image missing
Date: 2024-10-12 Page is: DBtxt003.php txt00025938
MATERIALS ... STEEL
GREENER STEEL

What It Would Take to Make Steelmaking Greener


Severstal PJSC Steel Mill as Omicron Ruffles Metals Market ... Source: Bloomberg

Original article: https://www.bloomberg.com/news/articles/2023-06-20/why-steel-s-carbon-emissions-are-so-high-and-what-s-needed-to-lower-them
Peter Burgess COMMENTARY

Peter Burgess
What It Would Take to Make Steelmaking Greener By Lars Paulsson and Liz Ng June 20, 2023 at 10:25 AM EDT Steel is one of the world’s most vital commodities, and making it is a major cause of planet-warming carbon dioxide emissions. Demand for the alloy is growing as an expanding world population forces more investment in infrastructure and buildings. While the shift to lower-carbon technologies is under way in other sectors such as electricity generation and road transportation, steel still relies overwhelmingly on production techniques devised more than a century ago. So a race is on to develop “green steel” before environmental taxes and tighter pollution rules render much of the industry obsolete. 1. How big is the challenge? The steel industry accounts for about 7% of global carbon emissions. Conventional steelmaking belches carbon dioxide twice: first when coal is heated to create coke, then again when the coke is burned to melt iron ore in furnaces where temperatures can reach above 2000C. Global demand for steel is poised to grow by 20% by 2050 from present levels, according to a forecast by the World Steel Association. Decarbonizing the ferrous industry — which includes construction and engineering steel as well as cast and wrought iron — by midcentury will require an estimated $1.4 trillion of investment, according to consulting firm Wood Mackenzie Ltd. 2. What is green steel? There’s no real difference in the product itself compared with conventional steel. It’s the way it’s manufactured that defines how green, or clean, it is. The industry is experimenting with several newer techniques, all of which are at an early stage of development. One of the most promising involves replacing coal with green hydrogen made using renewable power. Biomass — material derived from plants and animals — is also being tested as an alternative fuel. Steelmakers see recycling as a further avenue to lowering emissions, as melting scrap metal in an electric arc furnace requires less energy than making new steel from ore. Emissions can be lowered further if the electricity comes from renewable sources. However, the on-site electric arc process still generates localized carbon emissions which can only be avoided through heavy investment in carbon-capture technology. 3. What are the largest obstacles? First there’s the massive cost of rebuilding a vast, established industry from the bottom up, as manufacturers are only likely to invest if they can make a decent return. In other words, steel companies, and the banks that would finance these upgrades, need to be confident that green steel will sell for a big enough premium over regular steel to ensure the enterprise is a profitable one. While many old-fashioned coal-based steelmakers in Europe and Asia have sketched out plans for a shift to green steel, their US counterparts have yet to come up with serious proposals. Japan’s biggest steelmaker, Nippon Steel Corp., has asked the government to provide subsidies to help pay for its green shift. China’s government has said the country’s steel industry will reach peak carbon emissions by 2030 and net zero by 2060. 4. Who is working on it? Several large steelmakers have begun steps to green their output or set targets to stop using fossil fuels in the next decade or further out, with more companies coming on board each year. Here’s a snapshot of what the industry is doing: Sweden’s SSAB AB made its first green steel in 2021 and launched a commercial product in 2023: SSAB Zero, made from recycled scrap in a renewables-powered electric arc furnace. The aim is to be selling 100,000 tonnes of SSAB Zero a year by 2025. That’s still only a small proportion of its overall production capacity of 8.8 million tonnes. Another company, H2 Green Steel AB, got approval in June for a new factory in northern Sweden with a yearly green steel production target of 5 million tons by the end of the decade. London-based iron ore producer Rio Tinto Plc and China Baowu Steel Group Corp., the world’s largest steelmaker, are looking to set up green steel facilities together in China and Australia. Rio Tinto also has a pilot project that uses biomass to replace coking coal. The process, developed with the University of Nottingham in the UK, blends the biomass with iron ore, which is heated by a combination of gas released by the biomass and renewable-powered microwaves to convert the ore into metallic iron. Nippon Steel plans to boost hydrogen use in its blast furnaces. Fortescue Metals Group Ltd., the world’s fourth-biggest iron ore miner, is working with Japan’s Mitsubishi Corp. and European steelmaker Voestalpine AG to develop zero-carbon steel at a plant in Austria by replacing coal furnaces with hydrogen and an electric smelter. ArcelorMittal SA plans to use green hydrogen in an iron ore processing unit to be built in Spain by 2025. 5. How expensive is green steel? SSAB’s product commands a premium of about €300 per ton, or about 20-30%, over regular steel, according to BloombergNEF. The price differential could narrow as greener technologies are adopted more widely and economies of scale come into play. The benefit for buyers is an opportunity to decarbonize their own supply chains, and SSAB has said its customers are already willing to pay the current premium. End-consumers may see little difference overall. BNEF estimated that the price of a high-value end product would grow by only about 1% with the switch to green steel, making it “well affordable” for the automotive industry, for example. In Europe, the average person indirectly spends 200 euros ($231) a year on steel, and using low-carbon methods would add 60 euros, consultancy McKinsey & Co. has said. 6. What are governments doing to help? Carbon pricing — which imposes a cost on greenhouse gas emissions — has helped to prod manufacturers to go green. More recent policies include a European Union mechanism that imposes a tax on products imported from countries with more lax carbon-emissions requirements, helping to ensure that overseas producers can’t gain a competitive advantage by investing less than their European rivals in cleaner technologies. In the US, President Joe Biden’s Inflation Reduction Act includes billions of dollars in investment to decarbonize the domestic steel industry, though it’s not yet clear how the money will be spent. The Reference Shelf More QuickTake Q&As on how the EU plans to charge for carbon emissions beyond its borders, why “transition finance” is a growing asset class and how the US green deal has opened the floodgates for subsidies. A BNEF report on decarbonizing steel and a video on America’s Inflation Reduction Act. A Bloomberg photo essay on the green steel process from the mine to end product. Bloomberg stories on pollution by Chinese companies and Rio Tinto’s biomass pilot project. A Bloomberg Law report on EU’s climate-change tax plan. — With assistance from Joe Deaux Get Alerts for: Up Next Texas Faces Threat of Blackouts After Grid Fails to Secure New Power Supply Making the World's First Fossil-Free Steel Play3:26 WATCH: A venture in Sweden is making the world’s first fossil-free steel. Bloomberg’s Lars Paulsson reports. Have a confidential tip for our reporters? Get in Touch Before it’s here, it’s on the Bloomberg Terminal

SITE COUNT Amazing and shiny stats
Copyright © 2005-2021 Peter Burgess. All rights reserved. This material may only be used for limited low profit purposes: e.g. socio-enviro-economic performance analysis, education and training.