Adoption Trends & Obstacles

Key Messages | Steel's Future

Reaching net zero by 2050 would require a ~25% emissions reduction by 2030
Policymakers can and should step in to assist with green technologies, such as H2 Green Steel’s and Electra’s new generation plants
The focus should be on creating low-cost, low-carbon electricity and on driving down capital costs for new technologies
A production tax credit for low-emission iron would support electrolysis as well as green H₂
Time is of the essence, as Asia’s large fleet of high-carbon legacy blast furnaces (~75% of global iron production) are due for costly relining in the next 10 years. This presents an opportunity to instead invest in newer, greener technologies

Source:

Observations

The International Energy Agency (IEA) expects limited decarbonization progress until 2030, with only a slight increase in scrap EAF production and first production using green hydrogen and electrolysis
Scrap steel electric arc furnace (EAF) is expected to become the most used production method for steel by 2050 ─
taking 46% market share
In the IEA’s scenario, the remaining 54% is split between green hydrogen, electrolysis-based production, and CCUS-equipped production
- It should be noted that the effectiveness of carbon capture, utilization, and storage on blast furnaces is still challenged and debated within the steel industry

Notes:

BAU = Business as usual, assuming production route mix as of 2020 maintained; Increased scrap steelmaking refers to increase in both Scrap EAF production and use of scrap in primary production routes;
DAC = direct air carbon capture. Sources: Mission Possible Partnership Making Net Zero Steel Possible (2022).
Credit: Mimi Khawsam-ang, Max de Boer, Grace Frascati & Gernot Wagner (22 February 2024); share/adapt with attribution. Contact: [email protected]

Existing conventional plant equipment worldwide has an average age of only 13-14 years (<50% of the typical lifetime of 40 years)
Overhaul of production routes for to transition to Net Zero could result in $345-$518B of stranded assets
Stranded assets expected to be concentrated in Asia, particularly China and India

Green infrastructure, especially zero-carbon electricity generation and hydrogen production capacity, have to expand significantly to enable the steel industry to transition.
Electrolysis technologies are nascent –production equipment still needs to be proven successful at mass scale

As it relates to global carbon storage, demand is outpacing storage space development.
Without increased efforts to accelerate CO₂ storage development, the availability of CO₂ storage could become a bottleneck to CCUS deployment, alongside aforementioned drawbacks, like unproven technology.

Pressing need for unified definition of green steel and green iron, as diverse approaches are currently being pursued
Having shared definitions is crucial, but of course, no single definition can accommodate all perspectives

Insufficient educational and training opportunities for the steel industry’s workforce
Declining interest in younger generations to pursue careers in this field
Those that are interested typically gravitate toward green steel, meaning employees in the grey steel space are dwindling

Transitioning to new production technologies expected to cost $4.4T over ~30 years
Production costs per tonne of steel could rise by 30% driven by higher OPEX and required CAPEX of green hydrogen and CCUS technologies
At present, there is limited governmental support to incentivize producers to adopt greener production routes

BAU	Business as usual	H₂O	Water
BF-BOF	Blast Furnace-Basic Oxygen Furnace	IEA	International Energy Agency
CAPEX	Capital expenditure(s)	HRC	Hot Rolled Coil (type of finished steel product)
CCUS	Carbon capture, utilization & storage	MPP	Mission Possible Partnership – industry decarbonization coalition
CO	Carbon monoxide	MOE	Molten oxide electrolysis
CO₂	Carbon dioxide	NG	Natural gas
CO₂e	CO₂equivalent, using global warming potential as conversion factor	NAFTA	North American Free-Trade Agreement
DAC	Direct Air Capture	NG	Natural gas
DRI-EAF	Direct Reduced Iron-Electric Arc Furnace production process	NG DRI-EAF	DRI-EAF production process using natural gas
EAF	Electric Arc Furnace	NZE	Net Zero Emissions
EBITDA	Earnings before interest, taxes, depreciation, and amortization	O₂	Oxygen
EW-EAF	Electrowinning-Electric Arc Furnace	OECD	The Organization for Economic Cooperation and Development
Gt	Gigatonne, equal to 1 billion metric tonnes	OPEX	Operational expenditure(s)
H₂	Hydrogen	SR-BOF	Smelting Reduction-Basic Oxygen Furnace