What is Carbon Neutral Steel?

Steelmaking is one of the world's most energy-intensive industries, accounting for 7% of the world's carbon emissions in 2020. As more nations, industries and companies work towards becoming carbon neutral, steel makers and steel suppliers are carefully evaluating their production processes and business models to reduce net carbon emissions.

Given that in 2020, 1.851 tons of carbon were released for every ton of steel produced, this is a complex and challenging initiative.

This article will explore the factors driving the push for carbon neutral steel and look at some early strategies being employed to produce greener steel.

What is Driving the Green Steel" Movement?

While various factors are driving the green steel" movement, two of the biggest are government environmental protection policies and shifting business and consumer demand.

Government Environmental Protection Policies

The primary catalyst for carbon neutral and, therefore, green steel initiatives are government environmental protection policies, which have grown in number in the U.S. since the passing of the National Environmental Policy Act in the 1970s.

The 2016 Paris Agreement is one prominent example of an environmental protection policy. This international climate treaty is between 90 countries - primarily across Europe - who are committed to achieving carbon neutrality by 2050.

The 2022 U.S. Inflation Reduction Act is another policy shaping green manufacturing. This act invests $369 billion into domestic energy production and manufacturing activities. Due to its renewable energy focus, the bill is expected to reduce U.S. carbon emissions by 40% by 2030.

Additionally, the Biden Administration announced in September 2022 that the U.S. federal government will prioritize the purchase of low-carbon-emissions construction materials - including steel - for use in federally funded projects. This comes as an effort to encourage 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. Leeco Steel, for example, 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, we expect to see many service centers making adjustments to meet green steel demand.

Business & Consumer Demand for Green Products

Secondly, consumer demand for carbon neutral products is on the rise and, as a result, businesses are reducing their carbon emissions to meet this demand.

For example, consumers concerned by carbon emissions are demanding cars that are more environmentally friendly. There were more than 10 million electric cars on the road worldwide in 2020, and electric vehicle sales are expected to be about 29.5% of all new U.S. car sales in 2030.

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

Steel is used in virtually every industry, so as more businesses and consumers express demand for environmentally friendly products, the steel industry will adapt to offer a carbon neutral product.

How is Carbon Neutral Steel Produced?

Steel production is a complex process, requiring a significant number of resources and energy. There are two main methods of producing steel, both of which require different resources:

• Blast Furnace: Steel is produced using raw materials including iron ore, coke - which is produced from coal - and limestone. These materials are smelted into pig iron, where carbon is then 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 because they make use of recycled metals rather than raw materials, only about 25% of steel mills around the world use them. The majority of steel mills still use blast furnaces.

However, as blast furnaces age, mills in certain regions - such as 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. As a result, the U.S. releases far less carbon during steel production compared to countries like China and India. Mills have also worked towards being carbon neutral by purchasing carbon credit" permits, which allow mills to emit a specific amount of carbon.

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

While converting to EAFS is an important step to producing green steel, making the entire production process and supply chain carbon neutral will require additional actions.

Mills still use coal-based coke as fuel for smelting and deoxidization. Now, some mills are exploring the use of hydrogen in place of coke in steel production. In this process, hydrogen is extracted from electrolyzed water, which was charged from renewable energy sources.

This initiative was led by SSAB, who ran a pilot program in 2021 to test the feasibility of such a process. It proved to be successful enough that several other mills developed plans to test the use of hydrogen in their production process.

Making hydrogen is an energy-intensive process, so significant investments would need to be made in renewable energy sources to support the widescale use of green hydrogen. We are already seeing such investments taking place, including funding provided by 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 a slow process, 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 after 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 expected 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 continue growing, making it clear that this is not a trend, but rather an evolution of steelmaking.

As North America's largest steel plate supplier, Leeco Steel is still exploring what plate distribution looks like in a carbon neutral supply chain. As demand for green steel grows, we expect to see many evolutions in our industry, which is why our team of experts are collaborating with mills and customers alike to expand our product offerings in this area.

Contact us today to learn more about our products or request a quote.