Steel, partners strive for net-zero energy target

Steel mills’ power sources are already shifting toward more solar, wind and other renewable sources from reliance on coal and fossil-fuel-based electricity. The next stage might be a more holistic transformation of some production processes and preparations for commercially viable “green hydrogen” systems. 

The ultimate quest is to achieve the carbon net-zero target outlined in the United Nations’ 2016 Paris Agreement, with the European Union aiming for full compliance by 2050. In the United States, President Joe Biden has proposed a carbon-free electrical grid by 2035. 

The iron and steel industry accounts for an estimated 7-9% of the world’s greenhouse gas emissions, according to Anne-Claire Howard, chief executive officer of ResponsibleSteel, a third-party global provider of sustainability standards and certifications in ethical sourcing and emissions. Therefore, the industry will be under pressure from regulators and customers to succeed in reducing its carbon footprint, so must understand the financial implications of going green. 

To gain ResponsibleSteel certification, a steelmaker “must have a corporate commitment to meeting the Paris Agreement and an action plan for the certified site to meet the standards,” she said.

Kevin Dempsey, president and chief executive officer of the American Iron and Steel Institute, said companies including US Steel Corp, SSAB Americas, Cleveland-Cliffs and Nucor Corp are in the midst of projects to reduce their carbon footprint, initially focusing on solar panels, wind energy and other non-fossil-fuel sources. 

“At every industry, there is an increased emphasis on sustainability, and most of it is the private-sector customers’ [intention] to document the supply chain and to document the carbon in it,” he said. “A number of our members are getting involved in projects with the electric utilities to guarantee a renewable source of energy.”

The new Cleveland-Cliffs direct-reduction plant in Toledo, Ohio, is currently fueled by natural gas in producing hot-briquetted iron (HBI). The facility, however, also has the built-in capability to run mostly on hydrogen – once hydrogen becomes commercially viable. 

In the pursuit of net-zero carbon emissions, the commercialization of “green hydrogen” will be important because legacy methods of isolating hydrogen molecules employ natural gas and end up releasing carbon into the atmosphere. The “green” process starts with water and releases oxygen only. 

“Hydrogen is the big thing at the moment, but it depends on how you are producing this hydrogen,” Howard said. “Is it energy-intensive, and are you then shooting yourself in the foot?”
 
Large steel companies are waiting for the cost of the “green” version to come down, but consider it a viable alternative. 

Fueling the green transition is an expensive undertaking that will create extreme competition for green hydrogen, raw materials and scrap grades. Read our latest report: The true price of green steel, where we look closely at the impact on supply chains and steelmaking production margins.

“There’s certainly a place for hydrogen, but it’s very expensive today. When you start to talk about using hydrogen to produce iron in a furnace, the industry is looking at a $1-1.50 per kg target,” according to Pinakin Chaubal, ArcelorMittal’s vice president and chief technology officer.

In April, US Steel became the first North American steelmaker to become a member of ResponsibleSteel. That same month, the 120-year-old Pittsburgh-based company pledged to achieve net-zero carbon emissions in accordance with the Paris Agreement by 2050. 

Howard said a subsequent new US-based member of ResponsibleSteel has the potential to further transform the energizing of steel and alloy production. That company is Boston Electrometallurgical Co, more commonly known as Boston Metal.  

Boston Metal is developing a process called molten oxide electrolysis, which uses electricity instead of carbon-emitting fuels to reduce metal oxides, including iron ore, according to Gino de Villa, decarbonization technologies lead at the engineering and project-management firm Hatch, which is aiding Boston Metal in deploying the technology.

“The main idea is you are using electrical energy rather than fossil-fuel-based energy for the process,” de Villa said. “It has the potential to decarbonize the current process. The objective is emissions-free steelmaking.”

One of Boston Metal’s initial commercial projects is a technology introducing a cleaner way to produce ferro-alloys. In February, Brazilian mining giant Vale acquired a minority stake in Boston Metal. Another early backer is Bill Gates’ Breakthrough Energy Ventures, whose roster of investors or board members includes the likes of Prince Alwaleed bin Talal, Jeff Bezos, Mike Bloomberg, Jack Ma and David Rubenstein. 

Other legacy steel companies view the path to net-zero as achievable, and their broader business plans ultimately could benefit as the target date approaches.  

“The 2050 timeline can make sense,” Chaubal said. “We can plan for our facilities to reach the end of life. We hope that in this timeframe the price of renewable electricity and the cost of hydrogen production can come down to an area that is palatable. We will develop technology that will use electricity to go directly from iron ore to iron, while building the modules necessary to make the transition feasible. “

Because the production process at integrated steel mills generates its own power, and electric-arc furnaces (EAF) use incoming electricity, the two types of companies will need to pursue a different equation for achieving net-zero carbon emissions.  

ResponsibleSteel is working with steelmakers who are involved in both blast furnace production and EAFs to ensure that all certified steel is produced responsibly, not only in reducing carbon output but also emphasizing sustainable mining practices, human rights and recycling. 

“Ultimately, steel could be a fully circular economy,” Howard said. 

The approach of the Chinese will be influential in the global decarbonization process, Howard said, because about half of the world’s steel originates in China. 

“The rest is really around how quickly the new technology can be brought to scale and where is the funding going to come from,” she said. “Policy plays a huge role. How are governments supporting the sector in what is going to be a very expensive transformation?”

Dempsey said the effort will likely achieve more success if governments avoid micromanaging the exact pathways to the net-zero objectives and instead allow the private sector to experiment, compete and make its own choices. 

Mark Shenk in New York contributed to this report.

Decarbonization complicates an already complex marketplace. Our latest analysis, ‘The true price of green steel’, does a deep dive into the ripple effects that overhauling the markets will have on the steelmaking process and supply base.

Read more from our steel decarbonization series.