So far, companies representing half the global steel industry’s capacity have pledged to reach net zero emissions by 2050, which scientists say is required to contain global warming at 1.5 degrees Celsius by 2100 to avoid disastrous economic and social consequences of climate change.
Global carmakers with manufacturing in China will be a key driver of green steel demand, said Peter Bakker, CEO of Switzerland-based World Business Council for Sustainable Development and a member of Mercedes-Benz Group’s advisory board for integrity and corporate responsibility.
China, the world’s largest vehicle market, accounted for 53.7 per cent of global steel output last year.
In 2019, the German firm unveiled its ambition to make its entire fleet of new vehicles carbon-neutral across the entire value chain and life cycle by 2039.
“Many global auto brands have joint ventures in China,” Bakker said. “They will put pressure on Chinese suppliers to produce green steel. Meanwhile, the likes of BYD and Nio will need to use green steel to make zero-emission vehicles for exports to developed markets, or people won’t buy them.”
Bakker expects international standards will emerge within a year on methodologies for calculating consumer products’ carbon emissions across the supply chain, which will help differentiate rival products in terms of sustainability.
Using hydrogen in steelmaking is a key technology pathway to achieve near-zero emissions in the industry in the long term, according to the report.
But current global engineering and construction capacity is only sufficient for producing 70 million tonnes of steel annually using low-carbon hydrogen, according to Agora Industry. This amounts to around half the additional capacity needed by 2030 for the industry to be aligned with the 1.5 degrees global warming goal.
“One key solution would be to retrain engineers and construction workers to build direct-reduction iron plants,” Agora’s report said. “Another solution is to facilitate the entry of new players.”
A Chinese labourer loads coal into a furnace as smoke and steam rises from an unauthorised steel factory in Inner Mongolia, China, in this file photo from November 3, 2016. Photo: Getty Images
The cost of low-carbon hydrogen will be a key determinant of the future competitiveness of steel mills, which would find it financially more attractive to import low-carbon iron, it said, instead of shipping hydrogen over long distances and use it to produce low-carbon steel. Low-carbon iron refers to the metal produced using methods that are less energy intensive and produce less emissions.
Meanwhile, Australia-based iron-ore-mining giant BHP said in a blog on Friday that it plans to help the steelmaking industry develop technologies capable of slashing emissions by 30 per cent by 2030, adding that the industry must pursue multiple pathways to achieve decarbonisation.
Due to China’s limited availability of scrap steel for steelmaking in energy-efficient electric arc furnaces, it is imperative that emission abatement technologies be developed for plants that turn iron ore and coal to steel in blast furnaces, BHP said. Carbon-intensive production using blast furnaces constitutes 70 per cent of global steel capacity and 90 per cent in China.
Such abatement technologies include hydrogen injection, gas recycling, carbon capture and replacing fossil fuels with biomass alternatives, BHP’s sustainability executives said in the blog.
“To materially reduce the emissions intensity of primary steel production in the 2030s … widespread deployment of blast furnace modification technologies that abate emissions are required in parallel with those for other process routes, which we think are likely to take longer,” they said.
