One of the most recyclable substances on earth is steel. It can participate in the circular economy by being recycled repeatedly without losing quality and then reused or repurposed. Because of its high strength and capacity for reinforcement, it is possible to utilize less building materials, conserve energy, and make structures future-proof so they can be expanded or modified in the future.
The steel sector must continue its march toward decarbonization because the existing steelmaking processes have a high emission intensity. Over the past few decades, the steel sector has put great effort into reducing carbon emissions. Today, only 40% as much energy is needed to produce one tonne of steel as it required in 1960. The steel industry may continuously cut its carbon emissions to create a more sustainable, low-carbon material through industry cross-collaboration and communication, efficiency in resource use and operations, and intelligent and innovative design. The move to a more sustainable energy source, among other worldwide sustainable projects, depends on steel. However, the steel industry is also among the most energy-intensive in the world, producing around 8% of all carbon dioxide emissions.
As the global decarbonization drive picks up speed, lowering these emissions is crucial for steelmakers. Steelmakers who act now to enhance the sustainability of operations can benefit from environmental, social, and governance (ESG) indicators to gain a competitive advantage and stay ahead of changing carbon restrictions. Energy utilization in the manufacturing of steel has decreased by 60% over the past 50 years as a result of technological advancements and a switch from conventional blast furnaces (BFs) to electric arc furnaces (EAF). Implementing sustainable practices in the iron & steel industry has led to positive impacts such as:
Risk, cost, quality, and decarbonization must all be balanced in order to combine short-term commercial imperatives with long-term value generation. As greater initial capital expenses are likely to be covered by the long-term benefits of more sustainable operations and enhanced ESG performance, aligning investments with cyclical gains can reduce financial risks.
Up to 90% of the exhaust gas from BFs can be recycled through top gas recycling, and the remaining 10%—which is highly CO2-concentrated—can either be stored or utilized. Considering that technology prices are still expensive at this point in the development process, whether carbon capture is appropriate may depend on overall operating expenses.
The reduction of emissions from switching to EAF production based on steel scrap will depend on each steelmaker's preferences for the final product's quality as well as the cost and availability of steel scrap.
Although it will take some time before hydrogen is commercially viable and scalable, using green hydrogen (produced by renewables) with direct reduced iron (DRI) and EAF is expected to be the cleanest solution for steelmakers in the future.
Compared to integrated plants, some more recent commercialized smelting reduction technologies can provide greater emission control, but their economic feasibility depends on the overall power consumption and utilization of export gases.
Demand for steel is rising as firms face greater pressure to reduce scope 3 emissions. 12% of the world's steel is consumed by the auto industry, thus they are speeding up decarbonization efforts and looking for cleaner inputs. Government incentives will likely drive up demand even further. Steel manufacturers who create products that are more environmentally friendly might benefit from this demand. Numerous significant manufacturers have already seen the trend toward certified green steel products, and this trend is predicted to continue.
Investors want more ecologically friendly portfolios, and they also want potential investment targets to perform better and comply with ESG regulations. With many countries implementing emission trading systems (ETSs) and carbon tax regimes, government pressure to decarbonize is increasing at the same time.
Beyond meeting legal requirements and stakeholder expectations, improving ESG measures will benefit steelmakers. Companies with stronger ESG performance can finance projects more affordably, manage resources better, lower operational risk, and be more adaptable to future developments. When determining the financial viability of capital investments, several steelmakers now take the effect of carbon emissions into account. Adopting shadow internal carbon prices can aid in locating inefficiencies in sustainability and the potential financial effects of a low-carbon economy.
Many steelmakers have already adopted technology to enhance defect recognition, process safety, and quality assurance, making them digital leaders in their industry. However, there is a chance to use digitization more effectively to measure, track, record, and evaluate processes to improve sustainability performance and reporting.
Through the optimization of energy use, reduction of waste, and emission control, digital solutions can also aid in increasing productivity. Blockchain also has the potential to validate the sustainability of steel value chains, providing end users with trustworthy information to calculate their net carbon footprint. While cloud computing enables centralized command and control centers to monitor geographically scattered mine-to-metal value chains, it can also aid in the creation of more flexible supply chains.
There won't be a nationwide transition by the steel sector to greener steel. Compared to steel producers in developing nations such as India, where the combination of newer capital assets and cost pressures will force a more gradual transition, steel producers in Western regions and nations that are already investing in improving sustainability are likely to see a more rapid adoption of low-carbon technologies.
Steelmakers should make small investments in process improvements even in nations where growth would be slower in order to cut energy intensity, slash carbon emissions, boost material efficiency, and advance the circular economy. Due to the steel industry's very high carbon footprint, even modest changes will have a significant impact on the sector's progress toward carbon neutrality.
To maximize the potential of new technologies and gain economies of scale, while enhancing sustainability throughout the steel value chain, this change will require a tiered digital road plan. And in order to create a greener steel sector, steelmakers will need to collaborate with a wide range of stakeholders, including governments, the United Nations, universities, communities, and the World Steel Association.
Steel is one of the most durable, endlessly recyclable materials on the earth. It is also the most recycled material. Over the course of green steel's entire life cycle, investing in the development of a more environmentally friendly production method will pay huge environmental dividends.
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