An abundance of low-cost clean energy, increased policy and regulatory incentives, and industry standards and cooperation are keys for decarbonizing the steel industry, according to a report from Shell.
Currently, a lack of all those things is holding back the industry from transitioning to more green steel production. To overcome those obstacles, the industry may need to think outside of traditional practices, including where steel is produced, such as locating operations where green hydrogen is plentiful, the report says.
The report was developed with Deloitte with the intent of showing how the steel industry can overcome obstacles and realize decarbonization potential. It was produced through more than 100 interviews with executives and experts representing 57 organizations involved in all aspects of the steel industry.
The analysis comes at a time when questions surround whether steel and other heavy and emissions-intensive industries can hit their carbon targets even with stringent efforts. Recent research from Zero Waste Europe and Eunomia Research and Consulting finds materials such as steel, aluminum, and cement will all miss international net-zero goals even under the best estimates without further action.
The International Energy Agency says the steel industry needs to reduce its carbon dioxide intensity by about 3% per year through 2030 to meet global net-zero targets. The IEA says to do so, commercialization of near-zero emission steel processes needs to happen, including using carbon capture and hydrogen technologies.
Clean energy, low-carbon resources play key roles
The Shell report focuses significantly on obtaining clean energy sources and low-carbon technologies for the steel industry. It addresses the need for clean energy infrastructure, including renewable energy from wind and solar systems, and integrating green hydrogen.
It also suggests using carbon, storage, and capture systems for facilities that use blast furnaces. The report sites that the technology has an emissions reduction potential of 65% to 80%. The report also recommends electric arc furnaces powered with renewable energy as well as looking into technologies from other metals, such as iron ore electrolysis, which the report says is inspired by aluminium production.
Another solution is moving production away from mines — as blast furnaces potentially become obsolete — and closer to green hydrogen hubs. Green hydrogen is an alternative energy source for coal and can improve the efficiency of furnaces. Infrastructure for the fuel is also rapidly expanding, making it more important for the industry to access it, when it may not be in proximity to current production sites.
Earlier this year, United States, Equinor, and Shell US Gas & Power entered an agreement to advance a clean energy hub in the US. It includes carbon capture and storage as well as hydrogen production.
Materials are important
Another hindrance to making green steel is the limited availability of high-grade iron ore that is suitable for use in direct reduced iron-electric arc furnaces. The furnaces are seen as one of the most important pieces of decarbonizing the industry green because they emit significantly fewer emissions than traditional blast furnaces.
Just a third of the world’s iron supply is high-grade, according to the report. Insufficiently dense iron ore can damage electric arc furnaces and lead to decreasing yields, the report says.
Electra recently raised $85 million in an attempt to make improvements in this area. The company produces low-temperature iron from commercial and low-grade ores using zero-carbon intermittent electricity coming from renewable sources then electrochemically refines iron ore into pure iron at 140 degrees Fahrenheit to convert the iron to steel using electric arc furnaces.
The report finds an important part of reaching decarbonization in the industry is collaboration, government incentives, and production standards. The report says there needs to be steel-specific innovation funding, green procurement policies, and transparency across the supply chain so that operators know where the steel comes from and how green it is.
“There are a number of potential solutions to decarbonizing steel, but one approach is crystal clear: if the industry is to cut carbon emissions at the speed and the scale needed, it must work together to deliver change,” says Steve Hill, executive vice president, energy marketing at Shell.