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| Wire rod being manufactured at British Steel's Scunthorpe rod mill, U.K. |
A consortium of European construction and property giants is pushing steel producers to lay out more aggressive plans to cut their carbon emissions.
Under the SteelZero initiative, formed in December 2020 by climate consultancy The Climate Group and ResponsibleSteel, a standards setting nonprofit, 15 companies have committed to procuring, specifying or stocking 100% net-zero steel by 2050 at the latest.
The group seeks to build on momentum generated by world leaders at the COP26 climate conference in Scotland this year to drive the steel production industry to lower its notoriously high emissions.
SteelZero, which recently added Barrett Steel Ltd., Morrow + Lorraine Ltd. and Smulders Projects Belgium N.V. to its ranks, is already seeing success in pushing steel giants such as Tata Steel Ltd. and British Steel Corp. Ltd. toward releasing aggressive emissions cutting plans. Both companies have joined with new standard-setting efforts aimed at cutting emissions.
"Our initiative, which brings together businesses that use, procure and specify steel, critically sends a strong signal to markets, policy makers and investors that there is a demand for net-zero steel products," Mike Peirce, director of corporate partnerships at The Climate Group, said in an email.
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When 40 world leaders agreed on a U.K.-led plan to speed up affordable and clean technology worldwide by 2030 at COP26, the steel industry was earmarked as one of the top five industries to be involved in the process, Alan Dunsmore, CEO of structural steel giant Severfield PLC, a member of SteelZero, said over email.
Steel production averaged 1.82 tonnes of carbon dioxide emissions per tonne of crude steel cast from 2007 to 2020 using the basic oxygen furnace and electric arc furnace steel production routes, according to World Steel Association, or WSA, data.
The steel sector's share of global emissions in 2016 was about 7% of global anthropogenic carbon dioxide emissions, according to a September 2020 study by researchers at the University of Oxford. The data was most recently cited in October by the Net Zero Steel Initiative, or NZSI, supported by Rio Tinto Group, ArcelorMittal and PJSC Severstal, among others.
WSA data suggests not much had changed by 2020, when the sector produced 2.6 billion tonnes of carbon dioxide equivalent, representing between 7% and 9%. Dunsmore wants that to change.
"By sending a common demand signal, and working across the industry as a whole, we can collaborate to achieve the change we want to see," Dunsmore said of SteelZero's members.
Steel production could be made with "almost no carbon emissions" through $278 billion of extra investment by 2050, according to a BloombergNEF report released Dec. 1. Some steelmakers, such as U.S. Steel Corp., have already begun building mills with lower emission electric arc furnaces, and others are searching for alternative ways to squeeze carbon out of their processes.
Luxembourg-headquartered ArcelorMittal set a 2050 net-zero target in September 2020, helping to start a groundswell that showed the "market was changing" in Europe, making it an ideal continent for SteelZero to initially target, Peirce said.
"The power of a demand signal is one of the key levers of influence to which steel and, further upstream, iron ore producers will be able to respond," Peirce said.
Listening to calls
Dunsmore said British Steel Corp. Ltd.'s acknowledgement of SteelZero's importance in the steelmaker's decarbonization road map released in October is proof "the steel sector is listening to our calls to decarbonize." British Steel is owned by Chinese steelmaker Hebei Jingye Group Co. Ltd.
Some of SteelZero's members are customers of British Steel, which effectively made SteelZero a "key driver" in the latter's decision-making processes when "outlining its commitment to achieving net-zero status through the biggest transformation in its history," Dunsmore said.
"Based on the adoption and growth of SteelZero, it's deemed to be the best approach to adopt a science-based target and review the target and scope framework as this area develops," British Steel said in an Oct. 7 statement.
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| Rolls being inspected at British Steel's manufacturing headquarters in Scunthorpe, U.K. |
Lee Adcock, British Steel's environment and sustainability director, did not dispute that SteelZero affected its decision-making. However, Adcock said it is "difficult to rank" the range of external factors that influenced British Steel's road map, which included banks, investors, shareholders, customers and other stakeholders.
"Understanding customer/segment requirements in a cohesive manner is very important and key to understanding how their purchasing behavior may change over time," Adcock said in an email interview.
Dunsmore also applauded ArcelorMittal and India's Tata Steel Ltd. for signing up ResponsibleSteel — a standard aligned with the Paris Agreement for forging a pathway to achieve the commitments of SteelZero.
While technologies for alternative low-carbon steelmaking options are moving ahead, they are not yet available at scale, with cost issues remaining, The Climate Group's Peirce said.
Efforts are already underway across various continents, including North America and China, to convert steelmaking to electric arc furnaces in order to replace blast furnace and basic oxygen steelmaking operations.
Citi, Goldman Sachs, ING, Société Générale, Standard Chartered and UniCredit also united in May to develop a climate-aligned finance agreement to support steel sector decarbonization.
Steelmaking can be "almost fully decarbonized by 2050 by retrofitting blast furnaces and adding carbon capture and storage, scaling up hydrogen-based direct reduced iron, boosting steel recycling, and slowing demand growth through more efficient steel use," the Stockholm Environment institute said in November.