Industrial sectors together account for around twenty five percent of global Greenhouse Gas (GHG) emissions1, according to the International Energy Agency (IEA). These so called ‘hard-to-abate sectors’ have received less attention than other sectors like power and transport because they are technically difficult to decarbonise. Now, Steel: Mission Possible, from the Energy Transition Commission (ETC), provides a roadmap for the near total decarbonisation of steel using known technologies.

    Steel is at the heart of industry’s low carbon transition. Its production contributes 7 per cent of industrial GHG emissions and the IEA estimate this could reach 34 per cent by 2040.2 Yet steel is part of our everyday life and, as the World Steel Association points out, “is critical simply because no other material has the same unique combination of strength, formability and versatility.”3 The IEA expects production to increase by thirty percent by 2050.4

    Some steel companies are already working in collaboration to develop, pilot and promote technologies for greening steel and these activities have potential to become the norm through the not-for-profit organisation ResponsibleSteel™ . This initiative aims to confront the likelihood of greater emissions scrutiny in the industry in the future by creating a ResponsibleSteel™ certification later this year. The certification will introduce the industry’s first green steel standard, as well as market based incentives to encourage action across the value chain of suppliers, producers, consumers and investors.

    Decarbonising primary steel, as well as increasing scrap steel recycling rates, is critical because of demand growth projections. Primary steel is carbon intensive to produce, emitting 2.3 tonnes of CO2 per tonne of steel produced5 and is seventy percent of global production6. It is typically made using Blast Furnace – Basic Oxygen Furnace (‘BF-BOF’) with coal to generate high temperature heat and extract iron from iron ore before converting it to steel.7

    Whilst the proportion of primary steel in annual production volume is set to decline from 70 per cent today to nearly 50 per cent by mid-century, it will nonetheless remain the majority of annual production volume.8 This is because demand requirements from emerging countries with growing steel needs and low steel stocks – steel stocks per capita in India and Africa are 1 tonne compared to ~13 tonnes in developed markets9 for example- are most likely to use primary steel made from coal based BF-BOF. Steel stocks, typically in the form of buildings, take time to be recycled and often only a fraction is reused. In addition, the quality of scrap recycled steel is usually lower than the original steel it came from, limiting further application.10

    Currently, complexity and cost factors prevent the industry from decarbonising more quickly. The steel making business is highly localized, low margin and capital intensive, so no single transition roadmap fits all, and production facilities are often times highly integrated, such that it is difficult to adopt a project by project approach.11 Replacing assets before their useful life is challenging, as is adding costs in decarbonisation technologies with uncertain pay-back periods.

    Nevertheless a starting point for companies is to identify and develop facility specific roadmaps for a net zero emissions future. Low carbon technologies that can replace or be applied to existing assets include energy efficiency improvements, carbon capture and storage (‘CCS’), and biomass or hydrogen instead of coal in BF-BOF. In addition, primary steel production using natural gas or hydrogen based Direct Reduced Iron (‘DRI’), and switching to zero-carbon electricity in Electric Arc Furnace (‘EAF’) for scrap-based steel production would help.

    Support for investment and innovation would further enable steel’s decarbonisation as green steel becomes increasingly of interest to companies across the value chain.

    1International Energy Agency (2019), Transforming Industry through CCUS
    2IEA(2017), Energy Technology Perspectives
    3World Steel Association (2018), https://www.worldsteel.org/steel-by-topic/steel-markets.html,
    4IEA (2017) Energy Technology Perspectives
    5ETC (2019) Mission Possible: Steel
    6IEA (2017) Energy Technology Perspectives
    7World Steel Association (2019), Fact sheet: energy use in the steel industry
    8IEA (2017) Energy Technology Perspectives
    9Material Economics (2018), The circular economy: a powerful force for climate mitigation
    10ETC (2019) Mission Possible: Steel
    11McKinsey & Company (2018), Decarbonization of industrial sectors: the next frontier