Good morning everyone, it’s a pleasure to be here for today’s discussion. I’m here representing ArcelorMittal. We are one of the world’s largest steelmakers – a widely recognized hard-to-abate sector – and the only truly global steelmaker, so are well placed to opine on the challenges and opportunities decarbonization presents for the steel industry – a truly global industry. It’s a complex puzzle, but I will try to give an overview of the key moving parts.

Let’s start with technology, home turf for me given my position and background and the main thrust of today’s discussion.

For centuries we have used fossil fuels – primarily coal but also natural gas – to transform iron ore into iron. Over those centuries the efficiency of the processes we use have significantly improved, but fundamentally the chemistry of the process remains. We have wonderfully energy efficient and cost-effective processes with just one problem…depending on which of the two steelmaking technology routes you use, for every tonne of steel we produce, between one and two tonnes of CO2 are emitted into the atmosphere. That number is lower if we just use electricity to recycle scrap steel, although varies depending on the carbon footprint of the electrical power supplied.

The ongoing reliance on non-recycled scrap-based iron production is based both on societal needs and that high-grade, value-added steels required for the new economy will still require ‘clean iron units’ – which largely will come from processing iron ore. Our challenge therefore is finding and scaling new technologies, using clean energy sources, to reduce iron ore, hence addressing the climate impact of steelmaking while continuing to ensure our products support the transition to a net zero economy.

Now the good news is we believe we have the tools to solve the technology puzzle. We can use hydrogen to reduce iron ore, we could replace coal with sustainable biomass, we could continue to use coal and apply carbon capture technology, or – and this is a little further away – we could use clean electricity for direct electrolysis. Four technology options, several of which can and will co-exist to provide solutions to the global steel industry. A good place to be in.

Unfortunately solving our decarbonization challenge is not that simple – we’re called a hard-to-abate sector for good reason.

First, we need to scale up and prove the technology works. Despite what you may have read about so called green steel, it doesn’t exist today. We, and many of our peers, are running industrial-scale trials with all these technologies, but there isn’t a steel plant in the world that today produces zero carbon or near zero carbon steel. Although I’m confident we have the answer to the technology challenge, we do still have substantial work to do to prove it.

And the technology isn’t the only challenge, which brings me to my second point – cost and energy availability.

Let’s assume the technology works. The cost of transitioning the global steel industry is enormous. In its September 2022 report on the steel industry’s transition strategy and pathways, the Mission Possible Partnership – a body founded by the Energy Transition Commission - said, ‘a net-zero steel sector will require cumulative investment between $5.2 and $6.1 trillion, with more than two-thirds of investment falling outside the steel plants.’ That’s an enormous amount of investment for a volatile, cyclical, low-margin industry.

And I want to draw your attention to the second part of the sentence – namely two-thirds of that investment – up to $4 trillion – is in developing the clean energy infrastructure we need to make near or net zero steel.

Let me put that figure in some perspective. If by 2050 our industry shifted to purely electrified steelmaking, we’d need between 1.5 and 2TW of clean electricity. That’s between 45 and 63 per cent of total installed global renewable power today.

Not only do we need huge amount of clean energy, but we also need it at competitive rates, so as we transition, lower-emitting steel plants can remain sustainable and competitive – remember we are a global industry, steel is a globally traded product for steelmakers – wherever they are based.

Our corporate strategy team estimates that producing a tonne of net zero steel using green hydrogen today would be c. 75 per cent more expensive than traditional production techniques. By 2050 - even assuming technology matures, and costs reduce – it is likely to remain 30 – 40 per cent more expensive.

These numbers give some indication of the scale of our challenge. But I am an optimist and I do think they are surmountable, but several things need to happen.

First, as I mentioned, the technology we are developing needs to scale and mature, and as it does costs will reduce. We’ve seen that with renewable energy - three decades ago the cost of solar energy was prohibitive, today it is the cheapest method of energy production. Our challenge is to carry out this scale up based cost reduction at a faster pace – and for this we need the right financial support to transition our asset base.

Second, policy needs to evolve that ensures low-carbon emissions steelmaking is as competitive as higher carbon-emissions steelmaking. Again, I am optimistic here. Policy is evolving. We are seeing a carrot and stick approach in the EU. Governments are coming forward with funding support for transition projects, policy tools like the EU’s carbon border adjustment mechanism, or CBAM, should help to level the playing field, while the EU ETS is the stick, putting a cost on carbon that is designed to incentivize change. Then, in the US, there is the Inflation Reduction Act that provides tax credits for industry to adopt and develop renewable and low-carbon technologies.  Again speed is of the essence – policy needs to evolve and be implemented quickly.

And the final point I’d make – and this shouldn’t be under-estimated – is that we need to see more cross-sector collaboration. Industry should work together, as one, to support one another in our decarbonization efforts. I’ll give two brief examples:

1. We’re not the only energy-intensive industry, so industry needs to work together to support the development of the clean energy infrastructure we need. That may involve some self-development – we have 2GW of renewable energy projects underway at ArcelorMittal, primarily in joint ventures with renewable energy providers – but it’s more about coming together and committing to projects as anchor partners or off-takers to make clean energy projects bankable.
2. We need to create smart ways to reduce our waste by using our by-products to support the decarbonization of other sectors. For example, blast furnace slag - a by-product from the current steel making process - is already used to make low-carbon cement, but can we push boundaries further? Can slag from the electric furnaces that will become increasingly common as our industry transitions replace the blast furnace slag that is critical to reducing CO2 emissions in cement making? A second example is our plant in Ghent, Belgium, where we are replacing coal with biochar and then capturing carbon-rich waste gas and converting it into ethanol which can be used as a building block for a range of chemical products, meaning fossil carbon the chemical industry would normally use stays in the ground. And finally, in Spain, where we are transitioning our long products business from blast furnace to electric arc furnace (‘EAF’) production, significantly lowering our carbon footprint, we – with partners - are developing a first of kind multi-sectorial symbiotic project involving renewable electricity, water electrolysis (to create hydrogen), gasification of Refuse Derived Fuel from municipal solid waste and CO2 capture from our reheating furnaces. Collectively, these sources will provide renewable electricity for the EAF, renewable hydrogen for ammonia and bio-circular CO2 for methanol, the latter two which qualify as being renewably produced inputs for the chemical industry. So, we create energy from two different waste streams and renewable sources, use to it make steel and any resulting by-product is then recycled again into chemicals.

I hope that provides a reasonable framing of the challenge steel faces to decarbonize, the pieces of the puzzle within our control and where we need to see change and development to support our transition. Thank you.

^{Hear more from Pinakin when he discussed decarbonising steel production through innovation on our Futurising Podcast.}