The steel industry, a major emitter of CO₂, struggles to meet climate goals. While the EU leads with policies for greener steel, globally, the sector falls short. High-emission methods still dominate, and alternatives like hydrogen-fed iron reduction are costly and not yet commercially viable, outlines a report by Wood Mackenzie
The steel industry has long been a cornerstone of industrial society, but it's also a leading source of CO₂ emissions, making up about 8% of global emissions. Traditional steel-making processes are largely to blame, with the blast furnace-basic oxygen furnace method accounting for more than 71% of global production. This method emits an alarming 2 metric tons of CO₂ for every metric ton of steel produced.
Electric arc furnaces (EAF), which melt down scrap steel, offer a slightly greener alternative, producing about 0.5 metric tons of CO₂ per metric ton of steel. However, the limited availability of scrap metal restricts the widespread adoption of this method. This has led to growing interest in hydrogen-fed iron reduction as a future solution. Yet this technology is not only expensive but also faces material availability issues.
According to the International Energy Agency (IEA), the steel sector is off track to achieve net-zero emissions by 2050. Most new projects still heavily rely on high-emission production methods. Europe seems to be the exception, with aggressive policies and incentives to cut down CO₂ emissions. The cost of ignoring these climate directives is steep, with non-compliance costs potentially soaring to $168 per metric ton of steel.
State initiatives in Europe are making a difference. Governments have pledged over $9.5 billion to help decarbonize steel production, benefiting major producers like ArcelorMittal. EU policies have also sparked demand for greener steel, particularly from automakers seeking to reduce their carbon footprint throughout their supply chain.
However, while premiums are being offered for greener steel, much of it is still produced using the traditional, carbon-intensive methods. Some exceptions exist where electric arc furnaces are used, but these are in the minority.
Companies like H2 Green Steel are promising to significantly cut emissions by 2030, planning to use electric arc furnaces powered by renewable energy. However, these are plans for the future, and in the present, the industry remains largely mired in unsustainable practices.
The steel industry has a long way to go to meet global climate goals. While Europe is making strides with strong policies and financial incentives, the sector worldwide is still heavily reliant on high-emission methods. Without significant technological breakthroughs and global policy alignment, the steel industry's path to sustainability remains uncertain.