Why ‘Green’ Steel Is Important

Carbon neutrality isn’t something that is achieved by an OEM its own; inputs from suppliers must be assessed. When one of those inputs is steel, there is a lot of carbon that needs to be considered.

Gary S. Vasilash

April 3, 2024

6 Min Read
In October 2023 Porsche announced plans to use up to 35,000 tons of steel from H2 Green Steel starting in 2026 for its vehicle manufacturing.

When a company such as General Motors says it is targeting carbon neutrality in its products (and operations by 2040), attention immediately focuses on the transition from internal-combustion to battery-electric vehicles. No tailpipe emissions, no problem.

While BEVs address direct greenhouse gas emissions from vehicles, overlooked in the pursuit of carbon neutrality is what the EPA refers to as “value chain emissions” that “often represent the majority of an organization’s total greenhouse gas emissions.”

Given that most vehicles are made out of steel, even zero-emissions vehicles still have a considerable amount of emissions associated with their production.

“Steel manufacturing produces more CO2 than any other heavy industry, comprising around 8% of total global emissions,” according to the World Economic Forum.

To address this, steel companies and research organizations are developing “green steel.” Simply put, it is an effort to decarbonize steel and steel production.

Steel Basics

Steel is based on iron ore. To strip the oxygen from the ore to achieve iron in a furnace, the traditional approach uses a carbon-based material such as coke that chemically and thermally removes the oxygen. The oxygen molecules bind to the carbon so the outputs are both pig iron that is used to produce steel and carbon dioxide.

Various efforts are underway, particularly in Europe, to replace coke with hydrogen that has been produced with renewable energy. Using “green” hydrogen is important because steel makers have to account for their emissions to OEMs purchasing steel; green hydrogen means that isn’t an issue.

Serious Interest

Last fall, Porsche signed an agreement with H2 Green Steel, a Swedish company, to help Porsche work “towards a carbon-neutral balance sheet across the value chain for its cars by 2030,” says Barbara Frenkel, the sportscar-maker’s executive board member for procurement.

German automotive supplier ZF Group also signed a seven-year, €1.5 billion agreement with H2 Green Steel to purchase 250,000 tons of green steel annually through 2033. A European ZF representative explains to WardsAuto: “In Europe at this moment most of the flat steel is produced in the blast-furnace route from iron ore with a typical product-carbon-footprint of greater than 2 tons CO2 per ton of steel.”

The company is working toward carbon neutrality across the board by 2040, and estimates the utilization of green steel will reduce its annual CO2 emissions by 475,000 tons.

Going Green

The process used by H2 Green Steel starts with green hydrogen that is used in a reactor: The hydrogen is exposed to the iron ore; there is a chemical reaction so that the oxygen binds with the hydrogen and the outputs are steam and direct-reduced iron (DRI), which is then used in an electric-arc furnace where it is combined with steel scrap; the melted material is then transferred to a ladle furnace and RH degasser to produce steel. Alloys are added to the melt to produce the required types of steel.

Two points about this:

  • It is not 100% carbon-free. The company describes it as “near-zero emissions.” H2 Green Steel tells Wards: “We manage to remove up to 95% compared to blast furnace-produced steel. However, steel is ultimately iron and carbon, so you will never be able to totally remove carbon from the manufacturing process, though we are looking to use biocarbon as the availability of biogas increases. To carburize your iron and make steel you can either add carbon at the DRI step or the melting step.”

  • H2 Green Steel has binding agreements for some 1.25 tons annually of its steel, but it is still in the process of constructing its hydrogen- and steel-making complex in Boden, Sweden. It is anticipated to be complete in 2025, with an annual capacity of 5 million tons of steel by 2030.

In the U.S.

While there is plenty of activity in Europe in pursuit of lower carbon emissions from steelmaking, it is not as though work isn’t being done in the U.S.

For example, Boston Metal has developed a process called “Molten Oxide Electrolysis” that uses clean electricity to power an inert anode that’s immersed in an electrolyte. The cell heats to 1600 ° C (871° F, the electrons split the bonds in the iron oxide in the iron ore to produce pure liquid metal. This process works such that the emissions are simply oxygen, not CO2.

Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI), says, “In terms of current and plans of future reductions in emissions, I think the U.S. steel industry is ahead of Europe.”

He observes, for example, that 70% of the steel production in the U.S. is based on scrap – including scrapped automobiles. (Dempsey says this isn’t a case where a scrapped car is turned into steel that is used to make a new car. This is because when cars are crushed, there is a significant amount of wiring, or copper, in the mix. “Copper can be good or bad in steel,” he says. “If you’re making rebar and need a rigid, strong material, copper helps. But if you’re trying to make sheet steel with a lot of formability, copper is a problem.”)

There are more electric arc furnaces (EAFs) in use in the U.S. than in the rest of the world: In 2021 some 79% of the steel produced in the U.S. was with EAFs compared with about 26% in the rest of the world. EAFs are more energy efficient than conventional blast furnaces.

That said, in the U.S. there is an abundance of natural gas, which is not the case in Europe. “All steel makers in the U.S. are injecting natural gas into their blast furnaces,” Dempsey says. While that isn’t zero carbon, it is reduced compared with using coal.

Dempsey also points out that the blast furnaces that are configured to accommodate natural gas can be readily modified for hydrogen when it becomes more widely available.

Also, “In the U.S. we principally use iron ore pellets, which means a much lower emissions process for conversion than the sintering used in large parts of the rest of the world,” Dempsey says.

Bottom Line

Cost is always a factor, but as the price of carbon emissions increases, the relative difference between traditional and green steel will disappear, says Anna Borg, president and CEO of Vattenfall, an energy company owned by the Swedish state. She suggests that when carbon costs are taken into account, the premium for what she calls “fossil-free steel” in a car will be “equivalent to two USB sockets that you put into the car.”

Vattenfall joined with two other Swedish firms – LKAB, a mining company, and SSAB, a steel company – on a project named “HYBRIT” (Hydrogen Breakthrough Ironmaking Technology) that in 2021 produced the world’s first hydrogen-reduced iron that was used to make steel.

Volvo Group is partnering with SSAB on sourcing HYBRIT-based steels. It plans to ramp up its use of what it calls “fossil-free steels” as they become available throughout its lineup.

As OEMs continue their efforts to reduce emissions and to become carbon neutral, their investments need to be made not only in transitioning to electrified vehicles, but also transitioning to materials that have fewer carbon emissions. Like green steel.



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