subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now
Picture: 123RF/rachenphotographer
Picture: 123RF/rachenphotographer

Green steel is essentially the manufacture of steel without the use of fossil fuels, and its production is imperative to support SA’s climate ambitions and future competitiveness.

However, achieving this will require unprecedented collaboration between industry and the government, together with significant investment, innovation and dedication.

Steel is the most commonly used metal in the world and is vital to the construction, transport, manufacturing, motor, medical, aircraft, defence and domestic appliance industries. It is an industrial enabler and vital element to the sustainability of SA’s economy. Mindful of the Paris climate agreement to contain global warming to below 1.5⁰C, the steel industry is constantly seeking ways to reduce its carbon footprint and transform its operations to achieve net zero by 2050. As a hard-to-abate industry, the scale of the challenge is monumental.

The manufacturing process generates about 1.9 tonnes of CO2 per tonne of steel and the global steel industry produces about 36-billion tonnes of CO2 emissions annually, equating to 7%-9% of the world’s total. The sector is the largest industrial consumer of coal, supplying about 75% of its energy needs. Coking coal is the principal energy source used in blast furnaces, the primary producers of steel and, notably, high-quality steel, and accounts for about 75% of all steel produced. Moreover, steel cannot be replaced in the short term as global demand is forecast to be about 60% higher by 2050.

There are now no quick fixes to reducing the carbon footprint of the steel industry and a cornucopian approach alone is insufficient. The transformation to a greener steel industry is immutably linked to a just energy transition, which in turn is highly dependent on the government playing its part in the creation of a conducive legislative, regulatory, fiscal and investment environment. Success will require all elements in the long and diversified steel value chain to commit to net zero by 2050 and provide concrete and measurable plans that align to SA’s nationally determined contributions and greenhouse gas emission targets. Some of this can be achieved through design improvements and technological efficiencies at scale. For example, were it to be built today the Eiffel Tower would require 75% less steel than when constructed in 1889.

Encouragingly, however, both incremental and structural steps are being undertaken by the steel industry that provide a clear vision, direction of travel and pathway for a greener future. Current innovation includes supplementing coal-based energy sources with biomass, but with notable source availability and scale challenges. Solar and wind energy is being introduced into steel production and is set to be expanded significantly in SA as part of the future sustainable energy mix.

The steel industry is also seized in the near term with transforming its steelmaking processes to immediately reduce its carbon footprint. These involve the production of direct reduced iron, as well as the utilisation of greater quantities of scrap in the steel making process. Notably, steel is already the world’s most recycled material. Carbon capture and utilisation technologies are also being adopted in steel plants that lend themselves to such design and processes. Such technologies are expensive though, and are not suitable or affordable for many existing plants.

While unable to replace the quantum and quality of primary steel produced by blast furnaces, the industry is now adding more electric arc furnaces which, while using scrap rather than iron ore and thus producing far smaller volumes of greenhouse gases, are still heavily dependent on electricity suppliers that score badly as scope 2 emitters. An alternative energy source that provided incremental improvement is the utilisation of natural gas, which generates a far lower carbon and pollution footprint than coal and SA has in abundance.

Green hydrogen

But if the steel industry is to undergo the transformation required by its 2050 targets, the supply, availability and cost of green hydrogen is essential. When burnt hydrogen emits only water. If the hydrogen used as an energy source in the steelmaking process is produced via electrolysis using just water and renewable energy, then it is free of CO2 emissions. The encouraging news is that the first such full-scale zero carbon emissions plant has already commenced production in Spain. While there is a long, complex and challenging road ahead, this ground-breaking facility demonstrates that carbon neutrality can be achieved in the steel industry over time and with the right design, technology, investment and policies.

Of course, the broader commercial concern that arises is that of competitive advantage and arbitrage. While responsible steel manufacturers are committing to a greener future, the same may not be the case for others operating in less progressive and more lax jurisdictions, particularly those with an abundant oversupply and seeking global opportunities for export. Some estimates place the premium on the price of green steel as high as 30%, which raises questions about the willingness of consumers to pay a higher price for their steel products along the value chain.

The evaluation between sustainable green steel production and higher prices is one that consumers will have to make, but ultimately it is the government’s environmental, fiscal, industrial and trade policy that will determine whether a sustainable operating environment is created for the production of green steel.

• Verster is CEO of ArcelorMittal SA.

subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.