We live in a world of paradoxes. For steelmakers like ArcelorMittal, this is true for two important reasons:
Paradox 1: A low-carbon world needs steel, but producing it today emits significant amounts of CO2
A low-carbon world with a circular economy needs steel for its lower carbon footprint, unparalleled recyclability, and ease of reuse compared to alternative materials. Steel also makes strong and safe low-energy buildings and transportation networks, and is the basis of renewable energy infrastructure.
Because a developed economy needs so much steel, and about three-quarters of the world is still developing – our demand forecast suggests that annual steel consumption will be in the region of 2.6 billion tonnes by 2050 – so we will still need to make a great deal of it, despite recycling or reusing existing stock when it reaches the end of its use. A sustainable world needs steel and lots of it.
However, steelmaking today contributes 7% of the world’s carbon emissions. So, in a world aligned with the objective of the Paris Agreement to limit the global temperature rise to well below 2 degrees Celsius above pre-industrial levels – an objective ArcelorMittal is committed to – we must change primary steelmaking to emit much less carbon.
Paradox 2: Major investment in new technology is needed during challenging financial times
While we have the ability to find, test and develop technology to significantly lower the carbon footprint of steel production, enabling a shift on the scale and speed required to be true to the Paris Agreement depends upon significant long-term investment and collaboration. Yet steel prices have been lower in 2019 than they have been for years. Just as challenging market conditions serve to undermine steelmakers’ ability to invest, the increasing carbon charges in Europe further reduce the region’s steelmakers’ ability to make the very investments a low-carbon transition requires.
To accelerate the switch to low-carbon steelmaking, the vision could be as simple as this: steel made by companies investing in lower carbon steelmaking technology should be able to outcompete those who are not. For this to happen, more consistent policies around the world which support the levels of investment needed to develop breakthrough technologies are required, since competition is played out on the global market, not in regions. A border adjustment between those regions with a carbon price and those without, would be a good start.
Energy sector – decarbonisation through incentives
Energy companies are succeeding in making renewable energy cost-competitive with that made from fossil fuels. This was impossible a few years ago, but thanks first to technological advancements and secondly to incentive-based policies like green energy tariffs, which have enabled the first, they are seeing results. This proves such policy is effective in driving the change the world wants. Having learned this approach works, why not find similar measures to accelerate the decarbonisation of other sectors in response to the increasing intensity and scope of scrutiny on carbon?
Scrutiny widens to materials and those who buy them
Greenpeace raised the question of how much carbon is used to make a car, on top of how much is emitted while driving it. Until now, the focus of environmental campaign groups had been squarely on fossil fuel use in cars. Now the pathway to electric cars is emerging, attention is turning to the materials that make a car, including: plastics, aluminium, glass and most relevant for us, steel.
Greenpeace’s query on the carbon embedded in the products we all buy is a valid one. My colleagues in ArcelorMittal’s strategy team have calculated that making all the materials we use to live our lives (steel, cement, glass, paper, plastic, aluminium) accounts for over 19% of global CO2 emissions. Most of those come from using fossil fuel-based energy to transform primary raw materials into those we use to make our products (iron ore for steel, bauxite for aluminium, oil for plastics). The obvious next question for materials manufacturers is how do we reduce this?
The answers to this question are many and complex. But one thing clear to us as steelmakers, is that for ArcelorMittal to achieve our ambition to significantly reduce our carbon emissions globally, and to be carbon neutral in Europe by 2050, we need policymakers, NGOs and other stakeholders to actively support the enablers that would accelerate the decarbonisation of steelmaking, in the same way they supported the transition to renewable energy.
To get this message out, ArcelorMittal has chosen to publish a dedicated climate action report setting out our aspirations for and approach to reducing steelmaking’s carbon emissions.
The report puts in black and white the company’s commitment to significantly reduce our carbon emissions, as well as signalling our intention to announce a 2030 carbon reduction target next year. It also sets out the three pathways we believe could lead to a deep decarbonisation of steelmaking and highlights the technical trials we are running across all three. Today, these pathways are extremely energy intensive, and will lead to a structurally higher cost of steelmaking. Therefore, significant policy support will be needed if low-carbon steelmaking on a commercial scale is to become a reality.
ArcelorMittal’s low-emissions pathways and pilot technologies
The first pathway we are exploring uses clean power as the energy source for hydrogen-based ironmaking, and longer-term for direct electrolysis ironmaking, while contributing to other low-emissions technologies. We are building a demonstration plant in Hamburg, called H2Hamburg, which will reduce iron ore with hydrogen. We are also collaborating with 11 partners on a project called Siderwin, (see diagram above) to build a three-metre industrial cell which will test iron ore reduction via electrolysis in Maizières, France.
Our second option centres on circular carbon energy sources including bio-based and plastic wastes from municipal and industrial sources, as well as agricultural and forestry residues. Through a process we call Torero, we will reduce iron ore with waste carbon rather than fossil fuel coal in a demonstration plant in Ghent, Belgium. Meanwhile our campus in Dunkirk, France is piloting the IGAR project (see diagram, above) which reforms carbon from the blast furnace, converting it into a synthetic gas to reduce iron ore.
Finally, we are also looking at how we can render existing steelmaking processes low-emissions by bolting on carbon capture and storage / re-use technologies. The Carbon2Value process captures fossil fuel carbon for storage or re-use. Our Carbalyst® project, in partnership with LanzaTech, will capture carbon gas and recycle it into chemicals (see diagram below). Pilot plants for both technologies are under construction at our steelworks in Ghent, Belgium.
Creating the right environment for low-carbon steelmaking
For these projects to be commercially viable in the near-team while avoiding ‘carbon leakage’ (steel imports which adhere to less stringent carbon policies and therefore cost less to make), not only do we need policies which consider the environmental standards to which steel is made – rather than where it is made – steelmakers also need:
• Preferential access to abundant and affordable clean energy;
• Breakthrough steelmaking technologies to be identified as a key priority area for public funding;
• The necessary renewable energy, hydrogen, and carbon transport and storage infrastructure to be made available at national and regional levels to enable industrial-scale use of such technologies; and
• Materials policies should reward products for their reusability and recyclability to accelerate the transition to a circular economy.
Each of these elements will be critical to speeding up the transition to low-carbon steelmaking, but when it comes to meeting a challenge on a scale as epic as reinventing an industry as big as ours, we should not underestimate the value of having agreement on what good looks like along the way. This is something ResponsibleSteel, the first global multi-stakeholder standard and certification programme for the steel and mining industry – of which ArcelorMittal is a founding member – is examining closely. In fact, the Carbon Disclosure Project, The Climate Group and We Mean Business are all members of ResponsibleSteel and are actively helping shape its carbon standard, which will answer the question of what ‘good’ is while we strive to reach the ultimate objective of low-carbon steelmaking for a low-carbon world.
The carbon question is coming, steel sector. We need to be ready to answer it despite the paradoxes we face. Like all major global challenges, we cannot solve it alone. We need governments at all levels, NGOs, our customers and the public to help us get there, so let’s get the word out to our stakeholders that we want to make carbon-free steel and tell them how they can help us achieve it.
So yes, technology and innovation are essential to find ways of making steel with less carbon, but we also need understanding, trust and support from key stakeholders. Our carbon report has helped change the conversation with our key stakeholders and the ResponsibleSteel programme is a good way of turning that conversation into a market-facing standard. So yes, to conversation too. I hope many of you, our customers and other steel companies join us in this conversation. We cannot do this alone.