Low-carbon steel is currently produced by melting scrap steel in electric arc furnaces, which can cut emissions by two-thirds, compared with making virgin steel.

 

The world already produces over 1,800 million metric tonnes a year. Demand is expected to accelerate in the developing world, but far less so in Europe and North America where major infrastructure is largely already built. With iron and steel the most emissions-intensive industry on the planet, alone responsible for about 7% of GHG emissions, it’s critical that growth comes from net-zero processes.

 

The WBA’s latest research on the steel, cement and aluminium industries shows that companies need to triple their efforts over the next five years to reduce emissions intensity and increase investment into technologies that are not yet mature, in order to be on track to reach net-zero by 2050.

 

Steelmaking is traditionally done in two steps – the first is to reduce iron ore to iron by using coking coal, both as a source of heat to drive the reaction and to pull off the oxygen from the ore. Iron is then converted to steel in a second furnace. This route, on average, emits 2.3 tonnes of carbon dioxide for every tonne of steel produced.

 

About 30% of steel production globally has lower embodied carbon because it is produced by melting scrap steel in electric arc furnaces (so called secondary steelmaking). This route can cut emissions by two-thirds, but much of it uses electricity from fossil-based grids.

 

Sins acknowledges that huge financial investments will be needed to equip the industry for a net-zero future. “It's not only for the companies to do that by themselves,” she says. But “if a company is clear about their 2050 strategy, they know what they need to invest in it now.”

 

However, just five steel companies have set, or committed to set, near-term (2030) science-based targets (as specified by the Science Based Targets initiative); and just three have committed to set net-zero targets.

 

Using green hydrogen (made with renewables) instead of coal to reduce iron ore can make primary steel production almost carbon-free. The resulting directly reduced iron (DRI) is fed into an electric arc furnace to produce steel. Europe is leading the way: Swedish steelmaker SSAB, iron ore producer LKAB and energy firm Vattenfall have pioneered this route with their Hybrit technology, and are producing batches of fossil-free steel for testing by customers, who are willing to pay a premium for clean steel.

 

Steelmakers in the Middle East already use gas, rather than coal, to reduce iron ore, a direction that is being considered by some European producers while they wait for green hydrogen to become available and affordable. However, there are big concerns this could lock gas in.

 

ArcelorMittal, which has been given over 1.5 billion euros in subsidies by several European governments to shift to gas, then ultimately, hydrogen-based steelmaking, says green hydrogen would have to cost $1-1.5 per kg (as compared with $6 currently) to be competitive with gas. It has no confidence hydrogen will be available in Europe at the price or capacity it needs by 2030.

 

One big barrier to green hydrogen is that this fossil-free pathway involves a phenomenal amount of energy. One estimate suggests that producing enough hydrogen to fully decarbonise the steel industry would require 20% more electricity than currently produced globally from all sources. LKAB estimates it will need an annual 70 terawatt hours (twh) of clean electricity by the time it has fully transformed its operations by 2050.

 

Nucor, America's largest steel producer, teamed up with Microsoft and Google to aggregate their demand for technologies, such as green hydrogen and long-duration storage, that will help balance the grid and fill in when sun and wind aren’t available.

 

In March, the U.S. government announced a $1 billion investment in hydrogen-based steelmaking. SSAB’s U.S. arm is one of the beneficiaries. Hydrogen production also gets generous subsidies under the Inflation Reduction Act. Another $28 million strand of funding is coming from the Department of Energy’s Advanced Research Projects Agency – Energy (ARPA-E) to support the development of new techniques with the potential to produce zero-emissions iron and steel at cost parity with today’s blast furnaces.

 

One beneficiary of ARPA-E is Boulder-based green iron startup Electra, whose low-temperature electrochemical process can exploit lower grade iron ores that today are treated as waste by the mining industry. Aside from the reduced energy demand, Electra says its system can be started and stopped to take advantage of intermittent renewables. According to ARPA-E, if successful the project will produce iron for use in green steel with 80% less greenhouse gas emissions, at half the cost of existing fossil fuel-based processes.

 

Steel is the most recycled and recyclable material, and as nations decarbonise, demand for scrap will grow. Seventy percent of U.S. steel production is already via this secondary route, and switching to renewables as a power source would lower emissions still further. Many countries across Asia already restrict the export of scrap, while new European legislation will limit exports from 2027.

 

UK industry worries the EU legislation will drive up demand for its steel scrap (already exported in bulk) at a time when it will increasingly be needed domestically as the country’s steelmakers opt to close their blast furnaces.

 

Another barrier to increased recycling is that secondary steel accumulates impurities, such as copper and other alloys added to meet differing industry requirements. Taking care to improve scrap sorting and developing closed loops could reduce demand for primary steel, suggests energy and climate policy analyst Chris Bataille.

 

For example, German carmaker Volkswagen expects to be one of the first customers for the low-carbon steel planned by its neighbour Salzgitter AG, and both intend to develop the closed loop recycling of steel between their two plants.

 

Tightening of allowances under the European Union’s emissions trading system will increase the pressure on steelmakers to embrace cleaner production methods. Allowances will disappear entirely when the bloc’s carbon border adjustment mechanism (CBAM) takes effect from 2026.

 

The CBAM aims to prevent production and emissions moving overseas to countries with less stringent climate polices. This has stimulated overseas industry to think about how it will compete in the EU market, says Heaton.

 

And since adding scrap lowers emissions, “there's a lot of greenwashing that can go on if companies are only asked for the embodied emissions in their product,” Heaton adds. Hence Responsible Steel’s standards, which enable every steel plant to be compared on a like-for-like basis to drive overall industry progress and with it, emissions reductions globally.

Source：
Reuters（2024.6.3）Steel companies 'yet to prove their mettle' in race for net zero