Can Sustainable Steel Be Achieved? IDTechEx Explores Green Steel

Steel production is responsible for around 10% of global CO₂ emissions, according to IDTechEx, and with demand continuing to grow, decarbonization is increasingly necessary. IDTechEx's report, "Green Steel 2025-2035: Technologies, Players, Markets, Forecasts" covers various methods of producing steel that result in lower carbon emissions.

 

 

The steel market is very mature, and the supply chain well established, highlighted by global steel production having reached 1,892 million tonnes in 2023, with China producing 54% of this amount. In the same year, global steel usage stood at 1,763 million tonnes according to the World Steel Association. Buildings and infrastructure was the largest end-use sector, taking up 52% of the market, followed by mechanical equipment, automotive products, metal products, transport, electrical equipment, and domestic appliances.

 

The increasing industrialization of many countries, along with growing populations and subsequent economic growth, are some of the main reasons for steel's growing demand, while digitalization, AI, data centers, and renewable energy are also contributing factors.

 

One of the key drivers for green steel production alongside this growing demand is the global desire for clean electricity and decarbonization of heavy industries, since steel is a highly polluting sector. There is also a need for international cooperation and alignment in achieving these changes. Stricter regulations and increased incentives in key regions like the EU are emerging as a result over the coming years.

 

 

The blast furnace - basic oxygen furnace route (BF-BOF), is the most established in steel production and is responsible for around 70% of steel production globally. This method sees coal converted into coke, fed into a blast furnace alongside different kinds of sinters or pellets used for iron ore and limestone feedstock. The blast furnace works by drawing in air to convert reaction materials and iron ore into liquid pig iron. This product is then refined in a basic oxygen furnace to produce steel, which is then refined further downstream to produce crude steel. The main concern surrounding the BF-BOF route is that this process is highly carbon intensive, resulting in approximately 2.3 tonnes of CO₂ per tonne of crude steel, causing environmental and sustainability concerns.

 

The scrap electric arc furnace (EAF) route is the second most common process in steel production, responsible for approximately 22% of global steel production. This approach can be likened to recycling, where scrap is collected from scrapyards and is processed in the EAF unit. While this approach can be fully electrified, around 0.7 tonnes of CO₂ per tonne of crude steel is still produced in the process due to grid electricity. However, one of the main benefits of this approach is that it can use renewable electricity so emissions could be close to zero, producing green steel.

 

Another route is the direct reduction of iron (DRI) using natural gas, which is coupled with the processing of DRI together with scrap in the EAF - collectively known as the DRI-EAF route. This approach produces around 7% of steel and is another approach which results in lower emissions than the BF-BOF route. Pellets are used for iron ore feedstock, but the reducing agent is not coke, but natural gas or grey hydrogen, which enters a direct reduction furnace alongside the pellets. The main benefit of this approach is that existing plants can potentially be converted to use blue or green hydrogen, resulting in green steel.

 

 

Steel production is significantly difficult to decarbonize as a result of numerous factors. Dependency on coal due to blast furnace operations leads to a large number of emissions produced, with limited room for this infrastructure to change over the next decade. In fact, more blast furnace capacity is expected to emerge in countries like India.

 

The cost of investing in the necessary renewable and low-carbon hydrogen infrastructure is one large barrier to decarbonization and is causing hesitancy amongst steelmakers to invest in the future with sustainable changes. Green steel will therefore come at a much greater cost, meaning many sectors will not be able to make the switch.

 

There are also multiple imbalances across different regions concerning the regulations around decarbonization, and according to IDTechEx, Europe is leading with policies to decarbonize. Large government subsidies are also necessary to support changes within the industry, alongside increased regulatory support, as CO₂ emissions will continue to grow alongside steel demand if action is not taken to decarbonize. According to IDTechEx, regulators worldwide are beginning to recognize the need to address these challenges. Companies across the value chain, from mining and steelmaking corporate giants to emerging startups, are developing new technologies to decarbonize various parts of existing plants, as well as build new carbon-neutral plants from the ground up.

 

For more information, visit IDTechEx's report, "Green Steel 2025-2035: Technologies, Players, Markets, Forecasts" and the wider portfolio ofSustainability Research Reports and Subscriptions.