Introduction to steel decarbonization

Steel use and the importance of steel decarbonization

The iron and steel industry is one of the world’s largest greenhouse gas (GHG) emitters, responsible for about 11% of global carbon dioxide (CO2) emissions and 7-9% of global GHG emissions. Because decarbonizing the steel industry could address up to one tenth of global emissions, while also contributing to and promoting the decarbonization of other industries, it offers a large opportunity to create widespread change toward climate targets.

Steel is an essential and highly-demanded material, used in various applications including construction, household wares, transportation, and energy infrastructure. The material is resilient and long lasting, and can even be recycled without losing its properties. For most uses, steel has no material substitute because of its combined strength, weight, durability, ductility, and resistance to corrosion.

Steel Use by Consumer Category in 2022. Source: World Steel Association, 2023.

The largest buyers of steel are the construction, automotive, and machinery industries, which use steel for the building of houses, infrastructure, and industrial equipment, as well as in vehicle frames, hoods, doors, bumpers, and tanks. Together, these buyers account for more than 60% of the global steel demand. Governments are another significant source of demand, as they buy steel for domestic infrastructure projects.

Despite the popularity and widespread use of steel, producing it has a downside: manufacturing steel is an energy and emissions-intensive process. Iron and steel production currently uses coal for about 75% of its energy inputs globally, which produces a high share of carbon dioxide. The iron and steel sector globally accounts for about 15% of primary coal use, and 8% of final energy demand, leading to a coal consumption of 900 million tonnes of coal equivalent (Mtce) in 2019. However, low-emission steel production methods are increasingly available, and the industry’s carbon footprint can be reduced by switching from conventional, coal-based steel production to these efficient steel technologies.

According to the International Energy Agency (IEA), the steel industry must achieve an emissions reduction of more than 50% relative to 2020 in order to align with the 1.5°C pathway determined by the Paris Agreement. In other words, the iron and steel industry must reduce emissions to 1.8 Gigatonnes (Gt) CO2 by 2030 and 0.2 Gt CO2 by 2050. Optimally, this can be achieved  by switching to fossil fuel-free processes that produce green steel with net zero emissions. In some cases, due to geographic and economic constraints, net zero steelmaking may not be feasible. In those cases, emissions can be lowered through various measures that support low-emissions steelmaking.

Realistically, the pathway to decarbonizing the global iron and steel sector will consist of a combination of approaches, including measures to reduce emissions intensity in the production process, lower overall steel demand, and increase efficiency and circularity within the industry.

The steel production process

The following explanations are based on the traditional Blast-Furnace Basic Oxygen Furnace (BF-BOF) process. Changes within the process across other production routes are explained thereafter.

The production of steel can be divided into four stages (excluding mining), each creating its own emissions:

Estimated global direct and indirect emissions (in Ct/CO2) by process step in 2015. Source: Wang et al., 2021, as cited by Net Zero Steel, 2021, p. 6.

Raw material preparation: Producing one tonne (1000 kg) of pig iron requires an average input of 1370 kg iron ore, 780 kg metallurgical coal, and 270 kg limestone. For steel production, the iron ore needs to be converted into pellets by going through a pelletizer and a sinter machine, which uses high temperatures to convert the material into a product optimal for the blast furnace. During this activity, the pellets are processed at very high temperatures. The energy intensity needed depends on the quality of the iron ore, among other factors. In order for the coal to be useable, it first needs to be converted into coke. This is done under the pressure of high temperatures in “coke ovens”. Lastly, limestone is crushed to serve as a fluxing agent during the iron-ore conversion process. Emissions in the raw material preparation stem not only from the burning of coal, but also from the various operating processes and electricity consumption. Additionally, sourcing materials causes indirect emissions, such as the methane emissions released during coal mining, increasing the reported carbon footprint of the steel industry by up to 27%.

Ironmaking: Iron is produced through the removal of oxygen and impurities from iron ore. To do so, iron ore pellets, coke, and limestone are added to a production plant, like the traditional blast furnace (BF). The coke is heated to melt the iron ore, releasing carbon monoxide. This process reduces the oxygen in the iron ore, causing the emission of CO2 as a byproduct of the resulting pig iron, also known as crude iron or hot metal.

Steelmaking: This process aims to convert pig iron or scrap (waste metal) into steel. Pig iron is first melted at around 1600°C within the basic oxygen furnace (BOF). To purify crude steel, carbon needs to be oxidized to enhance chemical reactions and heat transfers. Additionally, the level of oxygen dissolved in the liquid steel needs to be lowered and hydrogen and nitrogen reduced, preventing defects in steel products. Steel can then be alloyed with oxidizable metals to arrive at the desired chemical composition with corresponding steel properties. In the last step, the liquid steel is cast into a mold where it can cool into the desired shape, such as slabs, blooms, and billets. Emissions are a byproduct of industrial heat and electricity production, as well as the sourcing and transportation of the resources used (such as iron inputs and reducing agents).

Rolling and coating: In the final step, steel is sent through a rolling mill to change the thickness or design of the material. Rolling and forming can be done at various temperatures. Cold-rolling, for example, can increase the steel’s strength through further hardening. Steel pickling is used to remove impurities on the steel surface by dipping it into acids. Steel buyers can also choose to get their end products coated in a layer of zinc to protect them from corrosion and oxidation. The choice of which processes are used determines the surface properties of the end products. Most emissions in this stage are created through electricity consumption and indirectly from the sourcing of the materials used.

The reduction of steel-related emissions

Steel production can be imagined as a formula with inputs, chemical reactions, and resulting outputs. Within it, one can choose what raw materials to use as input, and what type of energy is used to create the needed chemical reactions.

Main Steel Production Pathways in 2019. Source: IEA, 2020, p. 27.

To reduce emissions within the ironmaking process, use of coal can be eliminated or reduced. One way of doing so is by switching the methods used and producing direct reduced iron (DRI), also known as sponge iron. Instead of using coke to melt iron ore and turn it into pig iron via the blast furnace, alternative reducing agents such as carbon monoxide (produced from coal or natural gas) or hydrogen (produced from coal, natural gas, or an electrolyzer using electricity) can be used to remove the oxygen from the iron ore. Depending on which choices are made, emissions can be reduced. Another option is the “smelting-reduction” ironmaking process, which also avoids the need for a coke oven, sinter plant, and blast furnace, resulting in low-emissions iron production. Powdered coal and iron ore are injected into a reactor, where it becomes molten metal that can be processed in a BOF. This process requires less energy and could theoretically be used with carbon capture technology to further reduce emissions. Despite its potential role in the green transition, smelting is relatively new and, therefore, not yet widely adopted in the industry. Some producers have started developing low-emissions iron using the molten oxide electrolysis process. In this process, iron ore is dissolved in a molten oxide electrolyte solution using electrical currents, resulting in liquid iron. Instead of emitting carbon dioxide, this process results in oxygen as a byproduct. The process also requires less energy than the traditional integrated steel mill (i.e., BF-BOF plant). And although this process, too, is still in its early stages of development, it could allow us to produce high levels of emissions-free iron if scaled and fully powered by renewable electricity.

To reduce emissions within the steelmaking process, the raw materials used as input can be changed. Options include BF, DRI, smelting-based, or electrolytic pig iron. Alternatively, a combination of them can be used to transition to higher shares of low-emissions materials over time. It is also possible to use scrap, which is steel “waste” generated during the production process or from steel products at the end of their lifecycle. Using scrap as an input is a way to recycle steel, and has the advantage that no ironmaking (i.e. primary production) is necessary, thus eliminating this process’ carbon emissions. This is why scrap-based steelmaking is considered a secondary production, and a promising strategy to cut the industry’s emissions. Cheap, non-renewable energies like coal are largely used as reducing agents and energy sources during both the iron and the steelmaking processes. By substituting these inputs with less carbon-heavy energy sources, such as low-emissions hydrogen, green electricity, bioenergy, or natural gas, both processes’ emissions can be greatly reduced.

Therefore, it is possible to either fundamentally change the production pathway using low-emissions methods with green(er) raw materials and energy, or to change specific elements of the pathway, such as the raw materials used as input to the steelmaking process.

Another option for reducing emissions is to retrofit existing steel plants, such as through the addition of best available technologies (BAT). Some of these technologies include waste heat recovery systems, coke dry quenching systems, and top-pressure recovery turbines. However, even when all BF-BOF plants implement these technologies, effects are limited due to their necessity for coal. Furthermore, such retrofitting should be seen as a transitional process that is likely to only be employed if carbon emissions are more expensive — due to carbon taxes, for example — rather than be voluntarily adopted. Another talked-about technology is “carbon capture, utilization, and storage” (CCUS), which can capture emissions before they enter the atmosphere. This technology is, however, not yet successfully scaled, expensive to implement and maintain, and often comes with high bureaucratic and legal barriers, while not solving the underlying problems.

It is also possible to further increase the energy efficiency of existing production plants, e.g. through closed circuits to catch heat created in the process, and converter gasses to reduce energy needs. Other options are to lower the temperatures in blast furnaces to reduce the consumption of coal, or to switch to higher-quality coke and iron ore. Many of these changes have already been implemented in industrialized countries. Nevertheless, there are still opportunities for improvement in some (often emerging) economies.

Generally, some share of all steel produced is lost as scrap during the production process. Improving production efficiency can minimize material waste and thus lower the demand for new production, which can reduce production emissions. Increased efficiency and reduced emissions of the plant facility itself are additional decarbonization options, for example through better and low-emissions construction materials and design, or the electrification of on-site equipment.

Lastly, we can reduce emissions by improving the sourcing of energy and materials. This option can include switching to suppliers with lower CO2 footprints or reducing emissions created through transportation, either by shortening routes or switching the means of transportation. 

There are various models that highlight what a net-zero energy transition could look like, with notable ones being those created by the International Energy Agency (IEA) and Mission Possible Partnership (MPP). No matter their target and timeline — net zero by 2070 (IEA) or by 2050 (MPP) — feasibility is dependent on the maturity of certain technologies. By 2050, the adoption of best available technologies and breakthrough technologies could reduce about 90% of the industry’s direct emissions. About 25% of emissions reductions are expected to be achieved from two technologies alone, hydrogen-based DRI (ironmaking) and carbon capture, utilization, and storage (CCUS), even though the feasibility of the latter is still in question. Each steel plant will have its own decarbonization pathway, depending on the local prices, availability of resources, infrastructure available, and investment choices. Because of that reality, it is important to develop a larger repertoire of technologies that enable decarbonization across contexts.

To understand how emissions can be reduced within each of the major production processes and which other technologies exist, please refer to the respective technology pages.

The challenges and opportunities toward steel decarbonization

Steel decarbonization is technologically possible, but rapid change is challenging. This is partly due to a set of structural barriers (from now on referred to as challenges and opportunities) to steel decarbonization that reinforce each other, keeping the existing market and industry conditions in place. These challenges and opportunities include:

1. Growing steel demand
2. Green energy and resource availability
3. Steel recycling capacity
4. Profit margins
5. Market security for low-emissions steel
6. Competitiveness of low-emissions steel
7. Excessive government intervention
8. Overcapacity
9. Steel plant construction cost
10. Lifetime and reinvestment cycles
11. Access to financial resources
12. Availability of low-emissions technologies
13. Availability of low-emissions infrastructure
14. Trained professionals
15. Green steel definition
16. Technology standards
17. Bureaucratic barriers
18. Accountability to steel decarbonization
19. International cooperation
20. Awareness and information availability

To learn more about the challenges and opportunities, how they interact, and how to address them, explore their GEM.wiki pages and the Interactive Policy Tool.