Steel Times International Sustainable Steel Strategies Summit October 2023

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Contents Cover: John Cockerill Editorial Editor/Programme Director Matthew Moggridge +44 1737 855151 matthewmoggridge@quartzltd. com Editorial Assistant Catherine Hill +44 1737 855021 catherinehill@quartzltd.com Production Editor Annie Baker Advertisement Production Martin Lawrence Sales International Sales Manager Paul Rossage +44 1737 855116 paulrossage@quartzltd.com Sales Director Ken Clark +44 1737 855117 kenclark@quartzltd.com Corporate Managing Director Tony Crinion Published by: Quartz Business Media Ltd Quart House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK +44 1737 855000 www.steeltimesint.com © Quartz Business Media, 2023

Steel Times |nternational

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Welcome by Matthew Moggridge,

programme director.

4

Conference programme.

8

Speakers’ biographies.

22 The time to sunset coal is now.

24 Meet our sponsors.

26 FerroSilva – combining iron production with

a carbon sink.

30 Definining a green steel premium.

34 The challenge of green steel.

36 The gold standard?

SUSTAINABLE STEEL STRATEGIES SUMMIT

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Matthew Moggridge, programme director.

Welcome The figures vary, but it’s something like 7-9% of global CO2 emissions can be accounted for by global steelmakers. As somebody who has been closely associated with steelmaking for the past decade, I know that the industry has been working flat out to come up with a variety of solutions, all of which have been discussed at many global conferences and in the pages of Steel Times International. More importantly, however, the solutions being discussed and developed are being put into practice. Just take a look at the Swedish steel industry for proof that things are being done. It has been proved, for example, that it is possible to produce steel using hydrogen, thanks to SSAB and its HYBRIT initiative. Furthermore, H2 Green Steel (H2GS) is on the cusp of success with its new facility in Boden, Northern Sweden, which will start making hydrogen-based green steel in 2025. In short, it’s all happening. All the major steelmakers are busy doing something that will change the face of steelmaking as we know it.

However, while things are generally very positive, we’re not there yet.

Despite the fact that the blast furnace is widely regarded as the big bad wolf, there are many of them still being built for steelmakers in China, India and the Far East. That said, there are technologies under development that will make the BF a greener proposition than it is at present, but ultimately the global steel industry should be following the example set by North America where 70% of steel is produced using scrap metal in electric arc furnaces (EAFs). Unfortunately, on a global basis, it’s the other way around: over 70% of steel is produced using blast furnaces. We will change this and that is what this conference is all about. I hope you enjoy the Sustainable Steel Strategies Summit 2023.

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CONFERENCE PROGRAMME

Day One: Tuesday 24 October 1000 Welcome to the Sustainable Steel Strategies Summit 2023 by Matthew Moggridge, programme director.

1010 Opening Keynote Address by Caroline Ashley, director, SteelWatch: Why are we asking the wrong questions about steel decarbonization?

1035 Pathways to a Lower Carbon Future: A Process Agnostic Approach by Philip K Bell, president of Washington DCbased Steel Manufacturers Association.

1100 An effective, trade compliant metric to support steel decarbonization, by Matthew Wenban-Smith, director, OneWorldStandards and senior advisor to Responsible Steel.

1125 Driving an aligned global framework for sustainable steel decarbonization by Shivakumar Kuppuswamy, development and innovation director, Responsible Steel.

1150 A perfect storm to decarbonize the automotive industry, by Matthew Groch, senior director, heavy industry, Mighty Earth.

1215 Defining the Green Steel Premium by Stanislav Zinchenko, CEO GMK Center, chair of the committee for environment and sustainable development at the European Business Association.

1240 Decarbonizing the Commodity Industries: The Challenges Ahead by Mark Jeavons, Head of CRU’s Sustainability Division and Paul Butterworth, Research Manager at CRU.

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CONFERENCE PROGRAMME

1305 Lunch Break 1430 Envisaging the decarbonized ironmaking landscape of 2050 by Rutger Gyllenram, founder and CEO, Kobolde & Partners.

1455 Hydrogen DRI and scrap – transformation of primary and secondary production, by Marian D’Auria, global head of risk & sustainability, GFG Alliance.

1520 1.5ºC Science-based Target-Setting in the Steel Sector, by Brenda Chan, technical manager (steel), SBTi (ScienceBased Targets initiative) working for the Carbon Disclosure Project (CDP).

1545 Supervisory control systems for the future of the metals industry, by Dr. Mojca Loncnar, co-ordinator of projects for sustainable development, SIJ Acroni.

1610 Efficient Heat Scheduling Combined with Energy Management in a Hybrid Steel Plant, by Heinz-Josef Ponten, Product Manager, PSImetals Liquid & Energy.

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CONFERENCE PROGRAMME

Day Two: Wednesday 25 October 1030 Unlocking the first wave of breakthrough steel investments – making clean hydrogen DRI financially viable at commercial scale, by Marc Farré Moutinho, sector lead for steel, Energy Transitions Commission and the Mission Possible Partnership.

1055 Carbon capture technology looks unlikely to play a major role in global steel decarbonization, by Simon Nicholas, energy finance analyst, Institute for Energy Economics and Financial Analysis.

1120 Molten oxide electrolysis: A scalable, viable path to emissions-free steel by Adam Rauwerdink, senior vice president, Boston Metals.

1145 Demystifying CBAM: the EU Legislation aiming to contribute to the decarbonization of global steel production, by Jonathan Leclercq, senior manager, decarbonization & Sustainability at DNV. 1210 A step towards reducing emissions in steel, aviation and chemicals, by Sanjeev Manocha, global director of business development, Lanzatech.

1235 Lunch Break

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CONFERENCE PROGRAMME

1400 The European Chrome-Free Passivation Alternative by Ruaidrí MacDomhaill, Regulatory Affairs Manager, Apeal and Leader of the CFPA working group at Apeal.

1425 How digital transformation with real-time communication helps steel tube industries improve operations by Arjun Chandar, founder and CEO of IndustrialML and Shin Nakamura, president of Daiwa Steel Tube.

1450 Clean Energy for Clean Steel by Kate Kalinova, corporate engagement (steel), Solutions for Our Climate.

1515 Facing sourcing the renewable energy challenges and capitalizing on digital twins for resiliency, by Mo Ahmed, development lead, green steel, Schneider Electric, Josh Heeman, senior manager, renewable energy and carbon advisory, Schneider Electric; and Shaikh Sahid Hossain, chief revenue officer, ETAP. 1540 Embodied carbon over the life cycle of reinforcing steels: Carbon emissions associated with Modules A1-A3 Product stage and A4-A5 Construction stage by Dave Knight, sustainability advisor, CARES. 1605 Conference Closes Steel Times International

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SPEAKER PROFILES

MATTHEW MOGGRIDGE

EDITOR, STEEL TIMES INTERNATIONAL Matthew Moggridge has been editor of Steel Times International since January 2014, having previously edited Aluminium International Today, both published by the UK-based Quartz Business Media. During his time on both titles, he has travelled extensively around the world interviewing and writing about leading figures in the metals industry and covering international steel and aluminium conferences. In addition to working as a journalist in many different industrial sectors, he is also the creator and driving force behind the development of the Future Steel Forum, which later spawned the Future Aluminium Forum.

Matthew’s career as a business journalist has spanned many leading titles covering other industrial sectors including food processing, foodservice, foreign direct investment, bulk handling and transportation and computers.

CAROLINE ASHLEY

DIRECTOR, STEEL WATCH Caroline is an experienced leader and systems-thinker with diverse experience in change-making. A socio-economist by background, her career has spanned work in INGOs, policy research, policy making, business innovation, impact investment, consultancy and community development.

Rooted in international development, Caroline has lived and worked in multiple African and Asian countries. She worked in the Namibian government shaping post-apartheid environmental management, initiated approaches to address poverty within the tourism industry internationally, catalysed innovation with over 100 businesses through challenge funds and impact investment, and worked with multiple development banks on their development impact.

As economic justice strategic lead at Oxfam GB, she led a global team supporting communities and challenging business around the world to stretch for greater socio-economic transformation and climate resilience. As global programmes director at the Forum for the Future she led strategies that shift from incremental change to system transformation in energy, food and the role of business in society.

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SPEAKER PROFILES

PHILIP K. BELL PRESIDENT, STEEL MANUFACTURERS ASSOCIATION Philip K. Bell is president of the Washington, D.C.-based Steel Manufacturers Association (SMA). Before leading the SMA, Philip served as director of external communications and public affairs for Gerdau Long Steel North America based in Tampa, Florida. He is a 25-year industry veteran who developed an interest in the steel industry and manufacturing in the late 1980s while working in maintenance and operations at Elementis Chromium in Corpus Christi, Texas. He has held executive-level positions in operations, human resources and public affairs with Gerdau, the SGL Carbon Group, and Qualitech Steel Corp.

Philip serves on the US Department of Commerce International Trade Advisory Committee on Steel (ITAC 12), advising the secretary of commerce and US trade representative on trade policy, trade agreements and other trade-related matters that benefit US businesses, workers and the economy.

He is a member of the National Association of Manufacturing (NAM) Council of Manufacturing Associations (CMA) and the Association of Iron & Steel Technology (AIST).

Philip graduated from Texas A&M University in Corpus Christi with a bachelor’s degree in psychology. He holds a master’s degree in global strategic communications from the University of Florida, with distinction.

MATTHEW WENBAN-SMITH DIRECTOR, ONE WORLD STANDARDS, AND SENIOR ADVISOR, RESPONSIBLE STEEL Matthew Wenban-Smith has played a leading role in the development of many global sustainability standards programmes over the last 30 years, ranging from the Forest Stewardship Council (FSC) to the Alliance for Water Stewardship (AWS) and the IUCN’s Green List for Protected Areas. He supported the establishment of ResponsibleSteel and led the writing of ResponsibleSteel’s international standard in relation to greenhouse gas emissions, recognised by the IEA as being, ‘at the forefront among the shortlist of methodologies identified with respect to fitness for purpose for a net zero steel sector.’

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SPEAKER PROFILES

SHIVAKUMAR KUPPUSWAMY

DEVELOPMENT AND INNOVATION DIRECTOR, RESPONSIBLE STEEL Shiv is a metallurgical engineer with over 30 years of international experience in steel and core sector engineering industries. He has over two decades of experience in the steel supply chain with a deep understanding of the industry’s decarbonization challenges.

As development and innovation director, Shiv ensures that ResponsibleSteel and its International Standard deliver impact in line with its mission to drive the responsible production of net zero steel and demonstrate the effectiveness of Theory of Change.

Prior to joining ResponsibleSteel, he was managing his own advisory engaging in energy, construction, and metallurgical engineering services in Canada and the GCC region. He has held leadership positions in his career with companies in India, GCC and Canada. In addition to a bachelor’s degree in metallurgical engineering, he also holds a master’s degree in climate change from the University of Waterloo, Canada.

MATTHEW GROCH

SENIOR DIRECTOR, MIGHTY EARTH Matthew Groch is a senior director at Mighty Earth where he oversees the organization’s decarbonization campaign. Prior to joining Mighty Earth, he served as deputy director at Public Citizen’s Global Trade Watch division, where he worked on trade and globalization issues including the renegotiation of the North American Free Trade Agreement (NAFTA) and global access to Covid-19 vaccines, tests, and treatments.

He previously worked as vice president for TruBlu Politics, a Democratic consulting firm that developed strategic campaign communication plans for dozens of clients at state and local levels. Matthew also worked as a project co-ordinator to Dr Stanley Greenberg at the renowned public opinion research and consulting firm, Greenberg Quinlan Rosner Research, where he managed clients, projects, and staff across the globe. He has also held various positions working for a Member of the US Congress and has worked on numerous electoral campaigns.

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STANISLAV ZINCHENKO,

CEO, GMK CENTER Stanislav Zinchenko is the CEO of GMK Center, chair of the Committee for Environment and Sustainable Development of the European Business Association, and president of CSCMP Ukraine Roundtable. In the last five years, he has provided consulting services for Ukrainian iron and steel companies in areas such as sustainability issues, supply chains, CAPEX policy, and market analysis. Stanislav Zinchenko has 15-years of experience in consulting for manufacturing companies. He has expertise in operational management and supply chains as a team leader, consultant, and analyst in international projects in the field of entrepreneurship, operational efficiency, and logistic infrastructure. Stanislav has a MA in international economics at Kyiv National Economic University.

MARK JEAVONS

HEAD OF SUSTAINABILITY DIVISION, CRU Mark Jeavons is the head of CRU’s sustainability division, providing thought leadership and guidance on sustainability, climate change and their market implications, which helps clients to better understand, address and integrate sustainability themes into their decision-making.

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SPEAKER PROFILES

PAUL BUTTERWORTH

RESEARCH MANAGER, CRU Paul Butterworth is research manager at CRU. He moved to CRU’s newly-formed sustainability team in August 2021 where he is working closely with clients and internally on carbon market and energy transition issues.

RUTGER GYLLENRAM

CEO AND FOUNDER, KOBOLDE & PARTNERS AB Rutger Gyllenram is a Swedish metallurgist and entrepreneur. He has an MSc in process metallurgy and materials science and a Licentiate degree (Dr-ing) in metal production technology from the Royal Institute of Technology, KTH, in Stockholm. He is the founder and CEO of Kobolde & Partners AB, working with raw material and process assessment, which is crucial for decarbonization in the steel industry.

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MARIAN D’AURIA

GLOBAL HEAD OF RISK AND SUSTAINABILITY, GFG ALLIANCE Marian is the global head of risk and sustainability at GFG Alliance, the parent company of Liberty Steel – a global steel manufacturer with an ambition to be carbon neutral by 2030. Prior to joining GFG, Marian was a managing director at Redington and, before that, led Deloitte’s Trustee Advisory business. Marian is a fellow of the Institute and Faculty of Actuaries and a member of the Global Association of Risk Professionals, with a certificate in sustainability and climate risk management. She has over 20 years’ experience in risk management, sustainability, governance, and investment consulting, and she co-authored an award-winning paper on integrated risk management frameworks for institutional investors.

BRENDA CHAN

TECHNICAL MANAGER FOR THE SCIENCEBASED TARGETS INITIATIVE (SBTI) Brenda Chan is a technical manager for the Science Based Targets initiative (SBTi), working for CDP (Carbon Disclosure Project). Within the SBTi, Brenda is responsible for developing emissions reduction pathways for the steel sector.

The CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

Prior to joining CDP, Brenda worked as a senior data analyst and quality assurance for a data analytics firm that collated data for the Climate Risk Platform and rankings intended to shape investment decisions. She also has diverse research experience in academia and industry dealing with environmental issues through different projects for the coal, power, water, and mining sectors across Europe and China.

Brenda holds a PhD in carbon chemistry in iron and steel production, a master’s degree in environmental policy and regulation from the London School of Economics and Political Science, and a bachelor’s degree in chemical engineering. She is currently based in London.

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SPEAKER PROFILES

DR. MOJCA LONCNAR

SUSTAINABLE DEVELOPMENT PROJECT CO-ORDINATOR, SIJ ACRONI Dr. Mojca Loncnar has over 15 years of work experience in quality management, research and technology development, and the circular economy. She has acquired management experience in the research and development of steel and technologies and is currently actively involved in EU-funded projects in the fields of digitalization, smart energy communities and the use of secondary raw materials. She is the author of several international publications, including original scientific articles, and has presented and published several papers at scientific conferences.

DIPL.-ING. HEINZ-JOSEF PONTEN

PRODUCT MANAGER, PSIMETALS LIQUID & ENERGY Heinz-Josef Ponten studied electrical engineering with a special focus on information technology at the University of Applied Sciences, Aachen.

After his studies, he began his career with PSI Metals for what would become 36 challenging yet interesting years with diverse roles and responsibilities.

He joined PSI Metals in 1986 as consultant and project manager. Due to his expertise, in 1992, he became the head of department for process automation. In 2000, he became the head of the steelmaking business unit. Ten years later, after acquisitions of several companies and the reorganization of PSI Metals’ business, Heinz-Josef became the director of the PSI Metals’ Non-Ferrous, Flat & Long division as well as a member of the company’s Strategy Committee.

In 2014, he was additionally appointed the managing director for PSI Metals, Belgium and PSI Metals, UK. With over 36 years’ experience in PSI Metals, and after eight years as managing director, in 2022, Heinz-Josef handed over to PSI Metals’ ‘next generation’ and went back to his roots where he became product manager for PSImetals Liquid & Energy. His expertise has earned him an invaluable position and high demand in the global metals and steel industry.

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SPEAKER PROFILES

MARC FARRÉ MOUTINHO SECTOR LEAD FOR STEEL, ENERGY TRANSITIONS COMMISSION (ETC) AND THE MISSION POSSIBLE PARTNERSHIP (MPP) Marc Farré Moutinho is the sector lead for steel at the Energy Transitions Commission (ETC) and the Mission Possible Partnership (MPP). As part of his time at both organisations, Marc co-authored Making Net-Zero Steel Possible (2022), a 1.5°C-aligned roadmap to net zero for the global steel industry and part of the MPP’s landmark series of heavy industry and transport sector transition strategies. More recently, Marc was part of the team behind the ETC’s Breakthrough Steel Investment Forum Series and a co-author of the resulting Unlocking the First Wave of Breakthrough Steel Investments report series (2023).

Based in London, Marc currently focuses on supporting MPP’s efforts to unlock investment in commercial-scale heavy industry and transport projects around the world, with an emphasis on steel, as well as serving as the acting co-ordinator of MPP’s Net-Zero Steel initiative (NZSi). Prior to joining ETC and MPP, Marc’s background lay in the broader energy system, particularly in biogas, battery energy storage systems (BESS), and energy infrastructure policy.

SIMON NICHOLAS LEAD ENERGY FINANCE ANALYST, IEEFA Simon Nicholas is IEEFA’s lead energy finance analyst for Bangladesh, Pakistan, and the global steel sector as well as Asian seaborne thermal and coking coal markets. Simon’s focus is on the energy transition, the long-term outlooks for coal and steel as well as the need for emerging nations to establish financially sustainable power systems to support their development. Before joining IEEFA in 2016, Simon had 16 years’ experience in the finance industry at ABN Amro, Macquarie Group and Commonwealth Bank of Australia in Sydney and London. Simon is a fellow (FCA) of the Institute of Chartered Accountants in England and Wales, has a BSc in Zoology and a master’s in environmental management, for which he was awarded the Orica Ronnie Harding Prize by the University of New South Wales.

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SPEAKER PROFILES

DR. ADAM RAUWERDINK

SENIOR VICE PRESIDENT, BUSINESS DEVELOPMENT, BOSTON METAL Adam was one of the earliest employees at Boston Metal, joining the team in 2017. He leads business development at the company that’s scaling up breakthrough technology to decarbonize primary steelmaking. Previously, Adam led global development for several utility-scale energy storage technology companies. He holds a BS in engineering from the University of Connecticut and a PhD in engineering and innovation from Dartmouth.

JONATHAN LECLERCQ

SENIOR MANAGER, DECARBONIZATION AND SUSTAINABILITY, DNV Jonathan is a global senior manager focusing on the development of sustainability and ESG solutions at DNV. As part of the innovation team, he contributes to the development of new digital assurance services supporting customers to comply with new stringent ESG regulations, such as the EU Green Deal legislative package.

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SANJEEV MANOCHA BUSINESS DEVELOPMENT DIRECTOR, LANZATECH Sanjeev Manocha is the business development director of LanzaTech Inc headquartered in Chicago, USA. He joined LanzaTech earlier this year, having developed a passion to decarbonize industries. He is leading the steel, cement, and energy intensive industry sectors. In terms of his wider career, Sanjeev is a metallurgical engineer with an executive MBA, who started his working life in the iron and steel industry, having served in various executive positions across Europe, Asia Pacific and North America. In the later part of his career, Sanjeev moved to the lime industry. He also served as a board member with various businesses and institutes.

DR. RUAIDRÍ MACDOMHNAILL REGULATORY AFFAIRS MANAGER, APEAL AND LEADER OF THE CFPA WORKING GROUP, APEAL Ruaidrí is responsible for REACH/CLP and Food Contact Materials regulations and their potential impact on APEAL members. In addition, he co-ordinates any joint research and development projects between APEAL members including the development of Chromium Free Passivation Alternative (CFPA) – an innovative European alternative to the use of hexavalent chromium in ETP passivation.

Previously, and for several years, Ruaidrí was team lead for projects related to Substances of Very High Concern (SVHC) within a chemical consultancy and worked with several industry sectors including space, defence, mining, and pharmaceuticals. He has also worked in the European Chemicals Agency (ECHA) in the Substance Identification and Data Sharing Unit.

He holds a PhD in synthetic chemistry from the University of Dublin, Trinity College.

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SPEAKER PROFILES

ARJUN CHANDAR

FOUNDER AND CEO, INDUSTRIAL ML Arjun Chandar has spent his career leading the development and deployment of advanced technologies for manufacturing operations and production. He is the founder and CEO of IndustrialML, an enterprise platform which contains data integration, analytics, navigation, communication, and reporting features to help factories provide real-time information and training to their operations workforce. Arjun implemented supply chain planning and continuous improvement tools across two aerospace businesses at Meggitt, and was director of operations at New Valence Robotics, a VC-funded 3D printing start-up. He received his MEng in advanced manufacturing from MIT and is a member of the MITHaus group, which researches production of 3D-printed homes at scale for poor economies around the world.

SHINICHIRO NAKAMURA PRESIDENT, DAIWA STEEL TUBE INDUSTRIES

Shinichiro Nakamura is a manufacturing and global thought leader in the secondary steel processing industry. He is the president of Daiwa Steel Tube Industries and one to ONE Holdings, which operates steel tube making factories in Japan and Vietnam and implements inline galvanizing technology for tubing companies around the world. His original family business, Daiwa Steel Tube Industries in Japan, is one of the largest producers of inline galvanized steel tubes in East Asia. Shin is a past regional chair of the YPO North Asia region and a current member of the board of governors at the Asia School of Business. He previously consulted at Bain & Company and received his MBA from MIT Sloan, specializing in new product and venture development.

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KATE KALINOVA

CORPORATE ENGAGEMENT (STEEL), SOLUTIONS FOR OUR CLIMATE Kate Kalinova is part of the SFOC’s steel programme, where she focuses on corporate engagement, with an emphasis on engaging key consumers of the steel industry to accelerate decarbonization of the sector. Before joining the SFOC, Kate worked as a project manager at the Australian Chamber of Commerce (AustCham) in South Korea.

MO AHMED DEVELOPMENT LEAD, GREEN STEEL, SCHNEIDER ELECTRIC

Mo Ahmed has over 20 years of experience in the steel industry. Before joining Schneider Electric, he worked for Primetals Technologies, Siemens, Ivaco Rolling Mills and GE. He filled roles including automation and drives engineering, maintenance management, pre-sales support and sales of multi-million-dollar steel plant projects. He has engaged in the industry on a global scale, travelling to over 50 countries to meet and understand the needs of his customers. He is also an author of multiple white papers that have been published and presented at numerous steelindustry conferences.

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SPEAKER PROFILES

SHAIKH SAHID HOSSAIN

CHIEF REVENUE OFFICER, ETAP Shaikh Sahid Hossain received his bachelor’s degree in electronics and instrumentation engineering from B.P.U.T, Odisha in 2004 and a master’s degree in business administration from Preston University, USA in 2008, followed by a postgraduate programme in general management from the Indian Institute of Ahmedabad in 2009. Currently he serves with ETAP as chief revenue officer. Before joining ETAP, he worked as a development consultant at L&T. His projects involved implementation for power management systems, process automation, distribution automation, and consulting services. He was also involved in establishing the power automation business in the MENA region.

JOSH HEEMAN SENIOR MANAGER, RENEWABLE ENERGY AND CARBON ADVISORY, SCHNEIDER ELECTRIC Josh joined Schneider Electric in 2011, with an initial focus on procuring natural gas and electric power in the western United States. During his time as a regional energy buyer and later as a regional market manager, Josh built a strong foundation of expertise in supply-side energy commodity sourcing strategies, tactics, and related energy industry concepts. In 2016, he transitioned to the renewable energy and carbon advisory team where he has been focused on renewable energy procurement and strategy development. Josh received a bachelor’s degree of science in finance, as well as a master’s degree in business administration from the University of Louisville.

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FEATURE

DAVE KNIGHT

CARES SUSTAINABILITY ADVISOR, CARES Dave has spent over 25 years working internationally, across multiple industries and for various UN agencies to advance sustainable and ethical business practices. He advises CARES and its board on sustainability matters and has supported the development of its Sustainable Constructional Steels (SCS) scheme.

Within the construction sector, Dave has developed sustainability strategies and narratives, toolkits and social valuation approaches for responsible sourcing.

He has provided advice, training and assurance to the steel sector for over 15 years.

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SUSTAINABLE STEEL STRATEGIES SUMMIT

The time to sunset coal is now Many players in the steel industry now acknowledge that change is coming, that eventually the sector will move away from coal-based steel production. But ‘eventually’ is far away from what is needed. SteelWatch, a new climate organisation, has just launched, and our initial analysis1 tells us that the time to sunset coal has arrived. The planet cannot afford further delay. Relining and building of new blast furnaces needs to end.

By Caroline Ashley* and Margaret Hansbrough**

The steel sector has a climate problem – decision makers in steel know that by now.

But steel sector emissions are so huge and undiminished, that the steel sector’s emissions problem is in fact everybody’s problem.

Emissions from the steel sector are driving climate change and jeopardising chances of stabilising at 1.5°C of warming. Currently, the steel sector contributes to at least 7% of annual global greenhouse gas emissions, equivalent to the emissions of India. Just as we would not ignore India’s emissions if we seek to stabilise climate change, so equally we cannot leave emissions of the steel sector as they are.

If we continue with business-as-usual steel production through the blast furnace-basic oxygen furnace route (analysed as the Stated Policies Scenario by IEA2), this will eat up 23% of the carbon budget that remains by 20503.

The IPCC set a carbon budget to give us half a chance of stabilising climate change at 1.5°C. In January this year, the remaining budget was 380GT of CO2 until 20504.

Coal-based steel production will gobble

almost a quarter unless we change course now. (See Fig 1) The problem is not steel. A transformed steel sector will need to be part of the thriving zero emissions economy of the future. The problem is coal.

Globally, 70% of steel is primary steel that is produced from iron ore using coal-based processes and in Asia the percentage is even higher at 81%5. Each tonne of primary steel produced via BF-BOF requires 0.77 tonnes of metallurgical coal6.

Mining metallurgical coal unlocks vast methane emissions, burning it drives pollution and ill health, and using it in steelmaking drives the climate footprint of steel. Once methane emissions are included in the calculations (which SteelWatch argues they should be), then each tonne of liquid steel has a staggering climate footprint of 3.2 tonnes of CO2e (see Fig 2)7.

The scale of the problem is daunting, in terms of the scale of emissions. But actually, it is a problem we can wrap our heads and hands around. There are just over 1,000

blast furnaces in operation, at around 400 integrated sites, owned by 365 companies, according to GEM’s latest Blast Furnace Tracker8. So, the investment decisions by those companies are the lynch pin of climate stability.

Addressing this problem is also urgent – for three reasons.

The first is that climate instability is increasing not just by the decade now, but with the weekly tumult of bad news on temperature records and livelihood disruption.

The second is that steel is getting further off-track by the day, and urgent action is needed by 2030. The steel sector is already off track compared to the various decarbonization pathways that have been developed in the last few years. Over 70% of primary coal production is not yet covered by any corporate net zero commitment9. But even among the targets that are in place, the focus is on 2050, with insufficient action by 2030 to get on track for a 1.5°C warming trajectory.

The sector is simply not on the downward slope of emissions that is needed. By 2030

*Director, SteelWatch **Campaign Lead, SteelWatch

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the gap will be over 1 GT of CO2 a year unless change starts now (see Fig 3).

The third reason is that over 70% of blast furnaces approach the end of their operating life this side of 2030. So, whether to reline or transition is a decision that looms. Relining is a grave and imminent danger, as it would lock in high-carbon production for another 15-20 years.

Beyond the threat of relining, there are at least another 50 blast furnaces in construction and twice as many announced. These will take the sector in the wrong direction. Speed is needed in retiring blast furnaces and transition to new production, not in building new ones.

But this is also a good time to be addressing the problem. Steel has evaded adequate scrutiny, often shielded under the term ‘hard-to-abate’10. But those days are gone. Research published in June by Agora Industry, a think tank based in Germany, summed up the current consensus: “The hardto-abate label for steel is no longer justified – the steel sector can be fast-to-abate.”

Clean alternatives to coal-based steelmaking are rapidly emerging. Agora’s latest assessment shows that increased use of scrap, build out of green hydrogen-based direct reduction of iron, and development of a green iron (hot briquetted iron) trade, make it technically feasible to completely phase out coal by the early 2040s. Innovators are working on direct electrolysis of iron, adapting HDRI to different iron ore qualities, and reducing contaminants in scrap. The markets are shifting too, with huge policy shifts in both the EU and US initiating unprecedented investments in greening of industry and manufacturing. The commercial sites for green steel in Sweden already have offtake agreements, signalling the emerging market and premium for green steel. The pace of change is accelerating. We need the mindset of leaders and the ambition of companies to catch up.

By transitioning to coal-free steel production, we can preserve a liveable climate and build a stronger modernised steel industry. This is a not-to-be-missed opportunity to build a transformed steel sector that becomes part of the zero emissions future, while delivering quality jobs, and eliminating toxic emissions.

So now is the time to phase out coal Steel Times International

Figure 1

Figure 2

Figure 3

in steelmaking. SteelWatch has called for a red line on coal-based steel production: no relining of existing blast furnaces, no investment in new blast furnaces, and a phased transition out of existing ones.

Recognising the differentiated situation of richer economies, SteelWatch calls for: � No investment in any new or relined coal-based blast furnace facilities in OECD countries or by OECD based companies, from today.

� No investment in relining existing or building new coal-based blast furnace facilities that go on-line from January 2028, in emerging economies.

Organisation for Economic Co-operation and Development (OECD) countries and companies headquartered in those countries need to lead the way, starting today, modelling a just transition beyond coalbased steelmaking and enabling emerging economies to leapfrog to new technology.

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The need to end coal is clear. There are a host of issues to address to ensure it can happen. These range from ensuring significant renewable energy supply, to negotiating transition plans with workers and communities, to ensuring the right mix of government carrots and sticks. It may not be simple, but the challenge is urgent and essential, and so needs action by all players.

Thermal coal has been in the public glare for years. The risks associated with investing in thermal coal for power generation are well-known. And yet the climate threat of metallurgical coal for steel production has yet to be sufficiently recognized. Few financial institutions have exclusionary policies for metallurgical coal so far. Few climate activists realise that 23% of total coal production is met coal for the steel sector.

Now that the renewable energy revolution is gaining pace, the focus will shift to coal, framing it not only as a climate risk, but also an investment risk, to plough millions of dollars more into coal-based steel.

The next two decades will make or break the future of steelmaking and our climate.

Companies will face critical decisions to either lock in decades more of this emissionsintensive pathway or begin to transition away from coal-based steelmaking and toward more sustainable pathways. These decisions will determine whether steel gets on track for a climate-safe future.

can be found there.

April 2023, Most recent update)

Agora Industry and Wuppertal Institute (2023).

15 insights on the global steel transformation. https://static.agora-energiewende.de/fileadmin/ Projekte/2021/2021-06_IND_INT_GlobalSteel/ A-EW_298_GlobalSteel_Insights_WEB.pdf

IEA (2021). Net Zero by 2050, IEA, Paris. https:// www.iea.org/reports/net-zero-by-2050

BHP (Accessed 24th April 2023). Metallurgical Coal. https://www.bhp.com/what-we-do/ products/metallurgical-coal Global Energy Monitor (2023). Global Blast

Intergovernmental Panel on Climate Change (2023). AR6 Synthesis Report (SYR). https://www. ipcc.ch/report/sixth-assessment-report-cycle/ International Energy Agency (2020, October). Iron and Steel Technology Roadmap; Towards more sustainable steelmaking. https://www.iea.org/ reports/iron-and-steel-technology-roadmap Sohn, H. Y. (2019) Energy Consumption and CO2 Emissions in Ironmaking and Development of a Novel Flash Technology, Metals 10, no. 1: 54. https://doi.org/10.3390/ met10010054 SteelWatch (2023).

Sunsetting Coal in Steel Production https:// steelwatch.org/wp-content/ uploads/2023/06/ FINAL-SteelWatch_ SunsettingCoalInSteel_ June2023-sunday-25th-june. pdf

Furnace Tracker. https://globalenergymonitor.org/ projects/global-blast-furnace-tracker/

Swalec, C. (2022). Pedal to the Metal 2022; It’s not too late to abate emissions from the global iron and steel sector, Global Energy Monitor. https://globalenergymonitor.org/wp-content/ uploads/2022/06/GEM_SteelPlants2022.pdf World Steel Association (2022). Sustainability Indicators; 2022 Report. https://worldsteel.org/ wp-content/uploads/Sustainability-Indicators2022-report.pdf

Sources This article draws heavily on SteelWatch 2023, Sunsetting Coal in Steel Production.

Further detail on references and methodology

Global Energy Monitor (2023). Global Steel Plant Tracker. https://globalenergymonitor.org/ projects/global-steel-plant-tracker/ (Accessed

World Steel Association (2022). World Steel in Figures 2022. https://worldsteel.org/steel-topics/ statistics/world-steel-in-figures-2022/

Text References

https://www.carbonbrief.org/guest-post-what-the-tiny-

global-blast-furnace-tracker/

1. SteelWatch (2023). Sunsetting Coal in Steel Production

remaining-1-5c-carbon-budget-means-for-climate-policy/

9. Agora Industry and Wuppertal Institute (2023).

https://steelwatch.org/wp-content/uploads/2023/06/

5. Global Energy Monitor (2023). Global Blast Furnace

15 insights on the global steel transformation.

FINAL-SteelWatch_SunsettingCoalInSteel_June2023-

Tracker. https://globalenergymonitor.org/projects/

https://static.agora-energiewende.de/fileadmin/

sunday-25th-june.pdf

global-blast-furnace-tracker/

Projekte/2021/2021-06_IND_INT_GlobalSteel/A-

2. International Energy Agency (2020, October). Iron and

6. BHP (Accessed 24th April 2023). Metallurgical

EW_298_GlobalSteel_Insights_WEB.pdf

Steel Technology Roadmap; Towards more sustainable

Coal. https://www.bhp.com/what-we-do/products/

10. Agora Industry and Wuppertal Institute (2023).

steelmaking. https://www.iea.org/reports/iron-and-steel-

metallurgical-coal

15 insights on the global steel transformation.

technology-roadmap

7. SteelWatch 2023

https://static.agora-energiewende.de/fileadmin/

3. SteelWatch 2023

8. Global Energy Monitor (2023). Global Blast Furnace

Projekte/2021/2021-06_IND_INT_GlobalSteel/A-

4. Carbon Brief:

Tracker. https://globalenergymonitor.org/projects/

EW_298_GlobalSteel_Insights_WEB.pdf

Sunset coal: Photographer rights @ mkaplanphoto@gmail. com Sunset coal report front cover in 3 languages.

24 SUSTAINABLE STEEL STRATEGIES SUMMIT 2023

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COMPANY PROFILES

PSI is the leading partner for digital production in the metals industry combining SCM, APS and MES within one service platform – PSImetals. Our software solutions enable producers of steel and aluminium products to ensure their competitive edge by delivering products as agreed in quantity, quality and time while considering inventory, productivity and performance targets.

The PSImetals software line is an end-to-end approach for the overall supply chain caring for all the needs of the primary metals industry. From supplier to customer, PSImetals offers powerful and highly configurable standard products to support all processes from planning to execution while respecting the complexity of metal production: � Planning level to support all planning processes from business planning via production planning to detailed scheduling, � Execution level to monitor and control production activities as well as to assure quality, � Level of material – and transport logistics to optimise all transports requested to keep production running, � Energy management level, � Cross-application KPI and production monitoring functions.

All information is based on PSImetals Factory Model – a Digital Twin of the whole supply chain providing consistent real time plant status information.

As a market leader, PSI claims technology leadership as well.

PSImetals FutureLab investigates and develops the solutions of tomorrow based on PSImetals Service Platform (SP) taking into consideration: � Latest developments around Industry 4.0 � A collaborative approach with customers, partners and experts � Leading edge IT technology based on PSI Java Framework.

Schneider’s purpose is to empower all to make the most of our energy and resources, bringing progress and sustainability for all. Schneider realises the global energy transition is urgent and its mission is to enable customers to be efficient, sustainable, and resilient.

Schneider empowers its minerals and metals customers to contribute to progress, ensure social license to operate, and build a sustainable mining, minerals and metals business that is responsible, efficient and profitable with digitally integrated automation, power and process, along a unified value chain.

Schneider’s solutions are built on EcoStruxure, the IoT-ready platform, which integrates different domains of expertise (automation, power, building, IT) in a seamless architecture and transforms information collected from anywhere into actionable wisdom for optimized and paperless end-to-end operations.

Schneider collaborates with the ecosystem of players redesigning and delivering the core processes that are more sustainable for energy-intensive clients and leverages its unique expertise in both energy management and automation.

Leveraging its AVEVA and ETAP software, EcoStruxure for mining, minerals and metals creates integrated digital environments and redefines the energy journey leveraging integrated power, process and automation to enable enterprise digital transformation and to install a culture of innovation for sustainable business. Global companies like BlackRock, ArcelorMittal and Saint Gobain trust Schneider Electric to optimize every step towards this transformation.

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Combining 50 years of experience in implementing production management software with innovation, PSI supports numerous metals producers around the globe in achieving their competitive edge.

PSI Metals GmbH, Parsevalstraße 7a, 40468 Düsseldorf Germany – Phone: +49 211 60219-271.

Email: info@psimetals.com - Web: www.psimetals.com Linkedin: www.linkedin.com/company/psi-metals Twitter: https://twitter.com/psiag/ Steel Times International

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FerroSilva – combining iron production with a carbon si With an expanding economy, demand for steel is increasing – making the optimal use of resources a priority. FerroSilva, a project involving multiple steelmakers, suppliers, and academics, offers the novel use of biogenic material as a reducing agent in DRI production – with plans to build its first plant and commence operations by 2026.

By Rutger Gyllenram*, Peter Samuelsson** and Göran Nyström*** *Founder and CEO, Kobolde AB **MSc in metallurgy and materials science, PhD in metallurgy, KTH Royal Institute of Technology ***MSc in materials physics, Uppsala University

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Steel Times International

It is not difficult to produce iron from iron ore; we have done that for a couple of thousand years. Fossil free iron production was the dominant way until the coking process was invented at the end of the eighteenth century, and charcoal blast furnaces are still used in some countries. However, high-volume, lowcost production demanded the unmatched energy efficiency of the blast furnace process and the smooth logistics of fossil coal – so the blast furnace/basic oxygen furnace is the dominant process route for steel from iron ore.

This position is now challenged by the need to decrease global emissions of carbon dioxide in order to avoid a climate catastrophe.

n ink Above: The management team at the Hofors site.

From left: Peter Samuelsson (management and process development), Göran Nyström (market and finance), Rutger Gyllenram (raw materials and logistics) enconman.2023.116806

Steel Times International

The transition to fossil free iron is a challenge It is human to hope for a new metallurgical process that will solve all our problems immediately. However, abating emissions of climate gases is an issue not only for the steel industry but for all people, and replacing coal will make almost all other resources scarce for the decades to come, and process development will to a large extent depend on optimal use of limited resources. The transition to fossil-free steel will affect every aspect of steelmaking. Blast furnaces that are modified and combined with CCUS, will probably keep their position in order to make use of high gangue ores. Direct reduction from reformed natural gas combined with CCUS and followed by melting in electric arc furnaces using renewable electricity is one alternative and finally, making the reduction with hydrogen made from fossil-free electricity is another. They will all have their place in due time when technology reaches a high readiness level and new trade patterns are stabilised.

Biogenic material as a source of reducing agent From both an economical and an ecological perspective, the optimal route would be to benefit from resources that are not used to their full potential today. Such resources include sawmill waste and forest residue, i.e., tops and branches. The latter is often not harvested but left to rot. Other biogenic resources can be found in the vast and diversified agricultural sector. The drawback of biogenic material is that it is voluminous, it often must be collected from large areas,

and the available volumes are limited. There is however more biogenic raw material available than is normally recognised and logistic systems are being developed that can manage the material. The price is normally determined by the value of generated district heating and electricity which limits acceptable costs for transport and building up logistic systems. If, on the other hand, the product is a reducing gas that can replace natural gas or hydrogen, the value is higher and can cover more extensive harvesting and transport, which increases availability. The final advantage is that biomass generates biogenic carbon dioxide that does not require allowances and when stored, or used in products, creates a carbon sink.

Closing blast furnaces creates demand for DRI When the number of electric arc furnaces increases and the number of blast furnaces decreases there is a risk of a shortage of high-grade scrap with low amounts of tramp elements. This was the major concern that made three Swedish steel companies, Ovako, Alleima and Uddeholm, team up with two providers of wood chips and saw dust pellets, Sveaskog and Lantmännen. Together with KTH Royal Institute of Technology and Chalmers University of Technology, M3Advice and Kobolde & Partners, and with additional financing from the Swedish Energy Agency, the consortium performed a feasibility study finalised in September 2022. This has now resulted in plans to build a first FerroSilva plant of 50kt of DRI at the Ovako Hofors plant with the intention to start production in 2026.

The FerroSilva process The process is based on three technology building blocks, all of them in operation at full scale, but can be found across three separate industrial segments.

Gasification in a fluidised bed is nothing new and can be found at some companies in the pulp and paper industries. Often the aim is to produce heat or electricity. In this case the product is a biogenic syngas with a composition close to what is achieved when reforming natural gas. Today, there are the following designs available with a high technical readiness level; TRL, Dual Fluidised Bed (DFB), and Circulating Fluidised Bed

SUSTAINABLE STEEL STRATEGIES SUMMIT 2023

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(scope 1-3).

This leaves a carbon sink of 845kg if this carbon dioxide is brought out of the circuit or used to replace fossil carbon in any way.

Fig 1. Simplified layout of the FerroSilva process. [Ilman Zaini et al 2023] link: https://doi.org/10.1016/j.

(CFB), all with slightly different performances.

The biomass is dried before it is entered into the gasifier where a raw syngas is produced as is shown in Fig 1. The tar is then removed and after that, carbon dioxide and acid gases. The carbon dioxide removal process is commonly used in refineries and petrochemical plants. The resulting gas is then either heated and injected as reduction gas into a DR-shaft of the same type as is used for reformed natural gas, or injected cold in the bottom as cooling carburising gas. Carbon dioxide and water is removed from the top gas and hydrogen and carbon monoxide is recycled as reduction gas. The high-grade iron ore pellets that are charged at the top of the furnace leave the shaft as DRI. The shaft furnace is like the ones already applied today in the natural gas processes. Finally, the captured biogenic carbon dioxide is compressed, liquified and transported to a partner for further processing. (Fig 1) The key to efficiency is to use energy streams in the process. Approximately 1.4 tons or 3.7 m3 biomass is used, equal to 3500kWh. Electricity use is 300kWh and biogenic carbon dioxide generation is approximately 1 ton per ton of DRI. Life cycle assessment for steel using FerroSilva DRI The three major environmental impacts that must be observed in the FerroSilva process form the Global Warming Potential (GWP) which in large part is about uptake and

emissions of carbon dioxide and other climate gases, the soil carbon, and the biodiversity.

For a company like FerroSilva, all these three are of great importance and demand close co-operation in the supply chain.

Working with certified forestry companies and following up on research and compliance with standards is part of the core business.

For carbon dioxide, the follow-up must include how the captured liquid gas is transported and processed to new materials or fuel. Fig 2 shows the GWP, i.e., the carbon dioxide equivalents balance, for one ton of crude steel made in an electric arc furnace from FerroSilva DRI. As can be seen, the steelmaking and carbon dioxide liquefaction emits 360kg direct and indirect emissions

Cost of the reducing agent It is always tricky to compare production costs from processes that do not yet exist.

Reduction with natural gas and 100% CCS of the generated CO2, full-scale reduction with hydrogen or using biogenic syngas and CCU are here compared using published consumption figures and investment costs based on a reference case and estimated differences between the different technologies. As can be seen in Fig 3 the price of the reduction agent has a huge impact on the production cost. The price in euros for natural gas and biomass per MWh is shown on the x-axis, and production costs in EUR/ton DRI on the y-axis. The thickness of the lines shows the difference in cost between in a price range for electricity between 32 and 65 EUR/MWh. The calculations are made with varying energy prices, iron ore costs, and transportation. This means that distance to the mine or the market may change the differences in production cost between technologies. For FerroSilva, the calculation indicates that it is competitive at a medium natural gas price.

Building a first plant The first FerroSilva plant is planned to be located within the production site of Ovako in Hofors. There are excellent rail and road connections and much of the needed utilities

Fig 2. The global warming potential, GWP, from the life cycle assessment .

[Anissa Nurdiawati et al 2023] https://doi.org/10.1016/j.jclepro.2023.136262

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SUSTAINABLE STEEL STRATEGIES SUMMIT

infrastructure is available in proximity to the FerroSilva plant, including the residential district heating, where residual energies from the DRI production can be put to good use. Furthermore, the process for securing environmental permits will be substantially simplified, being within Ovako’s industrial area rather than at a greenfield site.

The melt shop where the produced DRI will be used in steelmaking operations is located some 200 metres away from the FerroSilva plant. Liquid carbon dioxide will be shipped via rail to other users, such as the production of bio-methanol, that can be used for the production of aviation fuel, but also for further synthesis into products that today are reliant on fossil raw material; such as plastics, pharmaceuticals etc.

Fig 3. A comparison of production costs for DRI using natural gas + CCS, biogenic syngas + CCS and hydrogen. [FerroSilva feasibility study]

The way forward With an expanding global economy, demand for steel is increasing and using our resources in an optimal way is necessary.

A sustainable use of biogenic material with the FerroSilva process will no doubt play an important role in countries with a well-managed sustainable forest industry.

The same is also valid for countries with a significant agricultural industry, where substantial quantities of residues are available. Contrary to the popular view, suitable bio resources, and thus residues, are available in many parts of the world and are not limited to the boreal and northern temperate forest ecosystems. After setting up the initial plant, the plan is to construct and commission an even larger scale plant and to further expand the geographical footprint of the FerroSilva technology. � For further information, log on to www.ferrosilva.com, or email info@ferrosilva.com

Fig 4. The FerroSilva plant in its suggested location at the Ovako Hofors site.

[Design: Katarina Hamilton]

SUSTAINABLE STEEL STRATEGIES SUMMIT

Defining a green steel premium What is a green premium, and what place will it hold within the steel industry? Stanislav Zinchenko* discusses the definition and timeline of one of the industry’s recent buzzwords.

A ‘green’ premium is calculated as the difference between prices of green and conventional products. It shows how many more green products are more expensive than conventional ones. Many companies believe that customers will be ready to pay more for green products when these products appear in the market (which may not happen earlier than in three to five years).

For us the big question is whether there will be a need to overpay for green steel products. The answer depends on two factors.

The first one is future dynamics of production costs (both for green and conventional products). The second factor is the ratio between demand and supply within the market of green steel products.

Impact of production costs The most significant impact on production costs will come from CO2 and energy prices.

We understand that сarbon prices in the EU will rise. According to a consensus forecast calculated by GMK Center, the CO2 price in the EU will reach €133/t in 2030, while the current carbon price is about €90/t.

The EU ETS was constructed in a such way that the emission cap and free allocated carbon allowances are being reduced.

Moreover, the reduction of free allocations will be accelerated because of the introduction of CBAM. The sharpest reduction in free allocations is expected in 2029-2030 and from 2034, economic sectors under CBAM will not receive any free allowances.

All abovementioned reasons will lead to increasing demand for carbon allowances and rising CO2 prices.

Energy prices will differ across different regions. We see that low-carbon projects are concentrated in countries which have access to cheap renewables (Sweden, Norway,

Spain, Australia etc.) or cheap natural gas (Middle East). This strategy is reasonable because it gives competitive advantages to steel producers.

Decarbonizing the steel industry is highly dependent on the decarbonization of energy supply. First of all, it is connected with the fact that the main decarbonization route is DRIEAF. EAF work is based on electricity – 90% of costs to produce steel in an EAF is due to energy usage. DRI production needs natural gas and in future – hydrogen. Considering ‘green’ hydrogen, its production also needs the supply of renewable energy.

On the one side, we understand that the steel market will consist of green products and conventional ones. The same type of product can be produced using both green technology and conventional technology.

Both green and conventional producers will impact on prices.

*CEO, GMK Center

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On the other side, we take the position that steel prices in different segments are defined by the production costs of the producer. It is that producer, who can still meet current market demand, but whose production costs are the highest.

The calculations of the GMK Center and other researchers show that the difference in production costs and prices of green and conventional producers in 2030 will not necessarily allow for the definition of a green premium. DRI-EAF production costs using 70% hydrogen in the energy mix will be close to BF-BOF costs, so there will no room for green premiums.

Green premiums are only likely if energy prices are high: electricity – more than €100/ MWh, natural gas – more than €100/MWh. In such cases, more expensive energy will increase the production costs of DRI-EAF manufacturers, so it will increase the market price of their products. In general, increased energy expenses have a negative impact on the competitiveness of DRI-EAF manufacturers in comparison with BF-BOF. But in the market, DRI-EAF manufacturers with higher production costs will set higher prices because we suggest that only BF-BOF supply will not be enough to meet demand.

Green premiums can also exist if the price of hydrogen is high. With low hydrogen prices (less than €2.5/kg) the production costs of different technologies (both BF-BOF and DRI-EAF routes) will not significantly differ. Moreover, with a low hydrogen price, DRI producers from Europe can have an advantage over MENA producers in mixes with a high proportion of hydrogen.

There is an opinion that green steel premiums will be linked with carbon market prices. Indeed, carbon markets are designed to fix market mistakes. In a free market, carbon-intensive products will cost less than low-carbon ones. So, high carbon prices will increase the costs of conventional steel products thus making green products more attractive for customers. Suppliers of green steel products can receive benefits from high carbon prices because it makes conventional steel products more expensive.

steel consuming industries – from 32% in construction of buildings and up to 50% for domestic white goods. So, purchasing green steel could provide opportunities for Scope 3 emissions reduction for steel consumer industries.

We can expect the greatest demand for green steel from the automotive segment, which in the EU accounted for 16% of steel consumption or 23.3Mt in 2022. The automotive industry could decrease its supply-chain emissions by 34% by purchasing green steel and it will add only 0.5% to car manufacturing costs, based on the share of costs for the purchase of steel in total costs.

The same relates to other industries.

Green steel purchasing leads to minor changes in terms of costs for steel consumers.

In other words, buying green steel can bring benefits to consuming industries and they can afford it. But the potential is highly dependent on the specifics within each sector.

High market concentration and pressure from customers will stimulate the automotive sector to demand green steel from steelmakers. This also relates to white goods, where the positive perception of green products should stimulate producers to buy green steel.

Sectors that consume 20% of steel in the EU (or 29Mt) have high potential demand for ‘green’ steel. Automotive, renewables and white goods consume mainly flat steel products, that are usually produced by

conventional BF-BOF technology.

On the other side, construction, the largest steel consuming industry, doesn’t experience significant pressure to decrease emissions due to a lack of policies. It also has low market concentration, as the construction sector consumes mainly long products, which are usually produced via the scrap-based EAF route and resultantly it doesn’t have significant potential to reduce emissions by purchasing green steel.

Reducing supply chain emissions is an important part of manufacturing business decarbonization strategies. The largest market operators have targets to reduce Scope 3. But the share of supply chain emissions in Scope 3 of automotive and domestic appliances industries is relatively small – up to 18%. Companies have a greater incentive to move towards their Scope 3 reduction targets in other ways. For example, automotive companies – due to their focus on the production of electric vehicles; manufacturers of home appliances – at the expense of renewable energy sources.

Therefore, we estimate that until 2030, green steel consumption potential will be realized only partially, in the amount of up to 20Mt of steel in terms of finished products. It will also depend on commercial issues – such as green steel prices and premiums.

Green steel supply Since the DRI-EAF route has become the

Demand side Considering the demand for green steel, we must recall that steel holds the major share in total supply-chain emissions of Steel Times International

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leading decarbonization technology, we expect that the bulk of green steel supply will come from DRI-EAF producers. Twenty six projects have been announced globally with a total capacity of 67Mt DRI/HBI. Many of these are in Europe, where there are 16 projects with a capacity of 40Mt, which is 50% of the current volume of BF-BOF steel output. The companies implementing DRI-EAF projects include both integrated plants and new entrants (H2GS, GravitHy, BlastrGreenSteel). All projects of the integrated plants are captive, and the new entrants are partly oriented to the European HBI merchant market as well as to the production of finished steel products.

Existing technical solutions make it possible to use hydrogen as a reducing agent in the production of DRI/HBI, including as part of a mix with natural gas. Some of the projects initially declared 100% hydrogen usage as a reducing agent, which we consider as green HBI for further production of green steel.

These projects are AM Hamburg, AM Sestao, Thyssenkrupp, Salzgitter, H2GS in Boden and Iberia, SSAB HYBRIT, GravitHy, and

BlastrGreenSteel.

The supply of green steel by 2030 may exceed 25Mt, based on the announced projects and their 85% utilization. By 2030,

we expect no shortage of supplies, which eliminates the possibility of establishing green premiums.

It is also worth adding that there is no recognized certification or classification for low carbon and green steel in the world.

Therefore, the branding factor in the promotion of low carbon steel can be widely used. In other words, all low carbon steel producers will call their products green using brandnames for their products. So, all customers, who will need green steel, will be able to find the appropriate green product.

Some potential producers of low-carbon steel announced that they have reached agreements with buyers on a green premium.

Some producers and market researchers believe that green premiums can reach €200300/t. We do not deny that green premiums can exist, especially at the first stage of green steel’s market evolution. Producers of green steel will initially receive green premiums for a short period of time until market supply increases. Following this, we believe that green steel premiums will not be a sustainable practice. �

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04/07/2023 14:53:32

SUSTAINABLE STEEL STRATEGIES SUMMIT

Electrolysers supplied by Nel Hydrogen installed and producing hydrogen at Ovako’s Hofors steelmaking facility in Sweden

The Challenge of green steel The steel industry faces mounting pressure to reduce its carbon footprint from both environmental and economic perspectives. As we all know, the steel industry ranks among the top three global carbon dioxide emitters, predominantly originating from just a few locations.

This places steel plants at the forefront of the quest for decarbonization, presenting both an obligation and an opportunity for long-term sustainability. By Shin Nakamura* Every ton of steel produced in 2018 emitted an average of 1.85 tons of carbon dioxide, equivalent to roughly 8% of global carbon dioxide emissions and over 3 billion metric tons of carbon dioxide each year. In 2015, a significant milestone was reached in the global response to climate change when 190 nations adopted the Paris Agreement.

Subsequently, over 60 countries committed to achieving carbon neutrality by 2050. These commitments have escalated the pressure to pursue decarbonization across all industrial sectors, with steel production emerging as a

prominent target.

Aside from the Paris agreement there have been several factors influencing the industry to act on sustainability. Firstly, clients across various sectors are demanding their products are eco-friendly to promote to their customers.

Secondly, governments are tightening carbon emission regulations regarding reduction targets and pricing mechanisms, highlighted by initiatives like the European Green Deal.

And thirdly, investors are expecting manufacturers to address climate change concerns or risk shutting off their financial

support. According to a recent EY report, 78% of investors say they believe manufacturers should invest in improvements relating to environment, social, and governance (ESG) matters, even if it hampers their short-term profits.

Optimizing resources and collaboration Recent studies indicate that roughly 14% of steel companies’ potential value is at risk if they fail to reduce their environmental impact.

The challenge lies in economic competition

*Owner, Daiwa Steel Tube Industries and partner of IndustrialML

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and the long investment cycles of steel facilities, limited supplier capacities, and multibillion-dollar financing needs. These factors necessitate proactive strategies to navigate the decarbonization challenge.

Far too often, steel manufacturers, including Daiwa, are aware of competitors and the majority of their processes, but details are withheld about crucial elements that could provide the key in our sustainability efforts. We need to know the whole cycle from start to finish so that we can question each other on specific issues. It’s too easy to say, “We need fewer blast furnaces to address the emissions problem.” By collaborating thoroughly with competitors, we can look at how adjusting our use of raw materials and resources can help the environmental cause.

Technologies on the horizon It should be said that steel producers are exploring various decarbonization strategies.

One prominent approach is transitioning to hydrogen-based (H2) steel production. This transition can occur in new greenfield facilities or by retrofitting existing brownfield sites.

Still, the optimal path depends on technical feasibility, infrastructure, market demand, operating costs (including renewable electricity prices and scrap costs), and regulatory conditions.

Steel production primarily relies on two processes: integrated blast furnace (BF)/ basic oxygen furnace (BOF) and electric arc furnace (EAF). Given that the BF/BOF process depends heavily on coal, alternative technologies are crucial for decarbonization.

However, it is clear that generating the quantity of green hydrogen required for the steel industry demands an immense supply of renewable energy, making it challenging to scale-up rapidly. Steel producers, mostly in Europe, are nevertheless actively developing strategies and pilot programmes to assess various production technologies: � BF/BOF efficiency programmes aim to optimize blast furnace operations by altering factors like raw material composition, fuel injection methods, and energy sources like hydrogen or biomass. � In regions with reliable biomass supply, employing materials like heated sugar, energy cane, or pyrolyzed eucalyptus can be alternative reductants or fuels.

Ovako’s Hofors facility from the air � Carbon capture and usage (commonly known as Carbon Capture, Utilization and Storage or CCUS) is an emerging technology that leverages emissions to create valuable chemical products, such as ammonia or bioethanol. � Maximizing the share of Direct Reduced Iron (DRI) and EAF-based steel production, which relies on scrap, are environmentally friendly and flexible options.

Limitations and challenges While the prevailing consensus is that a combination of scrap, DRI, and EAF powered by hydrogen represents the most viable and long-term solution for achieving carbonneutral steel production, there are many factors to address for it to move forward successfully. These include the cost of green hydrogen, carbon dioxide prices, and technological advancements.

Thankfully, the cost of green hydrogen, derived from water electrolysis and powered by renewable energy, is expected to decrease significantly in the coming years – driven by the falling prices of renewable electricity and improvements in electrolyzer technology. But at the same time, this is a projection, and it remains almost twice as expensive as traditional methods.

While hydrogen-based steel production offers a pathway to carbon neutrality, it requires addressing several key factors: � Reliable access to renewable energy sources is essential to support large-scale hydrogen production. � Raw material availability. � A willingness among customers to pay a premium for carbon-neutral steel products is pivotal for the success of hydrogen-based steel [see Stanislav Zinchenko’s article in this issue]. � Policy measures including carbon

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pricing and subsidies for initial investments will encourage adopting low-carbon steel production.

Hydrogen-based steel production is poised to play a key role in the steel industry’s journey toward carbon neutrality, offering a mix of technologies that reduce operating costs, diminish investment needs, and enable carbon-neutral production. However, this mix includes optimizing existing processes, and it’s easy to ignore that fact.

Recycling steel One such process is the recycling of steel.

According to the Galvanisers Association, 40% of global steel production relies on recycled scrap. In the UK, 87% of construction steel undergoes recycling, which is obviously considerably less resource-intensive compared to primary steel manufacturing, given the level of heat required.

However, in numerous countries, wellestablished recycling systems for steel are still lacking. Steel can be damaged by other metals, such as copper, which changes when it comes to being exported and is, therefore, ‘downcycled’ into lower-grade products.

Addressing this issue could be the key to a continuous global steel supply.

The transition to hydrogen-based steel production won’t happen overnight but represents a pivotal long-term solution for carbon-neutral steel. A comprehensive approach is needed, blending short-term wins with long-term goals and relying on collaboration among regulators, governments, and industry stakeholders. Policymakers and businesses need to prioritize high-grade steel recycling and circular solutions to meet the demands for green steel in terms of speed and scale. �

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The gold standard?

The ResponsibleSteel Standard does not say no to new blast furnaces or ban the use of coal. The aim is not to tell companies how to make their steel, but rather to set a standard to reduce the impacts of their production processes – and that requires that all certified steel must have lower than average emissions for given inputs and production systems… and then to improve on that.

In the small town of Lulea in northern Sweden, they are reinventing how we make one of the most common materials in the modern world. The process of manufacturing steel being pioneered there may rescue the metal alloy from its growing reputation as an environmental pariah, responsible for approaching a 10th of the annual emissions of gases causing climate change. For the pilot plant on the shores of the Baltic Sea does away with the coal-guzzling blast furnace, one of the foremost technologies of the industrial age, and replaces it with a system that employs hydrogen, made using water and wind power.

Hydrogen Breakthrough Ironmaking Technology (HYBRIT) is a collaboration between the Swedish government and the country’s biggest steel, iron-mining, power, and car-manufacturing companies. It currently produces one tonne of steel per hour, some of which has gone into Volvo vehicles rolling off the production line during 2022. But by 2026, a commercial-scale plant should be turning out more than 1Mt of ‘green steel’ a year. And by 2050, its backers believe the technology could be making most of the world’s primary steel and cutting the industry’s carbon dioxide (CO2) emissions by more than 90%.

But HYBRIT, like other technologies now being developed to decarbonize steel making, is currently costly. It adds about $300 to the price of a car. So, are there enough makers and consumers of steel products willing to pay this green premium? Or are governments willing to subsidize it or regulate

to require it? If there are, then how can manufacturers effectively brand and certify their green-steel products – and give the financiers who must bankroll the trillion-dollar industrial transition confidence they will get returns on their investment?

Setting the standard At ResponsibleSteel, we believe we have the answer. Set up seven years ago by steel makers and civil-society activists as an independent body, we have devised an international climate, environmental, social and governance standard for steel that we believe can drive the market, while making it transparent, honest and verifiable.

Steel making is the largest materials industry in the global economy. Nothing else matches steel’s combination of strength, durability and low cost, for building bridges and skyscrapers, pipelines and railway tracks, ships and automobiles, stadiums and wind turbines, consumer goods and the machines that make them. Developed countries typically have around 10 tonnes of steel in use for every man, woman and child. Around two billion tonnes more is manufactured worldwide every year.

Steel builds big. The 163-storey Burj Tower in Dubai contains 31kt of the stuff; the Beijing ‘bird’s nest’ Olympic Stadium 42kt; and the Sydney Harbour Bridge weighs in at 53kt. Yet such statistics are dwarfed by the steel content of the world’s motor vehicles. More than a billion tonnes of steel is driving around the world’s roads every day.

But there is a downside. The production

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the high temperatures needed to melt the iron ore and release its oxygen, which is captured by the carbon in the coal. The resulting ‘pig iron’ falls out to the bottom of the furnace, from where it is further refined to make steel.

But the other output of the process is carbon dioxide. The production of a typical tonne of steel made in a blast furnace typically emits around 2.3 tonnes of CO2.

Not all steel comes from blast furnaces.

Increasingly, the world is recycling scrapped steel. This does not require carbon to remove the oxygen. It can be done by melting scrap in electric-arc furnaces. Rather than coal, these furnaces require lots of electricity. So the overall carbon footprint of the process depends on how that electricity is generated in the power station. Generally, that fuel is still

of steel is a prodigious source of the CO2 emissions warming the atmosphere. It is responsible for around 3.7 billion tonnes annually, according to the International Energy Agency (IEA). This is due primarily to its reliance on coal, the dirtiest fossil fuel, as both a fuel and a feedstock.

How steel is made Chemically, iron ore comprises various oxides of iron. So to make steel, it has first to be stripped of its oxygen atoms. This is done by mixing the ore with coke in a blast furnace.

Coke is made from a very hard form of coal known as metallurgical (as opposed to thermal) coal. When this is burned, it creates

more than three-quarters of new steel-making capacity currently under construction (India’s production is set to more than double by 2030, for example), the industry’s outsized contribution to climate change seems set to rise further – especially as other industries decarbonize.

This cannot go on. The IEA says that if the international community is to meet its pledges to limit warming to near 1.5°C, the steel industry needs to reduce its CO2 emissions by more than 90% by 2050. Time is short, warns SteelZero, a Climate Group initiative run in partnership with ResponsibleSteel with a focus on scaling demand for net-zero steel by mobilising quantified and timebound public commitments from private sector steel buyers, under which steel purchasers promise

coal or natural gas, resulting in worldwide average emissions for electric-arc furnace production of 0.6 tonnes of CO2 per tonne of output. But emissions can be much less if the electricity comes from low-carbon sources, such as wind turbines, solar panels, hydroelectric dams or nuclear reactors.

While some 85% of the world’s steel scrap does get recycled, this cannot meet rising global demand for steel, which has doubled in the past two decades. More than two-thirds of demand is met with primary steel from blast furnaces, making steel responsible for some 11% of global CO2 emissions and 8% of all greenhouse gas emissions. With blast furnaces making up

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and today our membership is responsible for around 13% of the global industry.

Under ResponsibleSteel’s membership rules, steel makers must submit at least one production site for certification to an entrylevel standard, which also means committing their business to working towards near-zero emissions, explains Thuong Bui, standard and assurance director at ResponsibleSteel. By late 2022, 53 sites had been certified across five continents, collectively producing over 100Mt of steel per year. A further 15 site audits are in the pipeline, Bui explains.

The universal standard?

ResponsibleSteel has enthusiastic NGO members, too. “We think it is going to be the universal standard,” says Reecha Upadhyay

with shrinking markets and stranded assets.

One company on the cusp of such a decision is ResponsibleSteel founder BlueScope. It says the alternative technology for making greener steel is not ready yet, so it intends to reline an existing blast furnace at its giant ResponsibleSteel-certified Port Kembla plant, to come into operation between 2026 and 2030.

The company says this does not undermine its environmental credentials. It has committed to reducing the carbon intensity of its steel making operations by 12% between 2018 and 2030, and the relining will help achieve that. It is also expanding scrap recycling at its operation in the United States and partnering with Shell and Rio Tinto to develop greener steel making technologies, which it says it will

to achieve 100% net-zero steel sourcing by 2050. It says that to be on track will require ‘substantial emissions reductions within this decade.’

Rising quantities of scrap There is good news for the long term. The carbon intensity of steel production should fall as rising quantities of scrap become available to make new products. But the long lifetime of many steel products, especially in construction, means that in most countries supply will continue to lag many decades behind demand, says ResponsibleSteel cofounder Matthew Wenban-Smith, who led on the greenhouse gas requirements of the new ResponsibleSteel International Standard V2.0.

“To achieve net-zero steel, we will have to use steel efficiently, and maximize the recovery and recycling of scrap. But that is not enough,” he says. Even on optimistic assessments, there won’t be enough scrap to be the key to decarbonizing steel making for at least half a century, even if every electricarc furnace runs on renewable energy. So the industry urgently needs other solutions. “We need to produce net-zero steel from iron ore – and at scale.”

Enter ResponsibleSteel. Our organization was set up in 2015 by veterans of past green business certification systems such as the Forest Stewardship Council (FSC), to stimulate this process. Co-founder Francis Sullivan, today calls ResponsibleSteel ‘a coalition of the willing.’ We had initial funding from ArcelorMittal, the world’s second-largest steel producer, and Australia’s BlueScope Steel, Steel Times International

of Climate Catalyst, which campaigns on green steel. “We tell governments and others considering devising their own standards: don’t spend years reinventing this. The work is done. Look no further.” But it is early days for delivery, she says. “None of the certified sites yet have clear financed pathways and action plans to achieve near-zero.”

That is hardly surprising. The transformation will be expensive. Companies considering the necessary investment fear greener, more expensive products will lose out to cheaper and dirtier competitors. But on the other hand, if markets start demanding certified green steel at scale, first movers may have an advantage, as slow adopters find themselves SUSTAINABLE STEEL STRATEGIES SUMMIT 2023 39

BOX ONE – GREENHOUSE GASES GRAPH PRODUCED BY RESPONSIBLESTEEL AND STEELZERO ResponsibleSteel’s certification system is evolving. On 14 September 2022, initial requirements for the certification of production sites were extended, following an extensive consultation. The new International Standard V2.0 sets additional tougher requirements for certifying steel, allowing steel makers that meet these to make enhanced claims to their customers.

Under the system, sites can be certified at four levels of emissions of greenhouse gases (not just CO2) of increasing strictness. To meet Level 1, the entry level for initial steel certification, producers must be better than the current average for the proportion of scrap in their feedstock. Where there is no scrap, that average is the greenhouse gas equivalent of 2.8 tonnes of CO2 per tonne of steel. It declines on a sliding scale as more scrap becomes part of the mix, to 0.35 tonnes for 100% scrap.

Level 1 is intended to be temporary. As Smith of Mighty Earth puts it: “We need to get rid of Level 1 as soon as possible. Better than average is not compliant with Paris.” Level 2 requires emissions a quarter below the current average. Levels 3 and 4 are tougher again, with Level 4 requiring emissions below 0.4 tonnes of CO2 per tonne of steel for no scrap, and below 0.05 tonnes for all scrap. The level will allow those who achieve it to claim “near-zero” emissions.

Certification requires companies to track and publish updates on their progress to reducing site emissions and on their current performance to produce certified steel.

ResponsibleSteel does not currently set a timetable for companies to graduate through the levels. But Climate Catalyst says they should aim to hit Level 2 by 2030, Level 3 by 2040 and Level 4 by 2050. “It’s going to take a massive effort to get to Level 4 by 2050,” says Heaton. “But that’s what we have to aim for.”

adopt swiftly as they become commercially available and as markets open up for green steel.

The stakes are high. Blast furnaces last many decades and generally need their interior brickwork replaced every 15 to 20 years, at a cost of hundreds of millions of dollars. Under business-as-usual, half of all steel plants globally are due for this relining before 2030. The Global Energy Monitor, an independent think tank, reckons that the steel sector could spend $70 billion on blast furnaces in the next few years, which it estimates would lock in the future emissions of

some 65 billion tonnes of CO2.

Surging demand Annie Heaton, CEO at ResponsibleSteel, expects that demand for decarbonized steel will surge with the first ResponsibleSteel certification of steel, due in 2023, and with the growing influence of SteelZero among steel purchasers. “We believe buyers will compete to be responsible,” she says. “Our view is that the market will reward the right thing if the conditions are there. The big question for both private and public sector procurement teams has been how they can specify steel in a way

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that will make a difference and be credible at the same time. If we all can be clear and consistent on that, the market can really drive change. Our aim is to work with the market to create those signals to drive that change.”

ResponsibleSteel avoids being technically prescriptive. The ResponsibleSteel Standard does not, as some NGO activists propose, say ‘no new blast furnaces’ or ‘banish coal now’. “Our position is not to tell companies how to make their steel, but to set a standard to reduce the impacts, however, they make it,” says Heaton. Initially, that requires all certified steel to have lower than average emissions for given inputs and production systems. And then to improve on that.

Critical here is the proportion of scrap used in production. This is by far the biggest determinant of emissions, but one over which a shortage of supply means many producers have little control. So ResponsibleSteel’s emission standard has a sliding scale from where no scrap goes into production and higher emissions are allowed, to 100% scrap where the required levels are much lower (See Box 1).

The purpose of this approach is partly to maximize industry buy-in and kick-start the industry towards low-carbon. But partly also because it makes no sense to set a standard that stimulates a rush for scrap when there is only a limited supply. That may help green the output of downstream companies that can afford to pay the most and corner the market in scrap, but it would penalize others, especially in developing countries with little scrap available. “It would be a beggar-myneighbour strategy,” says Heaton.

This pragmatic, flexible approach can be a hard sell to policymakers in Europe who are attracted to promoting local recycling and adopting simple carbon-intensity targets for steel, she says. “We can seem to be apologists for dirty steel makers.” But it has widespread backing among industry analysts, including the IEA, which publishes its own sliding scale. Many environmental advocates also agree. “We need to increase scrap use as much as possible, but it has a finite supply, so you can end up with cherry-picking by the auto industry and leaving other sectors without. That doesn’t help anyone,” says Roger Smith, Japan-based project manager at Mighty Earth, a US-based environmental group and ResponsibleSteel member.

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Luckily, there is an alternative to blast furnaces. It turns iron ore into pig iron without melting, by running a huge electric current through the ore, and stripping out the oxygen atoms using a gas, usually natural gas. A few plants already use this system, known as direct reduction, notably in the Middle East, where natural gas is cheap and plentiful. They typically produce half as much CO2 as coal in a blast furnace. But direct reduction can also run on hydrogen. Then, with no carbon involved, the by-product is not CO2 but H2O – water.

The hydrogen must be manufactured, however. This is best done by electrolyzing water, which also requires large quantities of energy. But if the energy for both making this ‘green hydrogen’ and running the furnace comes from low-carbon sources, then primary steel can be made with CO2 emissions as low as 0.1 tonnes per tonne of steel.

This is what HYBRIT is piloting in Sweden.

Vattenfall, the Swedish state electricity utility and partner in the project, calls it ‘the biggest change in steel production in over a thousand years.’

Many regard direct reduction with green hydrogen as the technical Holy Grail for near-zero production of primary steel. If it happens at scale, then it will require the creation of a huge new industry for producing green hydrogen. Alongside SSAB, a growing number of steel producers now plan to use the technology to deliver near-zero emissions by 2050, from, ArcelorMittal, Voestalpine and Steel Times International

ThyssenKrupp in Europe to POSCO in South Korea.

Alternative fuels Another, less technically radical way to lower emissions in primary steel production may lie in using alternative fuels in blast furnaces. For instance, coal can be replaced as a carbon fuel and feedstock by biomass. In Brazil, steel companies already grow trees to make charcoal to burn in blast furnaces. Provided new trees replace those cut down, this could theoretically be carbon neutral. But would it in practice?

This issue has been a talking point during discussions about ResponsibleSteel’s Standard. Some environmentalists argue that timber would be better used to replace steel in construction, where the carbon remains

in the wood. Others say that the claimed carbon-neutrality is a fantasy and add that there is only a limited amount of land to grow trees, most of which already has other uses, such as growing food.

Coal could itself have a future if blastfurnace CO2 emissions were captured, and either used as an industrial feedstock or buried underground. Carbon-capture technology has been piloted on a small scale in the steel industry, but nobody has yet scaled it up sufficiently to deliver the kind of carbon reductions needed. Still, the British government appears keen. It envisages creating a carboncapture hub near British Steel’s Scunthorpe plant, which could collect CO2 from there and other local heavy industries, for burial in nearby former gas fields under the North Sea. However it is done, creating low-emission ways of making primary steel is likely to remain costly, and increasingly it looks like a holding strategy until the world generates enough scrap to meet most demand through recycling in electric-arc furnaces.

Steel is already one of the most recycled of all materials. But scrap’s takeover of the industry is bound to be slow. In many developing countries that are still installing their urban infrastructure, there is as yet little scrap available. But even in developed nations its use varies greatly. In Europe, much of the abundant scrap is exported to countries where lower electricity prices make running electric-arc furnaces cheaper. The UK exports three-quarters of its scrap steel, and just 18% of its steel production is from scrap.

Green steelmaking in the USA But in the US, which has lower electricity prices, around 70% of steel production is from scrap. (As a result, the carbon intensity of its steel industry is lower than most other countries at less than 1 tonne of CO2 per tonne of steel).

Wherever supplies are available, scrap recycling needs to be encouraged. Alongside this, we at ResponsibleSteel are also keen that our Standard ensures that electric-arc furnaces reduce the CO2 embodied in their output, by powering them with low-carbon electricity. Many still run on electricity generated in power stations that burn coal.

“Just because electric-arc furnaces are lowercarbon than blast furnaces doesn’t mean they have a get-out,” says Jen Carson, head of

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BOX TWO – SOURCING Alongside greenhouse gases, the second addition to the ResponsibleSteel Standard is bringing responsibility for the sourcing of the industry’s input materials. Supply chains are complex, so this will take time and patience, says Bammert. Initial rules require companies to commit to responsible sourcing in principle. Then they must develop a full understanding of their supply chains, and assess their suppliers’ environmental, social and governance performance. Once the performance of suppliers has been assessed, companies will be required to increasingly source from suppliers that have a proven good performance, and to report publicly on their efforts.

Performance in the supply chain will, where possible, be assessed according to existing industrial certification standards, such as those of Bettercoal, the Initiative for Responsible Mining Assurance (IRMA), and for timber or charcoal replacing coal in blast furnaces, the FSC. There are some quantifiable targets along the way. For instance, Level 1 requires producers to know where 80% of their iron and coal-based inputs come from, as well as the country of origin of 40% of scrap, and to have 100% of wood supplies from FSCcertified plantations. Level 2 will require 80% of iron and coal to come from suppliers that meet recognized performance levels, and 30% of scrap to come from audited suppliers.

By Level 4, certification will require producers to know where 98% of their iron- and coalbased materials comes from, with 80% from suppliers meeting recognized standards, and to know the country of origin of 80% of scrap inputs, with 60% of that scrap from audited suppliers.

industry at Climate Group. “Coal has to leave electric-arc furnaces, too.”

Steel companies are often big enough customers to demand green electricity from their local grids. One is US Steel, which is doubling the capacity of its recently certified Big River Steel electric-arc furnace site in Arkansas, and plans to roll out a range of branded sustainable steel products made there. It has encouraged its energy supplier to invest in new solar power capacity to meet its demands, according to senior vice president and chief strategy and sustainability officer, Richard Fruehauf.

While low-carbon steel is high on the industry’s agenda, it faces other challenges that must be addressed to meet society’s expectations of 21st century businesses.

Those challenges are also reflected in ResponsibleSteel’s principles and Standard.

“This non-carbon stuff is not, as some say, baggage slowing down the journey. We can’t and won’t ignore other issues,” says Heaton. “You can’t be certifying steel products that have low carbon emissions but are bad on the environment or human rights,” agrees Smith at Mighty Earth.

These issues are important in the audits carried out by independent bodies for ResponsibleSteel certification, says Sabine Bradac who has carried out these audits at LRQA, the successor to Lloyds Register.

ResponsibleSteel’s audits are more thorough than many, she says, covering everything ‘from ethical governance, health and safety,

human rights, collaboration with interest groups, to greenhouse gas and noise emissions, water management, biodiversity and decommissioning procedures.’ Auditors ‘interview not only employees, but also representatives of communities, NGOs, environment agencies and others,’ she says, because the companies must show they are willing to co-operate with these stakeholders.

ArcelorMittal’s European CEO Geert Van Poelvoorde observes that the process ‘has helped us improve our approach towards our rights holders, including our local communities, our employees, and the contractors working on our sites.’

Labour and human rights Still, there are issues to be resolved. Setting

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an international industry standard for labour and human rights is complex, because even developed countries have widely differing national laws that may not meet the expectations of stakeholders in the certification process.

For instance, International Labour Organization (ILO) norms on labour rights, which are incorporated in ResponsibleSteel’s Standard, are not enshrined in United States law. This has created problems for the member of the ResponsibleSteel board from the trade union movement, the Genevabased international federation of trades unions, IndustriALL. Matthias Hartwich, its director for base metals, says that while the Standard is generally “strong and wellelaborated, and sometimes higher than ILO standards,” auditors aren’t always seen as fully implementing it to the letter.

This is where ResponsibleSteel’s assurance programme has the discretion to encourage progress rather than making binary assessments of pass or fail. Where one element of the Standard has not been met, the auditor can flag a ‘minor non-conformity’ for the site to improve on before the auditor’s next visit in 18 months’ time.

Establishing the credentials of process input materials from mining and elsewhere is another key requirement of certification.

Overall, iron mining is estimated to be responsible for 23% of greenhouse gas emissions from the mining sector. But establishing the actual environmental footprint of these activities is not easy to achieve, says Marnie Bammert, who led the drafting of requirements on sourcing at ResponsibleSteel.

“Supply chains are so complex. Some companies don’t know where much of their material comes from.”

So the current entry-level requirements ask for companies to set up procedures, collect data, increase transparency and assess and seek commitments from suppliers. At subsequent levels, they will adopt existing recognized standards – for instance on responsible mining – asking steel manufacturers to source from suppliers meeting specific performance indicators (See Box 2).

A growing issue will be ensuring good working conditions for the millions of collectors and sorters of steel scrap across the world, whose supplies the industry will Steel Times International

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use in increasing volumes. In some parts of the world, these small operators often operate in the informal economy. “Scrap is often regarded as sustainable, because it is recycling,” says Bammert. “But there can be issues around environmental and labour conditions, and few standards exist.”

The ultimate aim for most resourceintensive industries in the 21st century is likely to be the more efficient use of energy and materials. Steel will be no exception. So how can it be done? Many of the gains are likely to be downstream, among the major industrial users of steel.

More than half of the world’s steel is used in construction. The CO2 emissions from steel production that is embodied in buildings and infrastructure is huge. This received little attention until recently, as the standards and purchasing decisions of the construction industry have come under closer scrutiny. Some companies are addressing the challenge.

Wind farms One is Orsted, a leading Danish wind-power developer and founder member of SteelZero.

The construction of wind farms is among the largest consumers of steel in Europe today. A single wind turbine can contain as much as 300 tonnes of steel. But the company says the specialised alloys needed are not available from low-carbon sources. It recognizes that it is crazy to fritter away climate gains by generating low-carbon electricity from its turbines by using high-emission steel in their construction. So, it intends to work with suppliers to have a carbon-neutral supply chain by 2040.

Also ahead of the game is Lendlease, an Australia-based international property company that is a member of both ResponsibleSteel and SteelZero. It procures 600kt/yr of steel for its buildings. But even this demand leaves it a minnow in the marketplace. Still, says the company’s head of sustainability in Europe, Paul King, by combining with other companies in construction, shipping, car production and the renewable energy industry and others, “we can send a stronger signal to steel manufacturers, and help them justify greater investment in decarbonizing further.”

Greener purchasing is not the only approach, however. Sometimes not Steel Times International

purchasing is best.

To make their building stock more energyefficient, some property companies want to tear down poorly insulated buildings and replace them. But architects are warning that such efforts often ignore the emissions embodied in the new structures, which will typically make up a third of an office block’s lifetime emissions.

Whole life carbon assessments Some European countries require mandatory ‘whole life’ carbon assessments for new buildings. But not yet the UK, where the issue has surfaced over plans by the retail giant M&S to demolish and replace a landmark store in central London. Objectors say the project will generate 40kt in embedded CO2

emissions. M&S claims the energy savings in the new building will recoup this within 17 years. A final decision awaits a public inquiry.

The optimum solution when replacing existing buildings will often be to reuse structural steelwork, says Will Arnold, climate change specialist at the UK Institute of Structural Engineers. “My mantra is simple: use less stuff,” he says. A bit of ingenuity can halve material use in buildings. Buildings should from now on be designed with reuse in mind – for example, by using standardsized beams, and employing bolted connections rather than welded joints.

The second largest user of steel is the vehicle industry. The average road vehicle contains almost a tonne of steel. With many makers keen to improve the saleability of their vehicles by improving their green credentials, Sullivan sees the industry as a key market driver for greening steel production.

Especially, he says, since the trend to electric vehicles running on renewable energy means the embodied emissions from steel used in their construction is becoming an increasingly large part of their lifetime carbon footprint.

Volvo keen on HYBRIT Thus, Swedish car maker Volvo is keen to be part of the HYBRIT project. The company was also the first car maker to join SteelZero.

The ResponsibleSteel Standard requires steel makers to disclose verified information about the steel they supply, giving credibility for Volvo and others in meeting their supply-chain

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targets. “It limits our exposure to future climate risks and regulations,” says chief procurement officer Kerstin Enochsson.

Fruehauf at US Steel says his car-making customers ‘are all going green.’ His company recently introduced a sustainable steel line, verdeX®, which he hopes will comply with ResponsibleSteel’s product certification.

Meanwhile, he wishes more of his customers would join ResponsibleSteel and recognize its certification. “We have one big auto maker here who sends us a long questionnaire every year to fill in on sustainability issues. But the

questions all coincide with the principles of ResponsibleSteel’s Standard,” he says. “So, if that company would just recognize that our certification answers their questions, life would be a lot simpler.”

Fruehauf says this story illustrates one of the great potential benefits for the steel industry from the widely applied ResponsibleSteel Standard for steel. “There are a lot of people out there – environment groups, customers, bankers, regulators and so on – with their own definitions. An agreed definition would help us all.”

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Governments A third group of market players should be even more influential, however: governments.

Their policies will be critical to advancing low-carbon steel, through regulation, financial subsidies for ‘green steel,’ and market incentives. In June 2022, the European Parliament adopted a carbon legislative package including the new Carbon Border Adjustment Mechanism (CBAM). Through the CBAM provision, the EU plans to impose a carbon levy on imports if certain product groups are deemed ‘emissions intensive,’ including iron and steel, starting in 2027, with a full phase-in taking several years. The levy will be designed to match the costs incurred

by European steel manufacturers who must buy emissions permits under the EU Emissions Trading Scheme (ETS) and is intended to stop high-carbon producers gaining a competitive advantage in European markets.

It may also encourage investment in lower emissions technologies outside the EU. “The EU tariffs are already concentrating minds in Asia,” says Upadhyay at Climate Catalyst, which works with governments in the region.

“It is an incentive for them to up their game.”

Government procurement policies But equally important will be government procurement policies. Public construction projects such as bridges, buildings and railways account for around a quarter of

Steel Times International

SUSTAINABLE STEEL STRATEGIES SUMMIT

global steel use. This makes governments into major market players. If they choose, they can set, recognize and uphold standards that other purchasers will follow.

At the climate COP in Glasgow in late 2021, world leaders launched a Breakthrough Agenda. They declared their hope that by 2030 ‘near-zero emissions steel’ will be ‘the preferred choice in global markets.’

ResponsibleSteel and SteelZero are among the initiatives included in the agenda, to drive private sector demand for low-emissions steel.

But will governments themselves play their part in making this happen? Some have already moved ahead. The state of California sets thresholds for the levels of embodied CO2 in steel purchases for public works projects. But elsewhere policies on public procurement often lag.

The Industrial Deep Decarbonization Initiative (IDDI) was designed to drive some momentum here, by bringing together governments in a pledge to buy low-carbon steel and concrete under the auspices of the Clean Energy Ministerial (CEM). At the end of September, leading countries including Canada, Germany, India, and the United Kingdom, pledged to require low-emission steel and cement in public construction projects starting no later than 2030, and the governments of Saudi Arabia, the United Arab Emirates, and the United States announced they were joining the initiative.

This is welcome news.

The British government, as the host in Glasgow, was a prominent signatory of the Breakthrough Agenda. Yet until now it had not set embodied CO2 standards for its own steel projects – including the HS2 high-speed rail line, which is currently Europe’s largest construction project, and will require an estimated 2Mt of steel over the current decade. “Post-Glasgow, there has been a huge misalignment between what governments say on policy and what they do on procurement,” says Sullivan.

Finance Right now, bankers are trying to look greener.

There is a growing appetite among many financiers to set tough decarbonization standards as a condition for their investment.

Steel making is a very capital-intensive business, and many financiers see the industry’s continued high emissions as ‘a Steel Times International

BOX 3: CHINA

In the race to decarbonize the world’s steel, much hangs on China. The country is currently home to half the world’s steel production, much of it to meet the demands of its booming construction sector. Annual Chinese steel consumption is currently 0.7 tonnes per person – higher than peak levels seen in the past in Europe or the US. Its blast furnaces take more than 30% of the country’s coal output.

Beijing promises more scrap recycling in future, using electric-arc furnaces. But this could be a slow change since the average age of its blast furnaces is today only 13 years.

China aims to peak steel industry emissions by 2030, but an analysis by the environment think tank E3G suggests that a 1.5-degree compatible pathway requires those emissions to be halved by then.

ResponsibleSteel has high hopes of launching its Standard in China. “I think we will find China willing to engage,” says Heaton. “In some areas, such as air pollution, Chinese standards are often already higher than in Europe.”

hotspot in their portfolios [that] poses risks from a valuation standpoint, says Lucy Kessler, a climate finance specialist at the think tank RMI (formerly the Rocky Mountain Institute).

Future investments in blast furnaces risk becoming financial liabilities, and even if those furnaces continue to function, they will put many financiers at odds with their public climate commitments. ResponsibleSteel’s Standard can serve as a risk-mitigation tool for banks and financial institutions lending to or investing in the industries, says Shiva Kumar, its policy and impacts director. “We want to tell the financial world that there is a standard you can use to benchmark your portfolios.”

We have a huge potential to help galvanize finance for decarbonization, with credit linked to ResponsibleSteel certification,” believes Kumar.

Substantial emissions mitigation Some in the finance world say the Standard does not yet go far enough, however.

The Climate Bonds Initiative, a member of ResponsibleSteel that has been developing its own certification system for green investment across industry, has been consulting on a proposed standard for steel.

“Our standards don’t allow investment in old blast furnaces without substantial emissions mitigation,” says its industry transition analyst, Fabiana Contreras. “Investors want more.

We only certify if 50% of emissions will be mitigated before 2030. Industry groups don’t like our pathways. But we say the technology is in place and the money needs to go there.”

This assertive approach is matched by the Europe-based Institutional Investors Group on Climate Change, whose members include Goldman Sachs, Allianz and other pension

funds, banks and asset managers. In 2021, it called for the industry to make cuts in its emissions of 29% by 2030. But it noted that, while existing technology could deliver 85% of the target, ‘the sector is currently not on track… by some margin.’

No insuperable barriers The bottom line is that despite the uncertain timelines, there are likely to be no insuperable technical barriers to the global steel industry cutting emissions by 90% by 2050 or so.

Near-zero is achievable. By then, coal burning in blast furnaces could be all but banished, except when equipped with carbon capture. Continuing production of primary steel could mainly employ direct reduction technology using green hydrogen. But recycled scrap could be the main source of steel from new products and infrastructure.

Steelmaking in the year 2070 By 2070, things could look even better.

Primary steel production could be largely phased out, as the world’s needs are met from recycled scrap. The HYBRIT plant in Lulea may lie abandoned.

By 2070, things could look even better.

Primary steel production could be largely phased out, as the world’s needs are met from recycled scrap.

Steel production will require a lot more electricity than today, which will have to come from low-carbon sources. It would be a complete transformation, with an industry that helped drive the industrial revolution reinvented for the Anthropocene.

If it happens, then perhaps ResponsibleSteel will be out of business, our job done. �

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