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.
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.
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.
Flat green steel is predicted to face shortages in Europe in 2030. Sweden-based industrial startup H2 Green Steel and Singapore-based Cargill Metals have reached a multi-year partnership to help combat this.
Anglo American, a multinational mining corporation, and Singapore-based Meranti Green Steel have signed a memorandum of understanding (MOU) for the delivery of premium iron ore lumps and pellets.
Singapore’s sovereign wealth fund GIC is among two other foreign national funds that led a €1.5 billion investment into a large-scale green steel plant based in Sweden.
BMW, Mercedez-Benz and Ford Motor have all pledged partnerships with low-carbon steelmakers that manufacture with hydrogen.
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.
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