In 2023, global steel production was responsible for approximately 7% of all greenhouse gas emissions caused by human activities, making it the largest carbon-emitting manufacturing sector. This industry, crucial to the global economy, primarily uses coal to power the production process, which significantly contributes to CO2 emissions. Currently, the average emissions are about 1.91 tons of CO2 for every ton of crude steel produced (World Economic Forum; worldsteel.org).
Decarbonizing the steel industry is essential to achieving global climate goals. It is estimated that by 2050, the demand for steel will increase by 30%, making the adoption of sustainable solutions even more urgent. These solutions include recycling steel using renewable energy, using green hydrogen instead of coal for reducing iron ore, and carbon capture and storage (World Economic Forum).
The shift towards “green steel” production requires massive investments, estimated at over $2 trillion, necessary for building hydrogen production and clean energy infrastructure. Although these technologies are under development, a large part of global steel production will continue to rely on traditional fossil fuel-based methods, at least in the short term.
In summary, the carbon footprint of the steel industry remains high, and the transition to greener solutions will require global coordination and considerable investments in technology and infrastructure. The steelmaking process can be divided into three main stages: iron ore extraction, reduction to iron, and melting to produce steel.
The Industrial Revolution was accelerated by the discovery of an innovative and affordable method of mass steel production: the Bessemer process, known for its carbon intensity, which involves burning iron ore with coal to transform it into metallic iron. Today, scrap metal can be recycled into steel without using coal. However, recycling alone cannot fully meet the global steel demand.
Steel production from iron ore continues, largely relying on a modernized version of the 200-year-old Bessemer process powered by coal: the BF-BOF method (described below). In this context, coal extraction contributes to the carbon footprint of steel produced by this method.
Steel production involves several essential stages:
- Iron ore extraction: This is relatively carbon-efficient. However, variations in ore quality sometimes require additional processes that increase the carbon footprint.
- Ore reduction: Iron is reduced either in blast furnaces (BF) or through direct reduction (DRI). The BF process uses coke to produce crude iron, being more emission-intensive. Alternatively, direct reduction, which uses natural gas or hydrogen, is more environmentally friendly, but efficiency depends on the gas source.
- Melting: Iron is converted into steel in oxygen furnaces (BOF) or electric arc furnaces (EAF). BOF is more polluting, while EAF, which uses electricity, is more environmentally friendly, especially if the electricity comes from renewable sources.
The conclusion: The DRI+EAF process is the least polluting, generating, on average, 1.2 tCO2e per ton of steel, compared to BF-BOF, which emits 2.2 tCO2e.
Companies in various industries are taking concrete steps to reduce the carbon intensity of their emissions, responding to both customer demands and ever-changing regulations. Notably, downstream customers are using their purchasing power to push for a shift to net-zero steel production by 2050. Additionally, new regulations, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), complement the European Emissions Trading System (ETS), penalizing high-carbon steel production by increasing costs for importers.
Technologies are already available to reduce carbon emissions in steel production. The most effective method, as discussed earlier, involves direct reduction with hydrogen and the use of electric arc furnaces (EAF) for metal melting.
Several European producers have announced their intention to abandon coke-fired furnaces in favor of hydrogen-based direct reduction technology. By using hydrogen generated from renewable sources, steel produced by this method can become nearly carbon-neutral.
To remain competitive in the future zero-emission economy, optimizing your steel supply chain is essential. Customers and financial institutions are increasingly focusing on sustainability, demanding low-carbon products and concrete measures from companies to reduce environmental impact.
Start by evaluating and reporting the emissions generated by your products, followed by implementing a supply strategy that prioritizes low-carbon sources.
