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Energy & Utilities

Green steel requires a global effort to be viable for widespread adoption

23 Nov 2023, by Kristen Gutierrez

With the steel sector contributing between 7-9% of the world’s CO2 emissions, the industry is working to reduce its carbon footprint. They are doing this by employing innovative technologies like green hydrogen-based direct reduction and low-carbon resources like high-grade iron ore and waste.

With less than 0.6 tonnes of CO2 emissions per ton of steel produced, green steel is hoping to take the high road with sustainability and economic viability as its destination. Steel Manufacturer Association’s Eric Stuart describes green steel today as any steel with the smallest carbon footprint.

The utopian assumption that there exists net-zero production is simply not a reality because it will generally always involve fossil fuels; it’s simply up to each steelmaking company to remap their processes with solar, hydrogen, and other innovative sources of power.

Paying Premiums

The biggest setback for the budding, still-niche industry is its ability to communicate clear-cut differentiation to customers at face value. Compared to the automotive industry where electric cars have distinctive features like more efficient internal combustion engines, green steel can still only claim its fame with behind-the-scene differences in production.

The steel industry also needs more time to catch up to other industries ahead of the game in environmental governance. This means that beyond steelmaking giants that have substantial budgets for the first mover’s advantage, convincing smaller firms to make the switch proves more challenging.

The German Steel Federation proposes a labelling system that shall classify steel according to its varying levels of carbon-neutrality and price it accordingly. This aims to prevent greenwashing, remove the ambiguity of the manufacturing process, and facilitate lower barriers to entry for those hesitant to transition.

Forward Thinking

Perhaps there will come a time when customers only accept low-carbon iron ore from ESG-certified producers. When the tradeoffs are materially better standards of living, the appeal of traditional coke and coal in a blast furnace will dwindle.

 

Due to its greater access to solar energy, Oxford University research indicates that Australia would be the third-cheapest country to manufacture green steel. Alongside Brazil, it is uniquely placed as one of the world’s major exporters of iron ore with superior environmental conditions to be a driving force for the green hydrogen economy.

Flat green steel is predicted to face shortages in Europe in 2030. Australia’s Fortescue has invested over AUD $750M over the next 3 years for a green steel project among others and GFG Alliance is making progress at the Whyalla Steelworks in its effort to produce green steel.

BMW, Mercedez-Benz and Ford Motor have all pledged partnerships with low-carbon steelmakers that manufacture with hydrogen.

Conclusion

It is a collective effort to transform the steel industry, but those who make the first move are rewarded with better investor recognition and reputation. Decarbonisation is an inevitable pathway, so the economic viability for sustainably made steel will eventually be more tenable. In fact, it might be sooner than you think.

 

Further recommendations:

Informa Corporate Learning are leaders in training, knowledge, and performance improvement, servicing up to 30+ industry sectors. Our Energy & Utilities Portfolio boasts one of the most well-designed, robust training programs in Australia featuring Fundamentals of Green Steel, Hydrogen Industry Fundamentals, and Electricity Industry Fundamentals. See our Energy & Utilities courses. For more information, please email training@informa.com.au.

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