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Shaping the Low-Carbon Transition of Iron and Steel: Global Policy Strategies

By Dr. Tobias Orthen and Mr. Naveen Ahlawat

Iron and steel plants require regular reinvestment every 15 to 25 years. In line with these refurbishment cycles, there is an opportunity before 2030 to implement low-carbon technologies that are already available for two-thirds of the current production capacity. The international community needs to focus on China, which accounts for the majority of today’s production capacity, as well as on India, as markets are expected to shift in this direction.

Steel Carbon Emissions

Steel production currently relies heavily on fossil fuels, which serve both as energy sources and as reducing agents. Therefore, low-carbon steel production involves more than just providing renewable energy: it requires employing low-carbon technologies throughout the production chain. These challenges are particularly significant given that steel is an important material for prosperity and climate neutrality, for economic development in emerging economies, and for the energy transition worldwide, yet its production currently accounts for around 8% of global greenhouse gas emissions (GHGs).

Retrofit Potential and Investment Cycles

By 2030, two-thirds of steel production plants will need refurbishment within their usual investment cycles; this presents a crucial window of opportunity to retrofit coal-fired blast furnaces (BF-BOF) with low-carbon technologies. Joint international efforts and retrofits together have the potential to eliminate approximately 30 billion tonnes of carbon emissions from iron and steel production by 2060.

An important step is to outline a green taxonomy for steel that clarifies which products qualify as “low-carbon steel” and to standardize and harmonize these criteria. A focus on economic viability and on achieving effective GHG reductions (per dollar spent) is recommended, rather than prescribing specific technology pathways, for example, using Marginal Abatement Curves (MACs).

Existing Technologies and Implementation Strategies

Effective levers for stepwise emissions reductions in the steel sector include switching from coal to available low-carbon technologies. Available options with different technology readiness levels (TRLs, as ranked by the International Energy Agency from low (1) to high (11)) include:

Strategies and quick wins for all integrated steel producers (ISPs) should focus on:

  • Improving operational and energy efficiency;
  • Deploying advanced control processes (APs) to reduce the specific consumption of raw materials; and
  • Valorizing blast furnace (BF), electric arc furnace (EAF), and basic oxygen furnace (BOF) slag in cement, road construction, soil conditioning, waste heat, and recovering waste heat, off-gases, and by-products for use as chemicals, fuels, and power generation.

Another important lever is maximizing resource efficiency through beneficiation of iron ore and the deployment of slurry pipelines and pipe conveyors in order to avoid the generation of fines.

Focus on China and India

To achieve emissions reductions in the steel industry, global collaborative efforts, both technical and financial, should focus on China, currently the world’s largest steel producer, and India, the biggest emerging player in the field, whose steelmaking capacity is estimated to triple by 2050.

China may also emerge as a leader in steel industry decarbonization in terms of CO2 emissions reduction, by reducing its capacity by 20% and replacing approximately 200 million tonnes of blast furnace-basic oxygen furnace (BF-BOF) capacity with electric arc furnace (EAF) capacity.

However, the industries in both nations largely consist of small and medium-sized enterprises that may not have the resources to invest in the necessary new technologies.

Diverse starting points among countries and regions necessitate tailored approaches to define each one’s possible contributions to global efforts. Industrialized countries need to employ different measures from those required in China and India. For example, most steel plants in Japan and Europe were built after World War II. These plants represent a major opportunity to be converted to low-carbon-emission steel production by adopting scrap-based and low-carbon direct reduction iron (DRI)-based electric arc furnaces. It is important to analyze the techno-economic situation of every case to make a decision on the appropriate technology to use.

Is There a Silver Bullet?

Low-carbon hydrogen energy, while promising, should not be regarded as a silver bullet solution for low-carbon steel production on its own, as political debates sometimes suggest. Nor can carbon capture technologies, despite their potential, fully eliminate emissions in the steel industry. The use of hydrogen as a reducing agent instead of coal has the potential to slash steel production emissions by between 70% and 90% per tonne of steel. However, low-carbon hydrogen production requires low-carbon electricity, significant infrastructure investments in production, transport, and storage, as well as mandates and carbon pricing. The same applies to the deployment of carbon capture technologies.

Dr. Tobias Orthen is a Senior Research Associate with FAW/n Ulm and Global Energy Solutions and Co-Founder and CFO of betterSoil. Mr. Naveen Ahlawat is the President & Head- Sustainability & Decarbonisation, Carbon to Chemicals, Jindal Steel Limited.

About the Council of Engineers for the Energy Transition (CEET)

This article is part of the Energy Insights Series published by the Council of Engineers for the Energy Transition (CEET). The CEET is a global, high-level body of engineers and energy systems experts, created under the auspices of the United Nations Secretary-General, with the goal of building coalitions and energy pathways for comprehensive decarbonization.

It should be acknowledged that these materials are for discussion purposes only, given the rapidly changing landscape of the energy transition and the various contexts in which they are relevant. CEET members are participating in their individual capacity and expertise without remuneration. Their professional affiliations are for identification purposes only, and their views and perspectives, including any statements, publications, social media posts, etc., are not representative of the United Nations, the SDSN, or UNIDO.