Advocates make economic case for green steel production at COP29
The global steel industry is experiencing a critical transformation, with growing momentum toward more sustainable, low-emission steel production. As representatives from nearly 200 nations gather at the 29th Conference of the Parties (COP29) in Baku, Azerbaijan, the spotlight is firmly on the role of green steel in achieving international climate goals.
Economic Factors in Green Steel
Advocates at COP29 are making a compelling case for the economic viability of green steel. Green steel, produced through innovative processes that dramatically reduce greenhouse gas emissions, is gaining ground as a cost-competitive alternative to traditional blast furnace-based steel. The key drivers behind this shift include the plummeting costs of renewable energy, advancements in carbon capture and storage (CCS) technology, and the emergence of green hydrogen as a clean fuel source for steelmaking.
“The rapid growth of renewables provides the foundation for higher levels of electricity supply, which in turn will drive growth,” noted Ilhan Ozturk, Executive Board Member at the RES4Africa Foundation. “This, combined with the falling costs of green hydrogen and CCS, is making green steel an increasingly attractive prospect for steel producers and their customers.”
Several pioneering projects in Europe, such as the HYBRIT initiative in Sweden, are demonstrating the commercial promise of green steel. These projects leverage abundant renewable energy resources, innovative direct reduced iron (DRI) processes, and electric arc furnaces to produce steel with up to 95% lower emissions compared to traditional methods.
Technological Advancements for Green Steel
Breakthroughs in technology are central to the green steel transition. Innovations in electrolysis, hydrogen storage, and carbon capture utilization and storage (CCUS) are paving the way for more sustainable steelmaking processes. The integration of these technologies, coupled with the increasing affordability of renewable energy, is driving down the cost of green steel production.
“We are seeing a shift in the geography of steel production, as green steel becomes more cost-competitive,” said Roberto Vigotti, Secretary-General of the RES4Africa Foundation. “Regions with abundant renewable resources and access to green hydrogen are emerging as hubs for green steel, creating new economic opportunities.”
Policy Incentives for Green Steel
Governments are also playing a crucial role in accelerating the transition to green steel. Policy mechanisms such as carbon pricing, emissions trading schemes, and green procurement mandates are creating a favorable environment for investment in green steel technologies. The European Union’s Green Deal and its associated Carbon Border Adjustment Mechanism are prime examples of policy frameworks driving the demand for low-emission steel.
“The policy environment is crucial in creating the right incentives for steel producers to invest in green technologies,” emphasized Norah Magero, CEO of Drop Access Limited, a Kenyan clean-tech startup. “Governments must work closely with the private sector to ensure a just and equitable transition for workers and communities.”
Greenhouse Gas Emissions Reduction
The environmental benefits of green steel are equally compelling. Traditional steel production, which relies heavily on coal-fired blast furnaces, is a significant contributor to global greenhouse gas emissions, accounting for around 11% of the world’s total. The shift to green steel production can drastically reduce this carbon footprint.
Carbon Capture and Storage in Steel Production
Innovations in carbon capture and storage (CCS) technology are playing a pivotal role in the decarbonization of steel production. By capturing and permanently storing the carbon dioxide generated during the steelmaking process, CCS can reduce emissions by up to 95% compared to conventional methods.
“CCS is a critical technology for achieving deep emissions reductions in the steel industry,” said Kamal Bali, President of Volvo Group India. “However, widespread deployment of CCS will require coordinated policy support and innovative financing mechanisms to overcome the initial cost barriers.”
Renewable Energy Integration in Steel Plants
The integration of renewable energy, particularly wind and solar, into steel production facilities is another key strategy for reducing greenhouse gas emissions. By powering steel mills with clean electricity, producers can significantly lower their carbon footprint and become less reliant on fossil fuels.
“The combination of renewable energy, green hydrogen, and CCS technology is the pathway to net-zero emissions in steel production,” remarked Ebba Busch, Sweden’s Deputy Prime Minister. “Leveraging these innovations will be crucial for the industry to meet its decarbonization targets.”
Efficiency Improvements in Steel Manufacturing
In addition to technological advancements, the steel industry is also focusing on improving energy efficiency throughout the manufacturing process. Optimizing furnace operations, enhancing process control, and implementing waste heat recovery systems can all contribute to significant reductions in energy consumption and emissions.
Sustainability Considerations
The shift to green steel production goes beyond just emissions reduction. It also addresses the broader sustainability challenges faced by the industry, including the environmental impact of traditional steel manufacturing and the potential for a more circular economy.
Environmental Impact of Traditional Steel Production
The traditional steel industry has a significant environmental footprint, with issues ranging from air pollution and water contamination to the depletion of natural resources. The production of coke, a crucial input for blast furnaces, is a particularly resource-intensive and polluting process.
“The environmental impact of traditional steel production is a major concern that must be addressed,” said Kamal Bali. “Transitioning to green steel is not just about reducing emissions, but also about minimizing the industry’s overall environmental footprint.”
Circular Economy and Steel Recycling
The steel industry is also exploring the potential of a more circular economy, where steel products are recycled and reused rather than discarded. By increasing the recycling rate of steel, producers can reduce the need for virgin raw materials and further lower the industry’s environmental impact.
“Steel is an inherently recyclable material, and we must capitalize on this advantage to create a truly sustainable steel value chain,” emphasized Roberto Vigotti. “Closing the loop through effective steel recycling is essential for the industry’s long-term viability.”
Life Cycle Assessment of Green Steel
To fully understand the sustainability advantages of green steel, industry stakeholders are conducting comprehensive life cycle assessments (LCA) that examine the environmental impacts across the entire production process, from raw material extraction to final product disposal. These assessments provide a holistic view of the benefits of green steel and help guide investment and policy decisions.
Global Climate Change Mitigation
The transition to green steel is not just a local or regional initiative—it is a vital component of the global effort to mitigate climate change. The steel industry’s shift toward low-emission production can have a significant impact on worldwide greenhouse gas reduction targets.
Role of Green Steel in Decarbonization
As a hard-to-abate sector, the steel industry has a crucial role to play in the global decarbonization agenda. Widespread adoption of green steel production can contribute substantially to the achievement of the Paris Agreement’s goal of limiting global temperature rise to 1.5°C above pre-industrial levels.
“The steel industry’s transition to green production is essential for the world to reach its net-zero emissions targets,” said Tanmaya Lal, Secretary West at the Ministry of External Affairs, India. “Showcasing the economic and environmental viability of green steel at COP29 will be a crucial step in accelerating this transformation.”
International Cooperation on Green Steel
Recognizing the global scale of the challenge, industry leaders and policymakers are calling for increased international cooperation on green steel. Initiatives such as the Climate Club and the Breakthrough Agenda are fostering collaboration and knowledge-sharing among countries, companies, and civil society organizations.
“The green steel transition is not something any single country or company can achieve alone,” remarked Ebba Busch. “It will require a coordinated, global effort to drive innovation, mobilize finance, and create the necessary policy frameworks.”
Green Steel Competitiveness in Global Markets
As green steel production gains traction, the industry is also grappling with questions of global competitiveness. Ensuring a level playing field and preventing carbon leakage will be crucial for the long-term success of the green steel transition.
“The economic case for green steel is clear, but we must also address concerns about maintaining a competitive position in global steel markets,” said Norah Magero. “Effective policy mechanisms, such as the EU’s Carbon Border Adjustment Mechanism, will be essential in this regard.”
The advocates at COP29 are making a compelling case for the economic and environmental benefits of transitioning the global steel industry toward green production. By harnessing the power of technological innovation, policy incentives, and international cooperation, the steel sector can play a pivotal role in achieving the world’s climate goals and ushering in a more sustainable future.