Green steel - the hope of a low-carbon construction industry?

In addition to the destruction of countless lives, the Russian attack on Ukraine has already had many consequences for the EU. In Germany, one of the industries most affected by this is the construction industry. According to B_I Medien, an enormous increase in prices for bitumen and steel is evident already, as reported by the Central Association of the German Construction Industry (ZDB), because around 30 percent of the construction steel and 40 percent of the raw iron used in Germany comes from Russia, Ukraine and Belarus.

In response to the war and the expected rise in energy prices, the EU is working to break its dependence on imports from Russia. In the steel sector, this is being sought by reducing energy consumption and increasing the use of recycled steel. One solution to this would be the more frequent use of green steel.

The global steel sector is the second largest industrial sector in terms of greenhouse gas emissions (after cement), as it is heavily dependent on fossil fuel consumption. According to the International Energy Agency (IEA, 2021), the volume of steel production has more than doubled over the past two decades, resulting in an overall doubling of direct steel production-related greenhouse gas emissions (IEA, 2020). It is therefore crucial to find solutions for decarbonizing this industry. This is how the "green steel" innovation was born. In this article, we explain what Green Steel is and whether it is the sustainable solution for the steel industry.

Steel is an important structural feedstock for major industries such as construction and automotive. As a result, end-use demand for steel could increase by an additional 40% over the next three decades to 2050, while facing the challenge of reducing emissions. In response, many companies are looking at substitutes to steel, such as the use of aluminum (see our article on steel vs. aluminum using a vehicle frame as an example), and steel companies are committing to achieving Net Zero greenhouse gas emissions by 2050. As a result, there are several international initiatives to decarbonize the steel sector, such as the Net Zero Steel Pathway Methodology Project, which proposes a foundation for consistency through a set of key principles to guide the steel sector in achieving Net Zero goals.

One potential long-term solution to this industry's decarbonization challenge is "green" steel. This breakthrough technology for reducing emissions from steelmaking can address the following:

1) steel products that have a lower greenhouse gas or carbon footprint (due to different production processes), or
2) "low carbon steel products", i.e. products with a minimal carbon content (0.04-0.30%) in the final products themselves.

In this article, we are concerned with the term "green steel" mentioned in point 1), which refers specifically to steel products manufactured using less greenhouse gas-intensive production processes, rather than products with lower carbon content. Green steel also differs from "sustainable steel" in that its consideration is limited only to lower greenhouse gas emissions, whereas sustainable steel also includes other aspects such as energy and resource efficiency, circular economy, and reduction of other pollutants.

Green steel should also not be confused with Responsible Steel. Responsible Steel describes the responsible sourcing and production of steel products based on 12 principles such as labor rights, biodiversity, water management, etc. (see sources for more information on standards and certifications for responsible steel).

How is green steel produced?

According to Vogl et al. (2018), the principle of green steel production is called hydrogen-based direct reduced iron (H-DR) and consists of replacing coking coal, which is usually required for steel production from ores, with renewable electricity and hydrogen.

Typically, coke is burned in a blast furnace at temperatures of about 1,600°C to smelt the iron from the ore. Iron coke is usually added to the iron oxide in a blast furnace to reduce it to molten iron and remove impurities from the coke. This process produces significant amounts of CO2 and requires a tremendous amount of energy as the mixture is heated up to 1500 °C. The molten iron is then transferred to an oxygen furnace so that a precise amount of air reacts with the carbon coming from the coke and contained in the molten iron to form steel. If the coke is replaced by hydrogen, the sponge iron can be fed directly into an electric arc furnace for further processing because it contains far fewer impurities and bypasses the blast furnace process.
The use of hydrogen eliminates this production process. This means a significant reduction in the energy required for steel production. Furthermore, the temperature required in the reaction process is significantly lower when hydrogen is used instead of coke, which in turn reduces energy input and the associated emissions. In addition, the by-product of hydrogen direct reduction is no longer carbon dioxide, but simply water, which is recycled to the hydrogen electrolyzer and reduces a significant proportion of CO2 emissions. Research by Vogl et al. (2018) evaluating hydrogen direct reduction for fossil-free steelmaking found that this green steelmaking method produces only 2.8% of the CO2 emissions currently produced by conventional coke and blast furnace systems. However, actual, concrete data are still being researched.

Challenges

A key issue is that due to the innovative process, green steel is initially more expensive than conventionally produced steel. The Swedish green steel producer, SSAB, estimates that green steel is 20-30% more expensive to produce than conventional steel (HYBRIT, 2017). However, Vogl et al. (2018) point out that an HDR-based steel production plant will only become competitive if the international CO2 price [see our article on CO2 pricing] is between €34 and €68 per ton of CO2, -but according to EMBER Climate, the CO2 price in Europe was already €68.85 per ton of CO2 on March 01, 2022- and assuming electricity costs of €40 per MWh (which, according to EMBER Climate, was already €167 per MWh in Germany in January 2022).

Moreover, researchers Muslemani et al. (2021) in their study "Opportunities and challenges for decarbonizing steel production" discovered another problem related to the carbon footprint in this innovation. The problem is whether it is calculated in absolute emissions ("x kg of CO2 per kg of steel") or in relative emissions ("Green steel produces x% less emissions than conventionally produced steel"), as this also depends heavily on the reference of conventionally produced steel. Indeed, steel can be produced under very different conditions depending on the country of origin, so it is important to carefully consider the calculation method and the reference for comparison.

In the case of HDR-based steel, it is also important to consider the emissions associated with hydrogen production. Indeed, hydrogen can be controversial because it can be produced from a variety of resources, including fossil fuels, biomass, and water electrolysis with electricity. Therefore, CO2 emissions from hydrogen production should also be included in the green steel emissions system. The issue of allocation therefore justifies the need for a global consensus on a carbon accounting methodology for the steel industry.

In order to present a better comparability of all CO2 emissions along the entire value chain, a bottom-up calculation method, as used by sustamize for the calculation of Product Carbon Footprints, is a highly efficient option. Here, processes are modeled with all individual process steps, just as they occur in industry, instead of aggregating them and reducing them to a single input or output. Performing PCF analysis using this method could provide more accurate insights on all alternatives. Especially when manufacturing location and the electricity mix there, or manufacturing processes and their Ernergymix play such a significant role as in the production of "sustainable", recycled and "green" steel.

Green steel could be an important innovative solution for decarbonizing the steel industry. An increasing number of companies are focusing on this innovation and investing in related projects. It is however important to look at the bigger picture as this innovation may introduce new sources of carbon emissions within the supply chain, e.g. in the production of the hydrogen used in green steel production or in the integration of recycled steel. As a result, a carbon footprint assessment of green steel would allow to present an optimal assessment of the CO2 emissions of this material.

Sources

ArcelorMittal (2020, 13. Oktober). ArcelorMittal Europe to produce ’green steel’ starting in 2020. https://corporate.arcelormittal.com/media/news-articles/arcelormittal-europe-to-produce-green-steel-starting-in-2020

Brinkmeier, B. (2022, 4. März). Kein Bitumen und Stahl mehr aus Russland? Rohstoffe am Bau werden noch teurer. B_I Medien. https://bi-medien.de/fachzeitschriften/baumagazin/wirtschaft-politik/materialmangel-kein-bitumen-und-stahl-mehr-aus-russland-rohstoffe-am-bau-werden-noch-teurer-b14601

Ember. (2022, 9. Februar). Average monthly electricity wholesale prices in selected countries in the European Union (EU) from January 2020 to January 2022 (in euros per megawatt hour) [Graph]. In Statista. Retrieved February 23, 2022, from https://www.statista.com/statistics/1267500/eu-monthly-wholesale-electricity-price-country/

IEA (2021). Iron and Steel. IEA. Paris. https://www.iea.org/reports/iron-and-steel

IEA (2020). Iron and Steel Technology Roadmap. IEA. Paris. https://www.iea.org/reports/iron-and-steel-technology-roadmap

HYBRIT (2017). Fossil Free Steel. Summary of findings from HYBRIT Pre-Feasibility Study 2016–2017. HYBRIT Brochure. SSAB, LKAB & Vattenfall. https://dh5k8ug1gwbyz.cloudfront.net/uploads/2021/02/Hybrit-broschure-engelska.pdf

Muslemani, H., Liang, X., Kaesehage, K., Ascui, F., & Wilson, J. (2021). Opportunities and challenges for decarbonizing steel production by creating markets for “green steel” products. Journal of Cleaner Production, 315, 128127. https://doi.org/10.1016/j.jclepro.2021.128127

Redaktionsnetzwerk Deutschland (RND) (2022, 4. März). Gas, Erdöl, Stahl: Kann Russland Rohstoffe als Druckmittel nutzen? https://www.rnd.de/wirtschaft/sanktionen-gegen-russland-wie-abhaengig-ist-deutschland-von-russischen-rohstoffen-MI5MEPXOQYOOAOU5WBZXYLQWFI.html

Responsible Steel (2019). Responsible Steel Standard v.01. https://www.responsiblesteel.org/wp-content/uploads/2019/11/ResponsibleSteel_Standard_v1-0.pdf

The Guardian (2021, 19. August). ‘Green steel’: Swedish company ships first batch made without using coal. Reuters in Stockholm. https://www.theguardian.com/science/2021/aug/19/green-steel-swedish-company-ships-first-batch-made-without-using-coal

U.S. Department of Energy (2022). Hydrogen Production and Distribution. Alternative Fuels Data Center. https://afdc.energy.gov/fuels/hydrogen_production.html

Vogl et al. (2018). Assessment of hydrogen direct reduction for fossil-free steelmaking. https://www.sciencedirect.com/science/article/pii/S0959652618326301

World Steel Association (2021). The Net-Zero Steel Pathway Methodology Project - Final Report and Recommendations. https://site-vkkfu93r.websitecdn.com/uploads/F5B19C8ADDA9CB51.pdf?v=0