Here are a couple of facts about the scope and magnitude of the steel industry:
- The world produces a massive amount of steel every year – Over 240 kilos for every single person in the world which is enough to build an Eiffel Tower every 3 minutes. That’s 180,000 Eiffel Towers in one year. Side by side they would go from Paris to New York three and a half times; and
- The world’s largest materials industry, steel, generates a turnover of 1 trillion US dollars and is 10 times larger than the aluminum industry, 7½ times larger than the copper industry, and 4 times that of the cement industry.
China is the world’s largest crude steel producing country, accounting for over half of the world’s production as of 2019. In August 2020, China had produced around 93 million metric tonnes of crude steel.
The graph presented below illustrates the growth percentage and production of crude steel in million tonnes from October 2018 to March 2020:
Here is the reality about the global production of steel and it’s direct impact on carbon dioxide (CO2) emissions:
- As one of the world’s most prolific materials, with 1.7 billion tonnes of steel produced in 2018, the steel industry today accounts for approximately 7 percent of global emissions. And with demand for steel and materials set to further increase – forecasts show demand rising to 2.6 billion tonnes in 2050 – it is vital the industry finds ways to significantly reduce its CO2 emissions to successfully meet the ambitions of the Paris Agreement and help limit the global average temperature rise to less than two degrees.
Here is a graph which illustrates how carbon impacts steel:
On the other hand, the economic impact of steel on the society cannot be ignored. Essentially, the economic impact of an industry is measured by the following two indicators:
- Its contribution to GDP (Gross Domestic Product). GDP represents the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific period of time ; and
- The number of people working in the industry.
These indicators help to describe the direct impact of an industry. The steel industry has a gross value added of US$500 billion, which is 0.7 percent of global GDP and employs just over 6 million people.
Perhaps the indirect impact of the steel industry on the society and the economy would not be complete without taking into consideration the sway it has in its value chain both from input suppliers and output customers. The effect, indeed is enormous when consider how steel as a material is key to so many industries in the society.
For instance, vehicles manufacturing around the world, steel has long been the material of choice. According to the International Organization of Motor Vehicle Manufacturers, the 91.8 million vehicles built in 2019 contained an average of 900kg of steel per vehicle. Furthermore, on the sustainability scale, steel doesn’t score too badly. It is endlessly recyclable, is supported by a well-established recycling infrastructure and boasts lower CO2 lifecycle emissions than other automotive materials. Nonetheless, the steel industry as a whole still remains a significant contributor to CO2 emissions.
The image presented below reflects the CO2 Emissions Generated (2.6 Gt CO2 per year) by the Steel industry and Energy Consumed (Mtoe per year) by Fuel in 2019:
While the millennium, global demand for cement and steel has more than doubled, according to the Global Energy Review 2020, published by the International Energy Agency (IEA) in April 2020, global energy demand was pushed down by 3.8 percent as a result of as a result of the COVID-19 pandemic on the global economy and mobility during the first quarter of 2020. Likewise, if lockdowns last for many more months and recoveries are slow across the world, it is likely that the annual energy demand will drop by 6 percent in 2020, wiping off the last five years of demand growth. Such a decline has not been seen for the past 70 years. If efforts to curb the spread of the virus and restart economies are more successful, the decline in energy demand could be limited to lower than 4 percent. Yet a bumpier restart, disruption to global supply chains, and a second wave of infections in the second part of the year could curtail growth even further.
Then again, steel is vital to modern economies and so over the coming decades, global demand for steel is expected to grow to meet rising social and economic welfare needs. Besides, steel will also be an integral ingredient for the energy transition, with solar panels, wind turbines, dams and electric vehicles all depending on it to varying degrees. Meeting this demand presents challenges for the iron and steel sector as it seeks to plot a more sustainable pathway while remaining competitive. Here are a couple of challenges that the steel industry is faced with:
- Automakers such as Volvo, Volkswagen and Toyota declared they want to eliminate carbon from their entire manufacturing process, which would mean any steel they use would need to be come from a decarbonized production process; and
- Likewise, investors have raised concerns that the steel industry needs to act now to safeguard its future in a low carbon world.
Global Consultancy McKinsey and Company found that 14 percent of steel companies’ potential value is at risk if they are unable to decrease their environmental impact.
The Steel industry recognizes the fact that through innovation, low-carbon technology deployment and resource efficiency, iron and steel producers have a major opportunity to reduce energy consumption and greenhouse gas emissions, develop more sustainable products and enhance their competitiveness.
The good news is that steel is one of the most highly recycled materials in use today. While iron ore is the source of around 70 percent of the metallic raw material inputs to steelmaking globally, the rest is supplied in the form of recycled steel scrap. Steel production from scrap requires around one-eighth of the energy of that produced from iron ore – mainly in the form of electricity, rather than coal for production from iron ore. This benefit results in high recycling rates (around 80-90 percent globally). However, scrap cannot fulfil the sector’s raw material input requirements alone because steel production today is higher than when the products that are currently being recycled were produced. This also means that recycling alone cannot be relied upon to reduce emissions from the sector to the extent needed to meet climate goals.
The idea of significantly reducing the industry’s emissions will require a shift away from current production methods towards new methods of production. The industrial application of already existing technologies could contribute significantly to mitigating climate change. As an example, wider diffusion of the use of more energy-efficient production practices could significantly reduce CO2 emissions. In the longer term breakthrough technologies will be required to reduce the impacts still further. In particular, the adoption of Carbon Capture and Storage technologies would reduce CO2 emissions from the sector drastically. Here is a graphical representation of various technologies for the plants:
According to the IEA’s Iron and Steel Technologies Roadmap published on 20 October 2020, in order to meet global energy and climate goals, emissions from the steel industry must fall by at least 50 percent by 2050, with continuing declines towards zero emissions being pursued thereafter. The IEA Sustainable Development Scenario (SDS) sets out an ambitious pathway to net-zero emissions for the energy system by 2070. It starts with the Sustainable Development Goals (SDG) outcomes and then works back to set out what would be needed to deliver these goals in a realistic and cost-effective way.
In the WEO-2020 report, the SDS also integrates the stimulus packages required for a global sustainable recovery from Covid-19. Investments in the 2021-2023 periods are therefore aligned with the Sustainable Recovery depicted in the World Energy Outlook Special Report.
While more efficient use of materials helps to lower overall levels of demand relative to the baseline projections, the average direct CO2 emission intensity of steel production must decline by 60 percent by 2050, to 0.6 tonnes of CO2 per tonne of crude steel (t CO2/t), relative to today’s levels (1.4 t CO2/t).
In the meanwhile, ArcelorMittal, the world’s largest steelmaking company, aims to reduce CO2 emissions from its European steel production operations by 30 percent by 2030. On a global level, it is working to become carbon neutral by 2050.
The steel giant is testing a number of different approaches geared at making steel in a carbon neutral way. One set of technologies is bundled together under the category ‘Smart Carbon’, which aims to significantly and rapidly reduce the CO2 levels from its blast furnaces in Europe.
1. THE SMART CARBON APPROACH:
A pilot project is underway at a facility in Ghent, Belgium involving the company’s Carbalyst (Steelanol) family of recycled carbon chemicals. It aims to capture carbon off-gases from the blast furnace and convert it into 80 million litres of bio-ethanol a year. This €165m (US$195m) project should be completed in 2022. Plans are underway for a similar project in Fos-sur-Mer in France, aiming to boost CO2 savings through hydrogen injection, supplied by a large-scale electrolyser that will produce the hydrogen locally from renewable electricity.
In the French city of Dunkirk, the company is also building an industrial-scale pilot to capture waste CO2 and waste hydrogen from the steelmaking process and internally convert it into synthetic gas. This gas will replace fossil fuels used in ironmaking. Other pilots around carbon capture and the conversion of waste wood into bio-coal are also under way in Europe.
These technologies include the use of circular carbon in various ways, but also capture CO2 emissions either to store them or to make new high value biomaterials for the chemical industry or cosmetics; and
2. THE DIRECT REDUCED IRON (DRI) APPROACH:
This approach requires green hydrogen which is produced through the electrolysis of water in which the electricity comes from renewable sources. ArcelorMittal is looking to combine green hydrogen with DRI; it is currently the world’s largest DRI producer. The trouble is that green hydrogen is neither easily available nor affordable at the moment.
Unfortunately, at the moment there’s no way they could use hydrogen on a big scale even if the technology works because of the cost of hydrogen. But what they can do is make sure that they are ready.
In Bremen, ArcelorMittal plans to install an electrolyser so that hydrogen can be produced and injected in large volumes into the blast furnace tuyeres. The project will reduce the volumes of coal needed in the iron ore reduction process, cutting CO2 emissions. In Dunkirk, it is developing a hybrid blast furnace process, which uses DRI gas injection technology in the blast furnace shaft as well as gas injection in the blast furnace tuyeres, using plasma technology to create a reducing gas. Eventually it will enable green hydrogen to be injected into the blast furnace as it becomes available.
Moreover, the following two major initiatives will be a great help to accomplish the global targets for the net-zero emissions in the steel industry:
1. SteelZero:
The Climate Group is overseeing a new-business-led initiative called SteelZero which is designed to drive the net-zero transition in the global steel sector.
The Climate Group is an international non-profit organization founded in 2003, with the offices in London, New York, and New Delhi. They have grown their network to include over 300 multinational businesses in 140 markets worldwide. Additionally, for the Under2 Coalition, the Climate Group serves as the Secretariat and the Under2 Coalition is made up of over 220 governments globally, representing more than 1.3 billion people and over 43 percent of the global economy. The Under2 Coalition is a global community of state and regional governments around the world committed to ambitious climate action in line with the Paris Agreement.
The Climate Group is inviting companies around the world to sign up and by signing up to SteelZero, companies commit to procuring, specifying, stocking or producing 100 percent net-zero steel across all operations by 2050 at the latest. As of December 2020, the following companies have signed up: BHC Ltd; Bourne Group; Grosvenor Britain and Ireland; Lendlease; Mace Group; Multiple Construction Europe; Orsted; and WSP UK; and
2. ResponsibleSteel:
A not-for-profit organization, ResponsibleSteel’s mission is to maximise steel’s contribution to a sustainable society. This can only be achieved through cooperation and mutual commitment by companies at all levels of the steel supply chain, representatives of civil society and other stakeholders. ResponsibleSteel provides the forum for this multi-stakeholder approach. They are committed to open dialogue with all the stakeholders and for collaboration with the best equivalent schemes wherever possible to help achieve the mission.
ResponsibleSteel is the industry’s first global multi-stakeholder standard and certification initiative. Welcoming members from every stage of the steel supply chain, they have developed an independent certification standard and programme via a process that aims to align with the ISEAL Codes of Good Practice.
ResponsibleSteel is developing further requirements for the responsible sourcing of input materials and for greenhouse gas (GHG) emissions. Meeting these requirements in addition to the already approved Standard will allow steel sites to not only make claims about the way their site is operated, but also about the steel products they offer. Incentives to meet the additional requirements will come from the market in the form of customer, public policy and green finance specifications, from civil society and peer pressure, or from the wish to distinguish from competition. The additional requirements will serve to identify and reward companies that are committed to creating a responsible steel value chain, and that are minimizing their CO2 emissions.
Kanata, Ontario, Canada 5 January 2021
