. Today, however, the technologies are nascent and expensive.
• Green hydrogen: Using clean (or green) hydrogen to replace coal in blast furnaces could decarbonise steel completely. This would transform the blast furnace’s byproduct from CO2 to H2O. Two years ago, a pilot project in Sweden, Hybrit, demonstrated the feasibility of a hydrogen steel plant, with the view to ramp up production by 2026.
• Other fuels: Improving the efficiency of the blast furnace process or plugging in less carbon-intensive fuels would help marginally reduce steel emissions. Japanese manufacturer Kobe Steel uses a natural gas blast furnace, which it claims reduces emissions associated with production by 20%. Some industries are suggesting syngas as a potential option. Other organisations are looking to biomass to reduce emissions.
• Electrification: Electric arc furnaces traditionally have been used for scrap steel, as they weren’t able to reach the temperatures needed to process raw iron ore. However, breakthroughs in electrolysis of iron ore are changing that. Boston Metal developed a technology that uses electricity to transform iron ore into molten iron, with oxygen as a byproduct.
Of these pathways, I pick electrification. Of the five options, only green hydrogen and electrification have the potential to remove emissions from the equation entirely. Between hydrogen and electrification, the latter is a more direct use of clean energy (instead of using electricity to make hydrogen to make steel, you could skip a step and use electricity to make steel).
Adam Rauwerdink, senior vice president of business development at Boston Metal elegantly summed up this sentiment: “It really doesn’t make sense to use the limited commodity that’s green hydrogen for steel production if you can skip the middleman and just use the electricity directly. I certainly believe in green hydrogen, just not for steel. Use it elsewhere.”
Call to corporations: sign procurement contracts
The single most important thing corporations can do to accelerate the adoption of clean steel is sign procurement deals. These will help signal demand for clean steel and speed along the complicated process of incorporating new materials. This is already beginning. Volvo, which signed a statement of intent with SSAB in July 2021 to produce green steel made from hydrogen for its cars by 2026; and GM, signed a deal with Nucor in October 2021 to use scrap steel and electric arc furnaces to create net-zero steel.
There are coalitions aiming to signal demand for cleaner steel such as SteelZero, Responsible Steel and the First Movers Coalition, but when it comes to corporations putting pen to paper for specific procurements, the list is embarrassingly thin.
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