Revolutionizing the Steel Industry: Forging a Sustainable Path to Green Steel Dominance

Overview

Green steel is made by forging steel without using fossil fuels. One way to reduce the carbon footprint of the steel sector is to use green hydrogen. However, the definition or the scope of green steel varies from one region to another depending upon the technology that is being used to produce it. In the future, green steel is anticipated to contribute significantly to attaining various nations' sustainable development goals by lowering carbon emissions. Green hydrogen, which is produced without the use of fossil fuels from renewable sources, is used to make green steel. The need for sustainable goods among consumers and manufacturers and growing initiatives by governments of leading nations will help in the growth of the green steel industry.

Within steelmaking processes, 70% of the steel is manufactured using a traditional process that includes emission-incentive coal. Moreover, a total of around 20% of the global coal use is done for steelmaking purposes only. The total demand for steel will rise by 20-40% by 2050, with rapid developments in construction and industrial sectors.

Carbon emissions can be expected to be greatly reduced or even be eliminated by using green steel production techniques. This is crucial in the fight against climate change given that the steel industry is one of the biggest contributors to greenhouse gas emissions on a global scale. Green steel frequently gets its energy demands met by renewable energy sources like wind, solar, or hydropower. As a result, there is less of a dependency on fossil fuels, and the carbon footprint of steel production is further lowered.

Evolution of Steelmaking: Difference between Traditional, Recycled, and Green Steelmaking

Industry Challenges and Opportunities

High costs, limited technical availability, and the necessity for a dependable supply chain of hydrogen produced by 100% renewable sources are obstacles to the broad adoption of green steel. With a carbon price of about $70-$100/tCO2, the cost of hydrogen-based direct reduction and molten oxide electrolysis is currently 20%–30% higher than that of conventional steel manufacture.

The world economy consumes over 1,700 million tons of steel per year, and for the steel industry to follow a 1.5°C pathway, a 100-fold step-change in the pace of transition is necessary. This makes the scale of change alarming. Low-carbon processes, however, are beginning to make financial sense as the price of renewable energy continues to fall and new technologies reach the commercial pilot stage.

The green steel industry now has new potential for innovation and expansion thanks to the rising demand for sustainable steel manufacturing. Governments all across the world are promoting sustainable steel manufacturing by providing incentives and support. For instance, the European Union's Green Deal allocates a sizable amount of cash for green steel programs and intends to make the continent carbon neutral by 2050. Demand for green steel is also being supported by growing awareness of the negative environmental effects of conventional steel production among the consumers of steel.

In order to reduce their carbon footprint, steel producers are investing in new technologies and procedures, which may result in a large increase in the market for green steel. Overall, the move toward environmentally friendly steel production offers the sector a tremendous opportunity for innovation and expansion.

Growth Opportunity

Rapid decarbonization will require both supply-push and demand-pull policy initiatives. Although the EU offers significant support through initiatives like H2020 and the forthcoming Innovation Fund, the policy-driven development of markets for green materials has not yet drawn much attention. The significant cost reductions in wind and solar power were the result of considerable policy intervention through the implementation of renewable portfolio standards and technology-specific feed-in tariffs on top of the carbon price. The development of green markets is required to hasten the transition away from steel considering the apparent success of demand-pull policies in renewable energy sources and the abundant evidence for the significance of a demand pull from innovation literature. It is challenging to compare the performance of demand-pull policies for renewable electricity with the sale of steel, which is a commodity with many different characteristics and variances. To reduce investment risk and establish a first mover steel market, it is important to thoroughly analyze the point of involvement in the value chain of steel products.

It becomes clear that there are already a number of demand-pull policy instruments by drawing inspiration from other industries. Early voluntary policies like voluntary labels or certificates can lay the foundation for later, more complex plans like awarding feed-in premiums or conducting project-based tenders. The usage of green steel in infrastructure and buildings may expand because of green public procurement targets based on the presented carbon footprint trajectory. To control the maximum permitted footprint of vehicles or buildings, standards could be used. A differentiation between green and non-green products must be made to support green products. The approach outlined in this article can help you arrive at this distinction. Environmental product declarations (EPD), an existing footprint accounting system, can be helpful and serve as the cornerstone of a demand-pull strategy for green steel. Although in theory having a global system for measuring product footprints would be ideal, the limited time left to address climate change necessitates a practical, easy-to-implement solution.

Several strategies and projects have been undertaken by the governments to reduce the carbon footprint. Green steel production is one of the major projects to reduce carbon output. Minimizing the supply-push and demand-pull will help significantly to overcome this problem.

Strategic Moves by Key Players

Newly developed technology for producing steel without the use of fossil fuels is what the European Union-funded Green Steel for Europe project seeks to achieve by the year 2030. Wherein, around 40 million tons of new green steel projects are slated for completion by 2030 which had started since 2021, and the EU Commission’s initiative also projects that about 30% of primary steel production in the EU will be decarbonized with renewable hydrogen by 2030.

A group of 12 partners, including steel producers, research centers, and universities, are involved in the project, which spans seven different European nations. The project will concentrate on creating innovative technologies for making green steel, like carbon capture and storage and hydrogen-based direct reduction.

Some of the green steel efforts and projects include, utilizing hydrogen supplied from renewable energy sources. The H2 Green Steel initiative in Sweden seeks to manufacture steel without the use of fossil fuels. In addition, a global business alliance called SteelZero wants to achieve net-zero emissions in the steel industry by 2050. Moreover, in order to create green steel, the Tata Steel Europe initiative in the Netherlands uses hydrogen to convert iron ore into iron.

Author: Digvijay Pawar