Steelmakers Grapple with How to Cut Carbon Emissions

In this article, we shall discuss steelmakers grapple with how to cut carbon emissions.

The recent shipment of 24 metric tons of Swedish steel could be the start of a new era the steel industry hopes for cleaning up one of the world’s dirtiest industries.

Major European and American steel companies, such as ArcelorMittal SA MT -5.29% and Cleveland-Cliffs Inc., CLF -2.86%, are stepping up efforts to limit carbon emissions, hoping to win customers and avoid mounting pressure. The government wants to stop it.

Sweden’s SSAB SSAAY 0.43% AB on Thursday shipped what it says is the world’s first commercial fossil fuel-free steel to truck maker Volvo AB. But progress has been slower in developing countries that produce the most steel, meaning the industry is likely to remain a major producer for years to come, analysts said.

Greening the industry is also expensive, and the steel used in cars, construction, and appliances is expected to become more expensive.

The challenges facing the steel industry reflect the difficulty of decarbonizing the wider economy as governments and investors place greater emphasis on curbing climate change. According to the International Energy Agency, steel produces 7% of global carbon dioxide emissions related to energy use, more than any other industrial sector.

The International Energy Agency predicts that demand for steel will continue to increase, so the industry’s greenhouse gas emissions must be halved by 2050 to meet global climate goals. “I agree that in the short term, the transition will be difficult,” ArcelorMittal Chief Executive Aditya Mittal said in an interview. Steel is a huge carbon emitter because of the way it is made.

However, according to world steel, only about 13 percent of global steel production last year came from the EU, UK, and North America.

China produces about 57 percent of the world’s steel, about 90 percent of which is produced using blast furnaces, according to global coal supplier BHP PLC. Furnaces in China are also relatively new, with an average age of 12 years, compared with 53 years in North America and 45 years in Europe, according to BHP Billiton.

Steel analysts say China has fewer plans to decarbonize steel than the West. China expects carbon emissions to peak in 2030 and move toward net-zero emissions by 2060, although officials have recently limited the scope of the national carbon trading system.

China announced 18 new blast furnace projects in the first half of 2021 alone, according to the Clean Air and Energy Research Center, an advocacy group. “Decarbonizing the steel industry is not an easy task,” said McKinsey consultant Christian Hoffman.

says more than 70 percent of steel is still produced using the century-old blast furnace process, in which coal is burned at high temperatures to reduce oxygen in iron ore and convert it into steel.

To reduce greenhouse gas emissions, some companies are melting more scrap iron to make new steel or using so-called direct-reduced iron, which removes oxygen without melting in a furnace and replacing coal with hydrogen, among other techniques. SSAB produces metal for sale to Volvo. ArcelorMittal has pledged to invest $10 billion in its decarbonization plan this decade, with a goal of reducing carbon emissions per dollar of sales by 25 percent by 2030.

Last month, the company announced that one of its sites in Spain would be the first large-scale carbon-free site. Steel mills that generate greenhouse gases are expected to reduce metal production using hydrogen and renewable energy by 2025.

Such moves can be costly. In 2018, SSAB estimated that the production cost of its fossil-free steel would be 20% to 30% higher than it was at the time, although it expected costs to fall. The company declined to say how much the shipment cost Volvo or how much it sold.

Earlier this year, ArcelorMittal told analysts that it would cost 60% more to make steel using hydrogen at a German plant than it currently is. To help with the investment, the company seeks public support.

ArcelorMittal recently signed an agreement in Spain under which the government could cover part of the 1 billion euros ($1.17 billion) cost of new investments in the country. SSAB worked with two state-owned enterprises to develop green steel, and the government invested directly in the early stages of the project.

In the U.S., 70 percent of steel production is now using electric arc furnaces to melt scrap metal, a process the IEA says uses only about one-eighth of the energy used to make steel from iron ore. According to the American Iron and Steel Institute, the United States recycles enough scrap every day to build 25 Eiffel Towers. Nucor Corporation is the largest U.S. steel producer.

NUE -0.03%, only scrap is used. In July, the company announced plans to reduce its carbon footprint by using more renewable energy and carbon sequestration. U.S. Steel X -2.82% also said it wants to achieve net-zero emissions by 2050 using carbon capture technology and using more waste. U.S.

Steel declined to comment on the allegations, while Nucor did not respond to a request for comment. Comment Cleveland-Cliffs said it has spent about $1.37 billion to meet its goal of reducing emissions by 25 percent from 2017 levels by 2030. This includes the $1 billion Toledo, Ohio DRI plant, carbon capture technology, and other equipment. If steel is more expensive to manufacture, it could be more expensive to buy, analysts say, suggesting prices for products containing the metal will rise. ”

Everything is going to be more expensive, and green steel products are going to dominate,” said Jefferies Steel analyst Alan Spence. McKinsey & Company estimates that if European steelmakers live up to their commitments, about 30% of their production capacity will be carbon neutral by 2030 and 100% by 2050. domestic. However, according to world steel, only about 13 percent of global steel production last year came from the EU, UK, and North America.

China produces about 57 percent of the world’s steel, about 90 percent of which is produced using blast furnaces, according to global coal supplier BHP PLC. Furnaces in China are also relatively new.

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