What is carbon neutral steel?

Steelmaking is one of the most energy-intensive industries globally, contributing to a significant 7% of the world's carbon emissions in 2020. As nations, industries, and companies strive to achieve carbon neutrality, steel manufacturers and suppliers are scrutinizing their production processes and business models to reduce net carbon emissions. This article delves into the motivations behind the shift toward carbon-neutral steel and examines some early strategies for producing greener steel.

carbon neutral steels

The Drivers Behind the Green Steel Movement

Government Environmental Protection Policies

Government environmental protection policies are a primary driver of the green steel movement. These policies have become more prevalent in the U.S. since the National Environmental Policy Act was passed in the 1970s. A notable example is the 2016 Paris Agreement, an international climate treaty among 90 countries, primarily in Europe, committed to achieving carbon neutrality by 2050.

The 2022 U.S. Inflation Reduction Act is another significant policy shaping green manufacturing. This act allocates $369 billion to domestic energy production and manufacturing activities, emphasizing renewable energy. It is anticipated to reduce U.S. carbon emissions by 40% by 2030.

Additionally, the Biden Administration announced in September 2022 that the U.S. federal government would prioritize purchasing low-carbon-emission construction materials, including steel, for federally funded projects. This policy aims to foster the development of low-carbon construction materials within the U.S.

As a result of these policies, manufacturers are adjusting operations to reduce their carbon footprint. For instance, Steel Friend is in the process of installing energy-efficient lightbulbs in all its facilities. From modifying production processes to updating equipment and investing in renewable energy, numerous service centers are making adjustments to meet the demand for green steel.

Business and Consumer Demand for Green Products

Consumer demand for carbon-neutral products is also increasing, prompting businesses to reduce their carbon emissions. For example, environmentally conscious consumers are demanding more eco-friendly cars. In 2020, over 10 million electric cars were on the road worldwide, and electric vehicle sales are expected to account for about 29.5% of all new U.S. car sales by 2030.

This trend motivates major carmakers to set goals to eliminate carbon emissions from their entire supply chain. Toyota, for example, aims to eliminate carbon emissions from its new vehicles, operations, suppliers, and dealers by 2050.

Steel is used in nearly every industry, so as more businesses and consumers demand environmentally friendly products, the steel industry will adapt to offer carbon-neutral products.

How Is Carbon Neutral Steel Produced?

Steel production is a complex process requiring substantial resources and energy. There are two main methods of producing steel, each necessitating different resources:

  • Blast Furnace: Steel is produced using raw materials, including iron ore, coke (produced from coal), and limestone. These materials are smelted into pig iron, where carbon is reduced and poured into slabs to create steel.
  • Electric Arc Furnace (EAF): Steel is produced using scrap metals, which are melted with pig iron in the furnace, purified, and poured into slabs to create steel.

While EAFs are generally considered more environmentally friendly due to their use of recycled metals rather than raw materials, only about 25% of steel mills globally use them. Most steel mills still rely on blast furnaces.

However, as blast furnaces age, mills in regions like Europe and the U.S. have decommissioned these facilities and replaced them with EAFs. For example, 70% of steel mills in the U.S. now use EAFs. Consequently, the U.S. releases far less carbon during steel production compared to countries like China and India. Mills have also pursued carbon neutrality by purchasing "carbon credit" permits, which allow mills to emit a specific amount of carbon.

Converting blast furnaces to EAFs is feasible for the world's largest steelmaking companies, but it is not cost- or resource-effective for smaller mills. Additionally, while EAFs emit less carbon, they still release greenhouse gases when powered by carbon-based energy sources, such as coal.

Converting to EAFs is a significant step towards producing green steel, but making the entire production process and supply chain carbon neutral requires additional actions. Mills still use coal-based coke as fuel for smelting and deoxidization. Now, some mills are exploring the use of hydrogen instead of coke in steel production. In this process, hydrogen is extracted from electrolyzed water charged from renewable energy sources.

This initiative was pioneered by SSAB, which ran a pilot program in 2021 to test the feasibility of using hydrogen in steel production. The program's success led several other mills to develop plans to test hydrogen in their production processes.

Making hydrogen is an energy-intensive process, so substantial investments are needed in renewable energy sources to support the widespread use of green hydrogen. We are already seeing such investments, including funding from the U.S. Inflation Reduction Act. Using green hydrogen in place of coke will take time, but once implemented on a large scale, it is expected to reduce carbon emissions from the steel industry by 70%.

The Future of Carbon Neutral Steel

While global implementation of carbon-neutral steel is expected to be gradual, several mills are already making significant strides towards producing carbon-neutral steel. SSAB, for example, aims to have fossil-free steel ready for commercial sale by 2026 following the success of their pilot program, which produced fossil-free steel using hydrogen, renewable energy sources, and an EAF.Nucor is also developing net-zero carbon steel, aiming to reduce their emissions by 35% by 2030 and committing to utilizing more renewable energy sources.

Carbon-neutral steel is anticipated to be more expensive than traditional steel due to the higher costs of renewable energy sources. However, demand for carbon-neutral steel from businesses and consumers is expected to grow, indicating that this is not merely a trend but an evolution of steelmaking.For further information about our products or to request a quote, please contact us today.

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