Frequently Asked Questions on Steel Decarbonisation and Green Steel

Steel decarbonisation is the process of reducing and removing net greenhouse gases (GHGs) that are produced in steelmaking by:

• using zero or low-emission energy sources in steelmaking;

• increasing energy efficiency and circularity; and

• by carbon capture use and sequestration (CCUS).

Steel decarbonisation matters due to its huge contribution to climate change – steel is currently estimated to account for 7-9% of global emissions. And these emissions continue to increase. Global Energy Monitor calculations show that steel sector CO2 emissions rose from 3.6 Gt in 2019, to 3.7 Gt in 2020, and 3.8 Gt in 2021. To align with the IEA’s NetZero by 2050 scenario , direct CO2 emissions from the global iron and steel industry need to be lowered to 1.8 Gt CO2 by 2030 and 0.2 Gt CO2 by 2050.

Steel is made by (in a very basic explanation) combining carbon and iron at extremely high temperatures, which requires A LOT of energy. Currently, the cheapest way to generate that energy and heat is by using and burning metallurgical coal. According to the World Steel Association’s 2022 figure, approximately 71% of global crude steel production uses this coal-based process, in what is known as blast furnace-basic oxygen furnace (BF-BOF) production.

It takes 770kg of metallurgical coal to produce one tonne of steel (BHP), and producing one tonne of steel through the BF-BOF steelmaking route emits around 2.2 tonnes of CO2 (IEA). That’s the equivalent of two people taking a return flight from Paris to New York for every tonne of steel!

This coal-based steelmaking process makes the steel industry the biggest industrial consumer of coal and a major emitter of greenhouse gases. In 2020, the IEA reported that the iron and steel sector directly accounted for 2.6 gigatonnes of carbon dioxide (Gt CO2) emissions annually, 7% of the total global emissions from the energy sector.

There are less-emissions intense ways to make steel (which are described in other answers, but those processes require expensive new and/or retrofitted technologies, which are cost-prohibitive in many geographies. They are also not deployed around the world due to varying availability of renewable energy and energy resources, funding, location, policy support or lack thereof, and other structural inequities that delay industrial transitions in developing economies.

China: by far the biggest steel producer. It makes more than half the world’s steel (1,032 million tonnes compared to India’s 118 million!). Chinese authorities have said that its steel industry should reach peak carbon emissions before 2030.

How is it doing this? In part from reductions in domestic demand but also by leveraging an expanding domestic supply of scrap steel. China invests heavily in secondary steelmaking capacity, which could account for almost 40% of domestic production by 2050.

India: the second largest producer, making 6.1% of global crude steel. And its demand for steel is projected to grow from 120 million tonnes today to 445 million tonnes by 2050. Such growth would more than offset the expected decline in China, Europe, Japan, and the Republic of Korea.

Japan: As an auto and shipbuilding powerhouse, Japan is the third largest producer with 96.3 million tonnes produced in 2021. In fact, the iron and steel industry accounts for approximately 15% of Japanese greenhouse gas emissions.

United States: The fourth largest producer with 86.0 million tons in 2021, steel is a big part of the US economy. In 2017 it accounted for $520 billion in economic output and nearly two million jobs.

(Fun fact: Did you know the US even has a football team named after steel?)

Russia: the fifth largest producer and the third largest exporter (after China and Japan), exporting 32.6 million tons in 2021. However this will likely be affected by the conflict in Ukraine and related sanctions. Russia has a large proportion of coal-based blast furnaces that will reach the end of their lifetimes in the next decade, which is an opportunity to replace these with green hydrogen DRI.

South Korea: the world’s sixth largest steel producer, making 70.6 million tons in 2021. The Korean steel industry emits about 101 million tons of CO2 per year, accounting for around 13% of the country’s total CO2 emissions. Most of this comes from the top two emitters, POSCO and Hyundai Steel, who are responsible for about 92 percent of the steel sector’s total emissions.

Essentially, green steel is the manufacturing of steel without the use of fossil fuels. However, there are several proposed definitions and standards for green steel which makes it difficult to have a shared definition! “Green steel” can refer to low embodied carbon, near zero embodied carbon, net zero embodied carbon, 100 percent recycled content, ethically sourced, or responsible steel.

There has been a notable increase in the number of standards, protocols, initiatives, and government policies focusing on either the producers of steel, the demand side of steel procurement, the finance and funding side or some combination thereof For a great overview of the current “green steel” standards, protocols, initiatives, and policies and their complexities, it's worth checking out Global Efficiency Intelligence’s What is Green Steel? They include:

• Responsible Steel Standards & Certification

• GHG Protocol for Steel

• Climate Bonds Initiative’s Criteria for Climate Bonds for the Steel Industry

• World Steel Association’s Protocols

• ISO 14067:2018 – Carbon Footprint of Products

• ISO 14404 Series – Plant Level CO2 Emissions Intensity From Iron and Steel Production

• American Iron and Steel Institute’s Steel Production Greenhouse Gas Emissions Calculation Methodology Guidelines

Th Green Steel Hub does not endorse any definition or standard for “green steel,” but rather helps readers understand the processes and technologies necessary to lower emissions from producing steel.

Unfortunately, blast furnace (BF-BOF) production cannot easily swap coal for another energy source due to the high amount of heat required, and the need to use coke (made from metallurgical coal) in the steelmaking process. BF-BOF uses metallurgical coal as the heat source and the “reductant” (the thing that takes oxygen out of iron ore) in the process of making iron. As the coal is heated, and then burned as coke, it releases CO2 and other pollutants. This is the fundamental process for making steel in BF-BOF production, so even using zero carbon electricity where it is possible in the BF-BOF process only reduces emissions by 7.4%, according to Global Energy Monitor.

CO2 from BF-BOF can be captured and stored (a process known as CCUS) that is discussed below, but it is not yet a proven technology at scale for steelmaking.

Currently, there are a few technological pathways for steel production that result in lower emissions. Without getting too into the technical details, they include a combination of:

• Scrap-based Electric Arc Furnaces (EAF) powered by renewable energy

• Hydrogen Direct Reduced Iron (DRI) in EAF and Smelter-BOF

• BF-BOF + Carbon Capture and Storage (CCUS)

• Direct electrolysis of iron ore (Molten Oxide Electrolysis and Electrowinning)

Electric Arc Furnaces (EAF) are a newer steelmaking technology that do not use coal for heating or making coke. They can be powered by 100% renewable energy, which further lowers emissions from steel production.

EAFs can be “fed” by scrap steel, which means that existing steel can be melted in the EAF and reused in different steel products. In this way, steel is almost 100% recyclable, and using scrap in steelmaking uses less energy that making primary (new) steel. This means the industry needs to improve how it collects end-of-life steel and improve steel recycling to increase circularity in steel production and use.

It is also possible to feed EAFs with direct-reduced iron (DRI) (remember, steel is made from reduced iron and carbon). DRI production turns iron ore into iron using a reducing gas. Using green hydrogen as the gas in the DRI process, as opposed to natural gas, could reduce CO2 emissions to 50 kilograms or less per tonne of steel — a 97% reduction.

DRI can also be retrofitted in the BF-BOF pathway, known as DRI-Smelter-BOF. DRI is produced by green hydrogen, melted down in a smelter, and then added to a traditional BOF to produce steel. For a quick video explanation of this process: https://www.youtube.com/watch?v=eEY0I_ORnDE

Recycled steel can also be used in BF-BOF furnaces, but in lower volumes that EAFs. The current best option for lowering emissions from BF-BOF steelmaking (which uses coal as the main fuel source) is capturing carbon emissions and storing them underground (CCUS). Not exactly carbon friendly!

Finally, a new “electro-chemical” process that is ready for commercial use relies on renewable energy and iron ore to reduce iron through “molten oxide electrolysis.” It’s complicated, but a chemical solution containing iron ore is heated up via renewable energy, which reduces the iron directly into a liquid necessary to make steel. If this sounds fascinating, we invite you to visit Boston Metal, who invented the process: https://www.bostonmetal.com/green-steel-solution/

See here if you’re wondering what the different colours of hydrogen mean.

We need to use less steel. Small but significant changes to building codes and education for architects, engineers and contractors could reduce demand for steel by 24%, according to the IEA. This helpful summary suggests that alternative materials with a smaller lifecycle carbon footprint for a given use, could replace steel in some products, including cars.

However, the IEA reminds us that while more efficient use of energy and materials can help, it will not be sufficient: “New technology must be deployed at a blistering pace, with new infrastructure to boost the industrial transition.”

Essentially, green steel is the manufacturing of steel without the use of fossil fuels. There are a few newer technological processes in steelmaking that use no or lower amounts of fossil fuels. They include a combination of:

• Scrap-based Electric Arc Furnaces (EAF) powered by renewable energy

• Hydrogen Direct Reduced Iron (DRI) in EAF and Smelter-BOF

• BF-BOF + Carbon Capture and Storage (CCUS)

• Direct electrolysis of iron ore (Molten Oxide Electrolysis and Electrowinning)

Electric Arc Furnaces (EAF) are a newer steelmaking technology that do not use coal for heating or making coke. They can be powered by 100% renewable energy, which further lowers emissions from steel production.

EAFs can be “fed” by scrap steel, which means that existing steel can be melted in the EAF and reused in different steel products. In this way, steel is almost 100% recyclable, and using scrap in steelmaking uses less energy that making primary (new) steel. This means the industry needs to improve how it collects end-of-life steel and improve steel recycling to increase circularity in steel production and use.

It is also possible to feed EAFs with direct-reduced iron (DRI) (remember, steel is made from reduced iron and carbon). DRI production turns iron ore into iron using a reducing gas. Using green hydrogen as the gas in the DRI process, as opposed to natural gas, could reduce CO2 emissions to 50 kilograms or less per tonne of steel — a 97% reduction.

DRI can also be retrofitted in the BF-BOF pathway, known as DRI-Smelter-BOF. DRI is produced by green hydrogen, melted down in a smelter, and then added to a traditional BOF to produce steel. For a quick video explanation of this process: https://www.youtube.com/watch?v=eEY0I_ORnDE

Recycled steel can also be used in BF-BOF furnaces, but in lower volumes that EAFs. The current best option for lowering emissions from BF-BOF steelmaking (which uses coal as the main fuel source) is capturing carbon emissions and storing them underground (CCUS). Not exactly carbon friendly!

Finally, a new “electro-chemical” process that is ready for commercial use relies on renewable energy and iron ore to reduce iron through “molten oxide electrolysis.” It’s complicated, but a chemical solution containing iron ore is heated up via renewable energy, which reduces the iron directly into a liquid necessary to make steel. If this sounds fascinating, we invite you to visit Boston Metal, who invented the process: https://www.bostonmetal.com/green-steel-solution/

Scrap steel is iron and steel broken down and collected as a by-product of manufacturing, and from products at the end of their uses, like building materials, vehicles, domestic appliances, machines, etc. (More info on steel scrap here). Steel is, in fact, the most recycled material in the world. In 2021, global steel industry used an estimated 680 million tonnes (Mt) of recycled steel to produce 1.95 billion tonnes of crude steel (World Steel Association). As discussed in the “Newer technologies” section , electric arc furnaces (EAFs) that use scrap as a feedstock is a well-established process in steelmaking to lower emissions. It remains more expensive than BF-BOF because of the upfront costs of constructing new EAFs and, potentially, the energy source for the electricity that powers the furnace.

There are a number of organisations working on steel decarbonisation across the globe, including:

Those providing technology and policy pathways:

• Mission Possible Partnership's Net Zero Steel Initiative: aims to decarbonize the entire value chain of seven of the highest-emitting industries in this decade. It brings together CEOs from carbon-intensive industries, financiers and customers to agree on ambitious decarbonization roadmaps.

• Net Zero Industry: demonstrates that a decarbonization pathway for steel by 2050 is possible globally using technologies that are currently commercial, near-commercial and at the advanced pilot stage.

• International Energy Agency’s Iron and Steel Roadmap: explores the technologies and strategies necessary for the iron and steel sector to pursue a pathway compatible with the IEA’s broader vision of a more sustainable energy sector.

Those setting standards:

• Responsible Steel: a global not-for-profit multistakeholder standard and certification initiative.

• Science Based Targets initiative (SBTi) on Steel: is developing science-based target setting methodologies, tools and guidance for steel companies and other stakeholders.

Those monitoring and reporting on transition progress:

• Global Steel Plant Tracker: produced by Global Energy Monitor, provides information on global crude steel production plants, and includes information on every plant currently operating at a capacity of one million tonnes per year or more of crude steel.

• Green Steel Tracker: aims to support decision makers in policy and industry, academia as well as civil society, by tracking public announcements of low-carbon investments in the steel industry and presenting them transparently in one place.

• Global Steel Transformation Tracker: a digital tool that measures progress in key indicators of the global steel transformation.

Those creating demand for green steel:

• SteelZero is a global initiative that brings together leading organisations to speed up the transition to a net zero steel industry. Members make a public commitment to buy and use 50% low emission steel by 2030, setting a clear pathway to using 100% net zero steel by 2050.

• First Movers Coalition: members commit to purchase near zero-emissions steel.

• Clean Energy Ministerial Industrial Deep Decarbonisation Initiative (IDDI): a global coalition of governments and private organisations who are working to stimulate demand for low carbon industrial materials, including steel.

Those helping to align finance with the transition:

• Climate Action 100+ for Steel Initiative: an investor-led engagement initiative that strives to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change with a workstream on steel.

• RMI’s Center for Climate Aligned Finance Initiative Sustainable Steel Principles: a set of commitments to adopt a common measurement and disclosure framework designed for banks to support the steel industry in forging a pathway to net-zero carbon emissions.

• Climate Policy Initiative’s Financing Steel Decarbonization combines technical assistance, low-cost patient capital, and implementation stage support to prepare, invest in, and de-risk decarbonization technology projects for low-carbon steel production, while supporting the development of the wider industrial ecosystem.

Green public procurement (GPP) is a policy instrument that governments use to buy goods with a reduced environmental impact throughout their lifecycle relative to similar goods that provide the same function (GEI). GPP adoption is increasing around the world as national governments, sub-national governments, and multilateral entities develop policies to reduce their carbon footprints and create new low-carbon markets.

According to the Mission Possible Partnership (MPP), procurement activities of national, state and local governments are directly or indirectly responsible for 15% of global greenhouse gas (GHG) emissions. Governments that build environmental standards into public procurement contracts send strong market signals to companies that rely on governments for business. MPP outlines a ten-step framework including creating transparency in baselines and targets, defining product and supplier standards and engaging suppliers, creating buyer groups and aligning across agencies. The impact of such a framework would be considerable. Recent GEI research indicates that similar GPP measures could result in an annual emissions reduction of 8.3, 2.3, and 1.4 Mt CO2 can be achieved directly from public procurement of steel in India, Japan, and South Korea, respectively.

• Clean Energy Ministerial Industrial Deep Decarbonisation Initiative (IDDI): a global coalition of public and private organisations who are working to stimulate demand for low carbon industrial materials, including steel.

• Science Based Targets initiative (SBTi) on Steel: is developing science-based target setting methodologies, tools and guidance for steel companies and other stakeholders.

• First Movers Coalition: members commit to purchase near zero-emissions steel.

• Mission Possible Partnership's Net Zero Steel Initiative: aims to decarbonize the entire value chain of seven of the highest-emitting industries in this decade. It brings together CEOs from carbon-intensive industries, financiers and customers to agree on ambitious decarbonization roadmaps.

• SteelZero is a global initiative that brings together leading organisations to speed up the transition to a net zero steel industry. Members make a public commitment to buy and use 50% low emission steel by 2030, setting a clear pathway to using 100% net zero steel by 2050.

• Responsible Steel: a global not-for-profit multistakeholder standard and certification initiative for steel production and procurement, covering emissions, pollution, responsible sourcing, human rights, labour standards, and more.

• Climate Action 100+ for Steel Initiative: an investor-led engagement initiative that strives to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change with a workstream on steel.

• Center for Climate Aligned Finance Initiative – Sustainable Steel Principles: a set of commitments to adopt a common measurement and disclosure framework designed for banks to support the steel industry in forging a pathway to net-zero carbon emissions.

Science Based Targets initiative (SBTi) on Steel is developing science-based target setting methodologies, tools and guidance for steel companies and other stakeholders. The Steel Science-Based Target Setting Guidance for 1.5°C which was released in draft form in November 2022, and after expert consultation and input, the targets will be launched in September 2023.

There has been a notable increase in the number of standards, protocols, initiatives, and government policies focusing on either the producers of steel, the demand side of steel procurement, the finance and funding side or some combination thereof. In What is Green Steel? GEI assessed seven different standards and protocols:

• Responsible Steel Standards & Certification

• GHG Protocol for Steel

• Climate Bonds Initiative’s Criteria for Climate Bonds for the Steel Industry

• World Steel Association’s Protocols

• ISO 14067:2018 – Carbon Footprint of Products

• ISO 14404 Series – Plant Level CO2 Emissions Intensity From Iron and Steel Production

• American Iron and Steel Institute’s Steel Production Greenhouse Gas Emissions Calculation Methodology Guidelines