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In 2021, Volvo announced a green steel partnership with steel producers Ovako and SSAB in their “constant search for new ways to reduce climate impact”. But what exactly is “green steel”? The phrase “green steel” conjures up ideas of zero-emission steel production. This is a very exciting thought for the future, but it is not where green steel is at presently. The current practical definition of “green steel” is simply steel produced with as little emissions as possible. As noted by Phil Gibbs, equity research analyst at KeyBanc Capital Markets, “Any electricity generation is base-loaded off some sort of fossil fuel and a process that involves fossil fuel or metallics. So to get something truly produced with zero emissions is a nice aspiration, but sort of a fantasy.” Fortunately, as regulatory pressure regarding carbon footprints increases, steel manufacturers have found many ways to produce steel with a lower carbon footprint.
As outlined in a Fastmarkets study, there are four main steps to steel decarbonization:
1. Maximize the use of scrap metal and minimize the use of hot metal in blast furnace and basic oxygen furnace steelmaking, currently the dominant technology for steel production
Steel is naturally complementary to circular economy values due to being one of the world’s most recyclable products. Secondary steelmaking takes scrap as input to create alloys as good as steel created from pig iron. This feature of steel makes it easy to reclaim and process scrap that would otherwise fill landfills: yesterday’s bottle top can become tomorrow’s train carriage. However, due to the use of coke (a form of coal) as carbon input, the high energy requirements of melting and smelting, and other carbon-producing processes of steel production (slag, dust, sludge), this is only the first and most basic step in steel decarbonization.
2. Replace blast furnaces and basic oxygen furnaces with electric-arc furnace (EAF) technology
Expanding upon step 1 of the decarbonization process, step 2 relates to replacing blast furnaces/basic oxygen furnaces with electric-arc furnaces, which come with many benefits. EAFs are able to produce steel using only scrap metal for feedstock, which is a huge reduction in energy requirement and emissions when compared to primary steelmaking from ores. EAFs are also much more flexible than blast furnaces, having the ability to be rapidly started or stopped, which allows a steel mill to vary production according to demand. However, as EAFs require large amounts of electrical power, if implemented without further consideration for a source of sustainable energy, the responsibility for carbon reduction would simply pass from the steelmaker to the energy provider, which is a significant issue that must be kept in mind.
3. Replace blast furnace iron produced from coke with direct reduced iron (DRI)
Iron is an integral part of steel production (steel being about 98% iron and 2% carbon). The carbon footprint of steel production can be reduced by using a more energy efficient way to create the necessary iron. Direct reduced iron (DRI) is produced from iron ore that undergoes a reduction by way of a reducing gas. Steel made using DRI requires significantly less fuel, in that DRI does not require a traditional blast furnace, and can be created in EAFs.
4. Replace the syngas used to produce DRI and the coal used to generate electricity for EAFs with renewable energy sources
Syngas is a mixture of hydrogen and carbon monoxide, used in the process of producing DRI. To eliminate fossil fuel usage in the production process, renewable hydrogen gas can be used in place of syngas. Importantly, as mentioned in step 2, the success of carbon reduction through replacement of blast furnaces with EAFs hinges on sourcing renewable energy, rather than relying on electricity created by fossil fuels.
Let us return to the definition of “green steel”: steel produced with as little carbon footprint as possible. As Annie Stefanec, SMA director of external communications and public affairs notes, “It’s almost more of a mindset, and the definition is based on how you’re producing your steel.” As with many things in the impact space, it is difficult to assign a static definition. But, what we do have are values: reducing emissions, impact-oriented technological advancements, and reusing existing resources to minimize the amount of new ore required in production.
Steel is an integral part of our lives, and a sustainable future hinges on the sustainable production of steel. With these values we can aim towards a more sustainable and more “green” future. Australia recently pledged net-zero emissions by 2050, and green steel values are likely to be considered in order to maintain heavy industries and contribute to sustainable infrastructure. Globally, about 70% of steel is still being produced using blast furnaces. Whilst decarbonization is inevitable, the road towards the final goal is uncertain, with many financial challenges along the way. Growing interest in scrap metal for DRI production may have the 700-million tonne scrap market struggling to support the demands of the 2-billion tonne steel industry. We can only wait and see which market participants can weather the turbulence of the green revolution, and continue to thrive afterwards.
