Are new technologies able to create zero-emission steel?
Indispensable in everyday lives, steel accounts for 7% of global emissions. Deep decarbonisation of the steel sector requires a dual strategy: material efficiency and low-emission technology development. A policy mix is needed to support innovation while phasing out the most emission-intensive technology and guaranteeing a just transition.
Steel is one of the most used and versatile materials in society, but the making of steel is highly energy-intensive and relies for a large part on coal, making the industry also one of the biggest sources of CO2emissions. This poses a grand challenge for deep decarbonisation.
Steel can be manufactured from iron ore, called primary steel, or from scrap, referred to as secondary steel. The production of iron is the largest energy consumer and source of greenhouse gases. Emissions in secondary steel production can be very low, if fossil-free electricity is used. Hence, increasing the use of scrap is one option for decarbonisation. However, the availability of scrap limits the potential of switching to secondary production.
New technologies and ways of making steel exist that can strongly reduce the emissions from primary steelmaking. European steel producers have begun to consider hydrogen as an energy carrier instead of coal, as for example in the HYBRIT project that aims to develop a fossil-free value chain for steel [see HYBRIT Case Study]. Other European innovation projects focus on producing chemicals such as methanol or ethanol from off-gases through carbon capture and utilisation (CCU), or developing smelting reduction technology as an alternative to the blast furnace. Low-emission steel production under the latter technologies depends on the availability of carbon capture technology. Furthermore, additive manufacturing techniques improve material efficiency and thereby reduce the need for primary steel production [See MX3D Case study].
The climate impact of the EU steel industry is governed mainly through the EU Emissions Trading System (ETS). To avoid carbon leakage (where industries move abroad, resulting in a net increase of global greenhouse gas emissions), the steel sector has been granted free emission allowances to cover their emissions. More recently, both industry and policy-makers have started to advocate a wider set of industrial policy measures, including the creation of markets for ‘green’ basic materials, exemptions of certain activities from EU State Aid rules, and increased attention to issues of justice in the transition to net-zero emissions.
A transition to net-zero emissions in the steel industry involves both processes of innovation and decline. Once new low-emission processes start to diffuse, old emission-intensive production methods need to be phased out in a controlled manner. Innovation and commercialisationof new technologies can be nurtured through policies such as R&D funding, investment grants and the creation of “green” markets for basic materials, while the controlled decline of “old” technology can be addressed through bans, sunset clauses and emission standards. Throughout the transition, increased attention to issues of social justice is needed, as some existing inequalities are likely to be exacerbated and new injustices created as part of the redistribution of burdens and benefits that are inherent in the transition.