Irons in the fire: Rethinking the steel industry for a low-emissions world

Over the weekend, I had the honour to speak on the COP26 program for the European Union side events session about the global steel transition.

Steel remains a material critical to established and emerging global economies. It will continue to be essential for construction as we reimagine our cities for a sustainable future, and as a component of low-emissions technologies. International Energy Agency figures show that the iron and steel industries account for almost 7% of total world CO2 emissions.

The pressure for the industry to decarbonize is on, from governments seeking to reduce the impacts of high emissions materials on their zero-carbon ambitions, from investors seeking to decarbonize their portfolios, and from companies up and down the value chain seeking to be competitive in a carbon-accounting marketplace.

The automotive industry, for example, has become a significant driver of the demand for green steel. Consumers are clamoring for cost-competitive electric vehicles, and manufacturers such as Volkswagen and Toyota aim to eliminate carbon emissions from their entire value chain, including from their steel suppliers.

We know that the first movers in any industrial transformation can quickly establish a competitive advantage that positions themselves to grow demand and shape future developments.

As a partner and supplier to industrial sectors —?the mining and steel industries among them — and as a company with ambitious emissions reductions targets, ABB has made a commitment to achieve carbon neutrality across our own operations by 2030. We have also pledged to support our customers to reduce their annual CO2 emissions by at least 100 megatonnes per year, which is equivalent to removing 30 million internal-combustion-engine cars from the roads each year.

Technological alliances will more quickly forge lower-carbon solutions

Only by partnering across industries and borders can the world bring industrial emissions down.

In steelmaking, we are applying the latest technologies to decarbonize the integrated value chain, starting with sustainable mining of iron ore. The mine of the future is carbon-dioxide-free, digitalized and autonomous. LKAB has initiated an industrial development project together with ABB, Epiroc, Combitech and Sandvik to set a new world standard for sustainable mining at great depth. We are deploying electrification and automation to mining processes and sharing data that will ultimately reduce CO2 emissions to zero, while at the same time increasing productivity by up to 50%.

Decarbonizing primary steelmaking, by which some 70% of today’s steel supply is produced, is the next priority for decarbonization, due to its high energy demands and emissions intensity. We expect green hydrogen to eventually replace a significant proportion of current coal and natural gas consumption by steelmakers, and carbon capture to further reduce emissions, but immediate emissions mitigation can be achieved using digital technologies. These include the new ABB Ability? Smart Melt Shop.

This industry-first smart-factory solution lets steelmakers realize their vision of a connected, autonomous and efficient melt shop. By integrating ABB Ability? Smart Melt Shop into its operations, global steelmaker JSW Dolvi has achieved energy efficiencies and productivity equating to a USD 2 million increase in the company’s EBITDA profit per annum.

Steel recovered from many sources such as old infrastructure and building demolition sites, scuttled ships, railway tracks, cars and scrap from the steelmaking process itself or iron smelted with natural gas and hydrogen, is used for the other 30% of world steel production, using electric arc furnaces (EAFs) for which energy is still largely supplied by fossil fuels. Steel is one of the most highly recycled materials in the world, but with around 85% already recycled there remains a gap to meet total world demand, which is projected to grow year on year into the future.

ABB is working to increase the viability of EAF-produced steel and grow the use of this technology through two means. Firstly, proven and established ABB ArcSave technology is already used by global steelmakers such as POSCO and Outokumpu because it improves EAF productivity by 5-7%, enhances energy efficiency by 3-5%, and lowers EAF CO2 emissions by 4%.

Second, again in collaboration with LKAB, ABB is involved with the Swedish HYBRIT project, which aims to further develop and scale breakthrough technology for producing fossil-fuel-free steel.

In June this year, the HYBRIT consortium of LKAB, steelmaker SSAB and energy company Vattenfall showcased the world’s first hydrogen-reduced sponge iron, which has since been used to make the first steel. Sponge iron is expected to provide an alternative to scrap steel as the main raw material for EAF steel production.

Fully implemented at LKAB, the HYBRIT technology has the potential to reduce carbon emissions among the group’s global customers by some 35 million tonnes —?which is equivalent to two-thirds of Sweden’s total emissions.

The steel-buyer’s perspective

An important piece of the emerging green-steel ecosystem is verification. No system currently exists to identify the shade of green (or red) of any iron or steel product. This prompted ABB to become involved in the development of TraceMet, a pilot certification system that will verify the origin, carbon footprint and recycled content for metals and minerals throughout their value chains.

TraceMet will recognize the progressive efforts of an essential industry to decarbonize and build trust that its investments have delivered results. Combining certification with technologies that not only reduce emissions, but increase productivity, will help incentivize the urgent need for steelmakers to decarbonize. This is an evolution essential to the industry’s social license to operate and to its future economic competitiveness.

We must all play our part, and we welcome open discussion from mining companies, steelmakers, original equipment manufacturers and technology innovators on the essential and urgent path towards decarbonization.

To watch the recording of the COP26 panel session: “Towards climate neutral industrial value chains – Europe as frontrunner in the global steel transition”, click here.

To access all recordings from the COP26 European Union Side Events, click here.