Steel stands as a fundamental pillar of our contemporary global economy, serving as a ubiquitous industrial commodity on a global scale. It plays an indispensable role, both in visible and concealed aspects of the modern world, encompassing crucial applications ranging from infrastructure and transportation to industrial machinery and packaging. Notably, steel production has surged significantly in the 21st century, with an impressive output of nearly 2 billion tonnes of raw steel in 2020. This trajectory is poised to continue upward, propelled by sustained economic growth and urbanisation, even as advanced economies approach a saturation point in their steel inventories.
Despite being an essential material in modern society, steel production stands as one of the leading contributors to global carbon emissions, accounting for approximately 7% of the total energy-related CO2 emissions. This elevated carbon footprint in iron and steel manufacturing can be attributed in part to its heavy reliance on coal and coke as primary energy sources, reducing agents and providers of permeability to the blast furnace burden.
Recognising the increasing significance and urgency of decarbonising the steel industry, IEAGHG commissioned ERM to investigate the environmental and technoeconomic implication of various potentially transformative technologies for reducing carbon emissions in steel production. Nine pathways are detailed in the techno-economic and lifecycle assessment, selected from a comprehensive list of primary steel production methods. The roll-out of clean steel technologies is envisioned to have a significant implication for support infrastructure. Therefore, a secondary objective of the study is to gain insights into the primary energy and infrastructure implications associated with large-scale deployment of different steel decarbonisation pathways. Clean steel production will likely be more expensive than steel produced today; this poses additional economic strains on steel producers and consumers. Consequently, a third objective is to estimate the price premium that clean steel could command in existing and future markets. Further, this study formulates recommendations for key stakeholders to support the sector and outlines recommendations for further work.
In the base case technology considered in this study i.e., Blast Furnace-Basic Oxygen Furnace (BF-BOF) route for steel production, metallurgical coal plays a multifaceted role.
- It acts as a heat source crucial for maintaining the high temperatures required in the BF
- It acts as a reducing agent for the iron ore
- It provides permeability to the blast furnace burden
- It is a source of carbon for the final product (steel is an alloy of carbon and iron).
These quadruple roles of metallurgical coal, combined with the substantial global demand for steel, underscore its integral importance in the BF-BOF steelmaking process.
This study highlights that:
- To achieve deep decarbonisation in the steel industry, it will be essential to adopt disruptive measures and innovate in steelmaking processes. While improvements in energy efficiency and increased usage of scrap in basic oxygen steelmaking processes can reduce emissions to some extent, these steps alone are insufficient to meet the significant emission reduction targets necessary for aligning with global climate objectives. The journey towards substantially lower emissions in steel production is complex and requires more than incremental changes; it demands a transformative approach to how steel is produced.
- While the decarbonisation pathways considered in this study are shown to reduce the fossil global warming potential (GWP) impact of steel production, achieving a truly significant reduction in emissions extends beyond addressing direct emissions from steelmaking processes. It is critical to also focus on decarbonising the supply of materials and energy used in steel production and improving the treatment of wastes. This holistic approach is vital for driving down the total GWP of crude steel production, emphasising the need for a comprehensive strategy that encompasses not only the steelmaking process itself but also the broader supply chain and lifecycle impacts of steel production. Through such integrated efforts, the steel industry can make meaningful progress towards its decarbonisation goals, contributing to global efforts to mitigate climate change. The findings also indicate that achieving completely emissions-free steel production is not feasible until residual emissions within the steelmaking facility and across the supply chain must be addressed.
- The study suggests that steel consumers with a shadow carbon price of €100/tCO2 would be willing to pay a maximum of 30% premium for clean steel compared to conventional steel. However, should the decarbonisation of other components in the value chains of final products also lead to increased costs, the overall rise in expenses could surpass initial estimates. This might result in end consumers exhibiting a reduced willingness to pay.
IEAGHG is pleased to contribute to this critical field with this detailed study on technoeconomics and lifecycle assessments of a broad spectrum of clean steel production pathways.
The findings of this study are relevant to industry professionals, academics, policymakers, and technology developers. This is report is restricted to members or organisations based in member states until August 2023 when it will become publicly available. If your organisation is an IEAGHG member, or is based in an IEAGHG member state you can request a copy of the report by emailing This email address is being protected from spambots. You need JavaScript enabled to view it. with the report reference number (2024-02).