Steel 101
A beginners guide to steel decarbonisation
Steel builds the world around us - our buildings, cars and fridges, not to mention planes, trains, and ships. But steel production is currently driving climate change so the need to decarbonise is critical and urgent. So where should we start?
Let’s talk about steel
The world produced nearly two billion tonnes of steel last year. One-thousand-nine-hundred-and-fifty million tonnes to be exact. That’s about 250 kilograms for every single person on the planet. Or enough steel to build a new Eiffel Tower every three minutes! Talk about heavy industry.
What drives this need for steel? Well, it is critical in building the world around us. It is used to build bridges and buildings; planes, cars, ships and trains - not to mention the tracks they run on; our household appliances, including toasters, ovens and washing machines; and our renewable energy systems of the future.
There is no getting away from the fact that we need steel.
But right now, its production is fuelling the climate crisis.
In fact for every tonne of steel produced, 1.8 tonnes of carbon dioxide (CO2) is emitted. In 2020, the global iron and steel industry was responsible for more than 3.1 billion tonnes of CO2 emissions. That makes the steel industry responsible for between 8 per cent to 11 per cent of all human-made greenhouse gas emissions. If the steel industry were a country, its carbon dioxide emissions would rank third in the world, below the US and above India.
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Why is this industry so polluting?
In simplest terms, the reason why steel is so carbon-intensive is down to the process of extracting iron from its ore. Firstly, the process needs heaps of coal. This coal is heated to make coke, an instrumental material in the chemical reactions needed to produce steel. The iron ore, coke and limescale are then heated at temperatures over 1000C to extract molten iron, which is then turned into what we know as steel. The byproduct of this chemical reaction is CO2.
But it is not just CO2. This process also produces other harmful and polluting emissions, including carbon monoxide, nitrous oxide and sulfur dioxide.
Want to know more about how steel is made?
So, we now know how steel is made, and why it is so intensive, but where is all this steel being produced?
China
China is 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. Scrap steel is iron and steel collected as a byproduct of manufacturing and end of life products like building materials, vehicles, domestic appliances, machines etc (If you want to learn more about scrap steel have a read here). China invests heavily in secondary steelmaking capacity, which could account for almost 40% of domestic production by 2050.
India
India is the second largest producer, making 6.1% of global crude steel production. And its demand for steel is set to grow. It is expected that India’s steel production will go 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 the 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
Russia is 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 sanctions. Russia which has a large proportion of coal-based blast furnaces that will reach the end of their lifetimes in the next decade, meaning it is well primed to replace these with green DRI.
South Korea
South Korea is 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.
How can it be decarbonised?
Around the world, demand for steel is growing. We’ve seen a ten-fold increase in production since 1950, and some estimates say demand could double by 2050.
This growth is incompatible with global efforts to limit global warming to 1.5°C, as set out under the goals of the global climate agreement.
Steel has some heavy lifting to do.
In fact, emissions from steel and other heavy industries will have to fall by 93 per cent by 2050 to keep global warming under 1.5°C.
The good news is, we’re seeing real breakthroughs in tech for greener steel production. Seven out of the ten biggest steel-producing countries have initiated at least one green steel project, according to the Green Steel Tracker.
We need a suite of solutions to decarbonise steel
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Recycling
The great news is: steel is 100% recyclable. With an electric arc furnace (EAF) producers are able to use exclusively recycled steel. The blast furnace-basic oxygen furnace (BF-BOF) route can use up to 30% recycled steel. This means the industry needs to improve how it collects end-of-life steel and improve recycling to increase steel reuse and scrap recovery.
The industry should also focus on efficiency in raw materials by decreasing the amount of crude steel needed per product. This can be done by improving processing and manufacturing, and using less steel in the final product. An example of this, is changes to building codes to encourage architects and construction companies to design and construct buildings that use less steel.
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Renewable energy + hydrogen = green steel
The combination of renewable energy and hydrogen offers a clean option for producing green steel via direct reduced iron (DRI) processes and in doing so could reduce CO2 emissions to 50 kilograms or less per tonne of steel — a 97% reduction.
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Use less
Small but significant changes to building codes and education for architects, engineers and contractors could reduce demand for steel by 24%, according to the International Energy Agency.
Alternative materials with a smaller carbon footprint for a given use, such as aluminium, might replace steel in some products, including cars.
So, what’s stopping us?
Money. Massive amounts of capital have been sunk into existing manufacturing methods. And it has been very profitable - the industry turned over $2.5 trillion in 2017. New plants require billions; they last about 40 years, with 25-year investment cycles.
“What we are talking about is a capital-intensive, risk-averse industry where disruption is extremely rare.”
The technology is not quite ready and the existing technology is well established and have long time frames:
“The blast furnace is one of the most energy-efficient machines that has ever been invented. We’ve spent well over a century optimizing its performance. So people aren’t going to change without a real good reason.”
Growing demand makes it hard for low-carbon technologies to catch up and a competitive wholesale market means steelmakers are concerned that early adoption of low carbon technologies would face a green premium that slower-moving rivals would avoid.
