Decarbonizing the Steel Industry

Steel contributes to 8% of global GHG emissions and is considered a hard to abate industry. As steel demand is expected to grow by more than 30% from 2022-2050, major changes will be needed to achieve the Net-Zero Steel Initiative's (NZI) target of net-zero by 2050.

Although scrap steel availability will increase, secondary stream steelmaking (recycling) is not expected to meet global steel demand. General efficiency increases in steelmaking have been proposed as a cost-effective solution, however these only yield modest emission reductions. A departure from thermal power sources is required to achieve meaningful emission reduction.

The most carbon intensive stage in the industry's value chain is steel manufacturing. Proposed technologies to decarbonize primary steelmaking include carbon capture, utilization and storage (CCUS), hydrogen (to replace coal) in direct reduction of iron (HDRI) and electrolysis. However, these methods of producing "green steel" struggle to be cost-competitive and so adoption remains low. An accelerated introduction of these technologies will be needed to meet net zero targets.

Electrolysis has not yet been proven at commercial scale, and steel manufacturers have been wary of CCUS due to its high capital costs. HDRI is seen as the most developed technology and is expected to make up the majority of green steel projects. However, a lack of hydrogen infrastructure and uncertainty surrounding the future levelized cost of hydrogen remains a challenge.

As these new production methods become more cost-competitive, there will be a shift from coal to HDRI and electrolysis over the coming decades. This process has the potential to be sped up by policies such as CBAM or by companies making commitments to purchase green steel.

Current trends in global steel production and the sector's emission footprint. Overview of the key technologies for decarbonizing the sector across the mining, manufacturing and logistics segments of the supply chain, including low-carbon hydrogen, CCUS, electrification. In addition, the report discuses the key players, policies, and initiatives throughout.

Scope

• Steel production has steadily increased over time, rising by a CAGR of 3.2% between 1950 and 2023 according to the World Steel Association. This growth has been driven by the industrialization of different regions over time, with the economic rise of China and India over the time frame contributing strongly to the global growth of steel production.
• 95% of carbon emissions in the steel industry are due to the manufacturing process - the direct reduction of iron ore is a very energy intensive process, requiring high levels of heat for the oxygen to be displaced from the iron ore.
• Despite the potential efficiency increases and emission reduction associated with electrification, adoption of battery powered loading equipment within mining remains relatively limited, with GlobalData's 2024 Mine Site Technology Survey revealing that 46% of miners had not invested in battery/ electric powered mining vehicles at all, compared to 2.7% for full implementation and 9.6% for considerable investment in the technology.
• According to GlobalData Hydrogen Analytics, the capital expenditure of low-carbon hydrogen projects that will come online by the end of the decade and supply the steel sector amounts to $136 billion.
• CCUS capacity within the steel sector accounts for 1.22Mt/year, so significant investment would be needed for the technology to meaningfully curb the steel industry's emissions.

Reasons to Buy

• Identify the market trends within the industry and assess what the biggest players in steel production are doing to reduce emissions.
• Develop market insight of the major technologies used to decarbonize the industry, as well as the policy framework laid out by governments to support their adoption.
• Facilitate the understanding of what is happening within hard to abate industries as they aim to become carbon neutral by 2050.