On July 3, 2024, the steel industry marked a significant milestone in its quest for decarbonization with the unveiling of ResponsibleSteel’s new report, “Charting Progress to 1.5°C.” The report has been thoroughly reviewed by representatives from the International Energy Agency (IEA), the Energy Transitions Commission, and Systemiq, in addition to over twenty peer reviewers from throughout the steel value chain. It also garnered endorsements from key industry players and organizations such as the OECD, Baowu Group, the Climate Group, and Lendlease. Developed using two foundational scenarios—one from the IEA and another from the Mission Possible Partnership (MPP) — the report provides a robust pathway for the steel industry’s decarbonization efforts.
As Dr. Devlin explained, there were three main reasons for choosing these scenarios: “Firstly, the IEA and MPP scenarios are both 1.5-degree aligned scenarios. Secondly, they explicitly outlined the technology-led pathway to 2050, allowing us to convert technology archetypes over time to ResponsibleSteel´s Decarbonization Progress Levels. Thirdly, these scenarios are underpinned by rigorous models from two highly reputable organizations that have undergone extensive peer review. Therefore, these base models gave us both ambition and confidence. They provided the fundamental data we needed to assess the pathway to 2050 in certification terms.”
A key takeaway from ResponsibleSteel’s report is that while leading steelmakers around the globe are starting to embrace decarbonization efforts and low-emission steel solutions are becoming available, achieving the goals of the Paris Agreement demands more comprehensive and widespread action. By 2030, every steel plant needs to reduce its emissions to levels that are below the current average emissions intensity to align with the climate targets set out in the Agreement. But what does “sufficient action” look like in this context?
“When we talk about what is enough, we are referring to the pathway to net zero by 2050. Over the next 26 years, we need to ensure incremental emission reductions occur so that the global carbon budget ´allocated´ to the steel sector is not exceeded. I talk about allocation in inverted commas because there is no international agreement on sector-splitting of the global carbon budget. However, it is a construct used in modelling exercises to ensure the sum of all emissions from different sectors does not exceed the global budget set by the Intergovernmental Panel on Climate Change (IPCC) for a 55% likelihood of achieving the 1.5-degree target. Even if we reach net zero by 2050, failing to follow an ambitious trajectory with stepwise reductions will result in a rise in global temperatures well above 2 degrees Celsius,” Dr. Devlin elaborated.
Rising steel demand and sustainable solutions
Most predictions indicate that there will be an increase in demand for steel, making the sustainable path more challenging. However, there are several ways to approach and mitigate these difficulties.
“Steel is an essential component in the energy transition. We need a significant amount of steel for wind turbines, electrolyzers, solar panels, and electric vehicles. Additionally, steel is crucial for constructing homes and infrastructure in developing regions, ensuring they have the same building blocks for productive and safe societies as developed regions. This need underscores the equity aspect of steel consumption,” Dr. Devlin highlighted.
She further explained, “It is crucial to maximize the value of steel throughout its lifecycle. This involves extending the durability and usage of steel, renovating instead of demolishing buildings, and designing for disassembly to facilitate reuse and recycling. Although steel is widely recycled and theoretically 100% recyclable, we still see material losses due to inefficiencies in the recycling system including contamination by elements like tin and copper which are difficult to separate from the steel. Currently, about 85% of end-of-life steel is recycled, leaving a 15% gap. Opportunities remain to enhance recycling and improve circular economy practices in the steel sector.”
The two scenarios considered in the report present different futures for steel demand. One scenario, with greater material efficiency, sees steel demand stagnating around 2 billion tonnes into 2050, roughly where it is today. The other scenario, reflecting a business-as-usual approach, predicts an increase to 2.5 billion tonnes by 2050. “No one really knows where we will end up in 2050,” Dr. Devlin noted, “but the consensus falls in the range of 2-2.5 billion tonnes. The outcome will depend on the actions taken over the next 26 years. It is essential to have the right processes, incentives, and supporting infrastructure, including standards, in place to manage future steel production sustainably.”
Supply Chain Emissions
Beyond managing steel demand, it is also crucial to address emissions across the entire supply chain to achieve meaningful decarbonization. One of the key points emphasized in the report is that steelmakers must look beyond their physical site boundaries. Indirect supply chain-related emissions could make up about one-third of the total average sectoral emissions by 2050, making their reduction critical to the steel industry’s transition.
“An often-overlooked aspect of upstream supply chain emissions is the methane emissions associated with coal mining and natural gas extraction and refinement. These emissions can represent a significant portion of GHG emissions and are frequently underreported due to inadequate data. We need to support accurate data collection at mine-level to uncover a clearer picture of emissions associated with upstream supply chains,” she also pointed out.
“In the near term, one of the key foci is decarbonizing the power sector. This can be achieved through various means, including onsite renewable energy installations, direct renewables procurement through the grid, or using market-based instruments such as renewable energy certificates and power purchase agreements. Acknowledging that today´s steel plants are not necessarily built in areas optimal for renewable energy generation, market-based instruments help stimulate renewable energy investments without physical delivery of green electrons to site,” Dr. Devlin underscored.
She further explained, “As the steel sector becomes increasingly electricity-intensive, the demand for decarbonized electricity will rise significantly. It is not just about having clean electricity but also about having enough of it. This creates a power supply issue that must be addressed as future demand will far outweigh current renewables capacity. Steel plants have an opportunity to install their own renewable energy infrastructure, depending on their location. If on-site renewable energy is not viable, procuring it from advantageous locations or investing in nearby renewable energy infrastructure can be a strategic move for near-term decarbonization.”
Importance of regional nuances
Dr. Devlin emphasized that regional nuances will be a significant factor in the steel industry’s decarbonization efforts and that it is crucial to appreciate the different available resources, whether natural, financial, or human, across geographies. It is critical to avoid disadvantaging certain regions because of external factors, and to ensure a level playing field for decarbonization. “ResponsibleSteel´s approach has always been technology agnostic,” she explained. “The universally applicable framework allows the market to determine which technologies will drive emissions reductions. However, examining current market developments shows that some technologies have already made considerable progress. For example, hydrogen-based direct reduction is expected to reach commercial readiness by 2026, promising near-zero emissions. This technology works well in contexts like Sweden’s, where there is substantial public sector investment, high-quality iron ore, and cheap renewable energy. Yet, this will not be the case for every region.”
“In other regions, the focus will likely shift towards scaling up carbon capture and storage (CCS) technologies to be efficient and ensure permanent CO2 storage. Currently, progress in CCS technology is lagging. There is only one commercial direct reduction ironmaking (DRI) plant with carbon capture. There are significant challenges to CCS for blast furnaces, including the complexity and cost of capturing CO2 from multiple flue gas points and the need for a high-purity CO2 stream to maximize efficiency. While promising technologies like molten oxide electrolysis and low-temperature electrowinning are in early development stages, they are unlikely to see significant progress before 2030,” she elucidated.
She stressed the importance of investment cycles, noting, “If a near-zero emissions compatible technology is not available during the next investment cycle, we risk extending the lifetime of blast furnaces by up to 20 years if the decision is instead made to reline. The proposed solution of retrofitting carbon capture technology to blast furnace facilities has not yet been demonstrated at commercial scale, which is problematic given widespread dependence in decarbonization plans. Maximizing the efficiency of carbon capture across the plethora of flue gas points will be a major challenge. It is impossible to predict which technology will emerge as the winner. It will depend on a range of economic and social factors as well as timing. The development of all near-zero emissions compatible technologies must be pursued with urgency.”
She also addressed the issue of scrap availability: “Scrap availability is a major determinant of which decarbonization technologies can be employed. While the scrap-based route is about 70% less emissions-intensive than the iron ore-based route, not all regions have sufficient scrap resources. By 2050, we expect around 50% of global steel production to use scrap resources, up from 30-35% today, but still far from 100%. Thus, we must find ways to decarbonize iron ore-based production in parallel with enhancement of the circular economy. Increasingly, policies will mandate domestic scrap use, affecting global scrap trade.”
Step-by-step approach
Dr. Devlin underscored that one of the report’s key messages is that all progress is good progress, regardless of the magnitude or starting point. Piecemeal emissions reductions are incredibly valuable, and ResponsibleSteel wants to recognize and support that progress.
“While the long-term goal is to achieve near-zero emissions by 2050, we must accept that change will be gradual, especially in the next decade, as transformative technologies are still in development. I encourage steelmakers who may be hesitant to engage in decarbonization efforts to consider the actionable steps they can take today. We need to embrace the complexities of this journey and recognize that progress, underpinned by a demonstrable plan towards near zero by 2050, is a step in the right direction” she said.
She also addressed the complexities involved in this transition: “There are many moving parts in decarbonization efforts, including the policy landscape, available finance, existing assets, and the skills required for a just transition. Major capital investments in new infrastructure require long lead times, and the supply chains for emerging technologies like green hydrogen are still developing. The steel sector needs to build partnerships across the supply chain to de-risk these investments and ensure a coordinated move towards near-zero emissions.”
“Being a multi-stakeholder organization, ResponsibleSteel is rigorous in its approach and extensive in its reach. We connect not only with steelmakers but also with upstream and downstream members of the supply chain, including policymakers, investors, and civil society organizations. The report provides targeted recommendations for these groups to advance decarbonization efforts and integrate the ResponsibleSteel framework into their strategies,” she continued.
Dr. Devlin concluded with a motivational call: “The report is designed to be a tool to inform change across the steel value chain. Unique stakeholder groups – steelmakers, steel buyers, suppliers to steelmakers, policymakers, and investors, among others – will play different roles, in stimulating and propagating low and near zero emissions steel production and utilization. I encourage all stakeholders to engage with the report’s findings, take actionable steps, and collaborate to drive the steel industry’s transition towards a sustainable future.”
