Decarbonizing the steel industry

Hard to abate industries are critical to human development but are heavily polluting. Their fossil fuel and energy intensity in their manufacturing processes and the high capital required to change core processes makes them hard to decarbonize. The steel industry is a prime example of a hard-to-abate industry, which accounts for 7–9% of global emissions annually.

Concepts like ‘green steel’ and recycled steel have entered the mainstream discourse on decarbonisation. Since the steel industry contributes to nearly 2% of India’s GDP, it is imperative that India is an early mover in decarbonizing steel.

Green steel

Green steel is produced using low or zero emission methods by eliminating the use of fossil fuels — mainly coal — in the traditional blast furnace and basic oxygen furnace methods (BF-BOF). The final product is the same as traditionally produced steel, but with a much lower carbon footprint. While green steel lowers the emissions and energy use in steel manufacture, it still has environmental impacts at scope 3 level through mining of iron ore.

Some innovations in green steel include:

1. Hydrogen-Based Direct Reduced Iron (H-DRI): uses green hydrogen instead of coke (coal) to reduce iron ore
2. Electrochemical Iron Reduction: Uses electricity in water-based or solid-state electrochemical cells to directly extract iron from ore, eliminating the need for high temperatures or fossil fuels
3. Low-grade Iron Ore Refinement: Upgrades low-quality iron ores to make them compatible with hydrogen-based/electric steelmaking through bleaching, thermal treatments, and green solvents.
4. Electric Arc Furnaces and Scrap Optimisation: Uses electricity to melt scrap and improves the process through charge mix optimisation, AI-powered scrap control, and other controls to improve efficiency and scale.
5. Advanced Slag Engineering: Involves altering the slag chemistry during steelmaking to reduce emissions, enhance material recovery, and enable carbon sequestration in the byproducts.
6. Plasma Reduction of Iron Ore: Uses high-energy plasma stream from reactors to reduce iron ore without coke or hydrogen, allowing carbon-free steelmaking.

Recycled steel

On the other hand, recycled steel involves melting pre- and post-consumer scrap steel in an electric arc furnace. This process improves the circularity of our economy, because infrastructure to recycle steel lowers the demand for new steel. Steel is infinitely recyclable without a degradation in quality, so this type of infrastructure is sustainable and has high returns. Recycled steel has a 74% lower energy and 60%-90% level of emissions than virgin steel made directly from iron ore.

Companies and startups in green steel

1. SSAB — HYBRIT Project: SSAB’s HYBRIT Project is a joint venture between LKAB and Vattenfall in Sweden. They were the first to produce fossil-free steel in 2021 and have plans to go commercial by 2026.

2. Stegra (H2 Green Steel): H2 Green Steel are building a large green steel plant in Boden, Sweden, with aims to produce 5 million tons/year of green steel by 2030.

3. ArcelorMittal Nippon Steel: AMNS has invested in H-DRI and EAF transition in Europe and Canada and are committed to net-zero emissions by 2050.

4. Thyssenkrupp: Thyssenkrupp Steel is piloting hydrogen integration in blast furnaces and working on direct hydrogen-based methods.

5. Fortescue: Through Fortescue Future Industries (FFI) in Australia, investing in green hydrogen and green iron production.

6. Hygenco: This Indian green steel plant eliminates the use of ammonia in the stainless steelmaking process and is India’s first commercial scale green hydrogen plant.

Indian steel companies with plans to make green steel include TATA Steel, ⁠Essar steel, ⁠Jindal steel,⁠ ⁠JSW, and SAIL.

How are companies decarbonizing?

Across the steel industry, companies are seeing the merits of decarbonization. From eliminating coke (coal) to ammonia in the manufacturing process, companies are working on alternative processes to minimize carbon and energy footprints. Most large players in the steel industry have environmental commitments to adhere to ESG practices and make their operations more sustainable. However, decarbonization is not just an ESG friendly strategy but also a financially rewarding transition.

Investing in systems change across the steel value chain helps businesses save money on raw materials, energy, and manufacturing at the early stages of the product life cycle. These interventions combined with the recycling of steel scrap can create critical circular economy infrastructure that significantly reduces the demand for mining of new metals and coal to process steel.

Altering industrial processes in hard-to-abate industries are extremely challenging due to the scale at which these industries operate as well as the capital investments required. Therefore, steel giants are partnering with knowledge and technology partners to enable their transition to newer, cleaner tech. Nevertheless, navigating regulatory barriers is impeding progress in this industry. The regulatory landscape is evolving rapidly, and companies and policymakers need to collaborate to speed up commercial production of green steel.

Decarbonising the steel industry

The steel industry helps supply a good that lays the foundation for all our engineering and infrastructure needs, and thus it is impossible to eliminate steel from the supply chain. To decarbonize steel, we must ensure lower emissions of virgin steel as well as circularity in the industry. Table 1 compares traditional virgin, green virgin, and recycled steel across kety parameters.

Table 1: Comparison of different types of steel manufacturing processes