Tangible progress on “green” steel production shows that we already have the tools needed to decarbonise the most fossil fuel-reliant sectors, The Carbon Trust says.
Steel manufacturing accounts for roughly 9% of global emissions and is considered “hard to abate” partly because of the extremely high temperatures required.
However, the era of near-zero emissions steel is arriving.
In Europe, Swedish company H2 Green Steel has started building a massive complex that will produce green hydrogen, iron, and steel. The hydrogen will be used to extract iron from its ore. That iron will then be fed into an electric arc furnace to make low-carbon steel.
This new production method, which has never been deployed at such scale before, reduces carbon dioxide emissions by 95% relative to conventional processes that rely on coke-fired blast furnaces, according to H2 Green Steel.
“A supportive policy environment and evidencing demand helped get it off the ground,” The Carbon Trust says of the flagship project in Boden, northern Sweden.
The advisory firm cites the EU’s lofty carbon price, which is incentivising companies to move away from coal-derived steel, and the bloc’s Carbon Border Adjustment Mechanism, which is disincentivising customers from simply buying cheaper, higher-carbon steel from abroad.
Alongside this policy support, H2 Green Steel has signed off-take agreements with the likes of Mercedes-Benz, which is willing to pay a premium for low-carbon steel as the car-maker works to meet its own climate commitments.
That has helped H2 Green Steel secure close to €6.5 billion in funding, including a €250 million grant from the EU Innovation Fund — the EU’s answer to America’s Inflation Reduction Act (IRA).
The IRA, meanwhile, is also helping to kick-start the low-carbon steel sector.
In late March, the US department of energy announced $6 billion in funding for 33 industrial decarbonisation projects, partly funded by the landmark climate package.
That includes up to $500 million each for green steel projects by Swedish-American group SSAB and the Cleveland-Cliffs Steel Corporation.
Cleveland-Cliffs says its Ohio project will reduce greenhouse gas emissions by 1 million tonnes a year as it replaces one of its blast furnaces.
Meanwhile, “clean” iron company Electra recently commissioned a pilot plant in Boulder, Colorado.
The plant converts iron ore into iron metal through an electrochemical process. Unlike traditional iron-reduction methods, it doesn’t require much heat, and is powered by renewables. The company then sells its emissions-free iron to steel-makers.
