How Does Green Steel Really Enter the Application Field

Green steel technology and practice

The steel industry is an important field to achieve global green and low-carbon development. The global steel industry is actively exploring disruptive and transformative technologies for green development, and green steel is transforming from concept to action and from vision to reality. When the decarbonization action of the steel industry is fully accelerated and the green steel action is rapidly launched, the World Metal Guide has launched the “Green Steel Technology and Practice Topic”, which aims to clarify the definition of green steel, the applicable groups of green markets, explore the best practice of the global steel industry to achieve climate neutral production path, and analyze the research and application status quo of hydrogen metallurgy at home and abroad. The leading role of standardization in promoting green production of iron and steel was expounded.

How can the steel industry ensure that green steel is put into proper use? The answer is to develop a green lead market to strengthen demand for climate-friendly steel with the help of regulatory measures, or to create a new kind of sales market where a so-called “green premium” can be achieved.

The global steel industry is currently moving towards climate neutrality. By retrofitting high-emission processes and with the help of an efficient circular economy, the industry can, wants and must produce net-zero emissions by mid-century. Although the technical challenges are huge, they are achievable. On the other hand, there is also the question of how to ensure that green steel, which is more expensive to produce, is put into use. Therefore, government support, especially for the so-called “climate protection treaty” currently under discussion, is indispensable. However, this can only be used as start-up capital. To ensure that public funding is kept to a minimum while completely replacing traditional processes in the long term, more political tools are also needed to support this transition.

Green value chain of green steel

Green value chains are where “green lead markets” come into play, aiming to strengthen demand for climate-friendly steel through regulatory measures or to establish sales markets where a “green premium” can be achieved. This, in turn, could offset the additional costs of transitioning to climate-friendly processes. National compensation agreed in climate protection treaties will also be reduced.

Public procurement, as well as leading markets for green steel, are well suited for customers facing significant pressure to reduce emissions. Until climate-neutral materials are fully established, these leading markets can play a transitional role. Whether it is minimum standards, premium models or targeted credit options, binding incentives for users and buyers are needed.

Green steel has a large impact on the user industry, but a small impact on the costs associated with the end product. For example, the use of climate-neutral steel in electric vehicles can reduce the total CO2 emissions associated with production by 16%, which represents a cost increase of less than 1% for the end consumer. Therefore, financing green steel through the market is an economic imperative. The appropriate framework must now be created for this.

A clear definition and classification of green steel is key

The market for environmentally friendly products can only develop on a clearly defined basis. It is vital that every buyer has a clear understanding of how much CO2 is emitted during the manufacturing of the finished steel. If such transparency exists, this information can be used in procurement strategies to reduce emissions from the scope, i.e. indirect emissions from the supply chain. Therefore, compared with products with high emission intensity, low-carbon products have more competitive advantages. Importantly, the carbon footprint includes emissions along the entire value chain, and regions must be clearly defined and emissions calculated according to the same rules. However, there is no single rulebook yet.

However, for the control and implementation of green leading markets, the carbon footprint alone is not enough to accelerate the decarbonization of steel production. In addition, the gradual transformation process of the industry must be taken into account: pure green steel will not be available until sufficient quantities of green hydrogen are obtained. Initially, natural gas will play a key role in the operation of the first reduction plants, with an increasing proportion of hydrogen as the hydrogen economy develops and, in the early stages, the sites will also be partially retrofitted. In the field of recycled steel, which is already produced in a climate-friendly manner, further reduction of CO2 emissions depends mainly on the availability of green electricity, the use of which is also associated with additional costs. For further processing, hydrogen and green electricity are also crucial.

In order to map the different forms of climate-friendly steel production over time, a suitable classification system needs to be adopted, in the form of energy labelling, as in other areas such as household appliances. The main goal here, however, is a direct link to the leading market concept: if classified as eligible for the leading market category, companies that take substantial change measures can be rewarded.

To this end, the German Steel Federation has proposed a five-tier system: to ensure manageability, the system does not extend beyond the scope of hot-rolled steel. The first ambitious level is Label D, which is oriented towards the most advanced technology. Label A is reserved for green steel produced in a climate-neutral manner. The intermediate level is defined in a technically open way and is very demanding, requiring considerable effort to reach the next level.

Such a system would be a good basis for guiding market-leading practices. For example, norms could be developed to insist on the use of a certain amount of Class C steel in public building products from a specific date. Over time, as hydrogen production increases and the energy transition progresses, the requirements to lead the market will become more stringent for upcoming categories, providing incentives for further transitions. The labeling system can also be used to define medium-term goals that can be used to track and control the entire process of transformation and promotion accordingly.

When designing the system, it is important to ensure that the use of scrap is also considered accordingly: this is because its availability is limited worldwide, and if enough is available, it will all be used. By replacing pig iron with scrap steel, steel producers can reduce their carbon footprint. However, the CO2 emissions of the system as a whole remain unaffected, so it is only by taking truly transformational steps that the reduction of CO2 emissions across the system can be rewarded in the labelling system. In other words, it is also necessary to establish an incentive mechanism for the conversion of Pu Steel. At the same time, it is essential to ensure that manufacturers that use 100% scrap do not suffer any adverse effects when they produce in a climate-friendly manner.

The International Energy Agency (IEA) recently put forward proposals to implement this target, and G7 countries have adopted it as part of their Industrial Decarbonization Agenda (IDA). The task now is to develop further, with a strong global industrial value chain in which steel will play a decisive role.

Green steel development and application cases

At present, the global steel enterprises have begun to connect the supply and demand of green steel with the downstream industry, which will make an important contribution to reducing the carbon footprint of the steel industry chain.

Arcelormittal Sheet Europe has delivered the first batch of recycled XCarb to automotive parts supplier Gestamp. The product is manufactured using the electric arc furnace steelmaking route, using at least 75% scrap steel and 100% renewable electricity in the steelmaking process. XCarb reduces its carbon footprint by nearly 70% compared to similar products that do not use XCarb recyclable recycled substrates. Two companies have successfully used the steel to make car parts.

Swedish Steel (SSAB) has signed a green steel supply agreement with German auto parts producer KIRCHOFF Automotive, with the goal of reducing CO2 emissions from KIRCHOFF Automotive’s body production process by 40%. In addition, SSAB has signed similar agreements with forestry machinery producer Ponsse, Norwegian public furniture manufacturer Vestre, and international automotive parts supplier Meneta Group. SSAB plans to start producing green steel in 2026.

H2 Green Steel has signed an agreement with Scania, the Swedish truck, bus, industrial and Marine engine manufacturer, to supply climate-neutral steel to Scania from its Boden plant under construction. H2 Green Steel has also signed a binding agreement with Mercedes-Benz to supply 50,000 tonnes of green steel to the carmaker’s European plants. H2 Green Steel’s Boden plant, which produces steel using green hydrogen or carbon-neutral electricity, is expected to start production in 2025.

Bluemint Steel, a subsidiary brand of Thyssenkrupp, has launched its first batch of low-carbon strength steel to the well-known German bathroom brand Caldevi. The bluemint steel production process is the first to use a new technology, traditional blast furnace steel is replaced by hydrogen steel, carbon emissions reduced by 70%. The use of hydrogen to make steel is an important part of ThyssenKrupp’s overall transformation, and the production of the sub-brand bluemint mild steel is part of this process. A full-scale plant using hydrogen reduction technology will be commissioned by 2025. Thyssenkrupp will also supply low CO2 bluemint steel to Jakula, a producer of steel ball slides, for use in the production of truck wheels.

Salzgitter, Germany, has partnered with Klockner&Co on the transition to a green steel industry. From the end of 2025, Salzgitter will deliver CO2-reducing steel produced via the SALCOS route to Becker Steel Service centers, a subsidiary of Klockner&Co. Salzgitter’s CO2 reduction steel will be offered under the Nexigen brand. In addition, Salzgitter has signed a letter of intent for the supply of mild steel materials with BSH Home Appliances Group.

Baosteel and BBAC officially signed the Memorandum of Cooperation on Building a Low-carbon Green Steel Supply Chain, committed to using greener raw materials in the vehicle manufacturing process and jointly building a low-carbon green automotive steel supply chain. As a result, Baosteel has become a Chinese steel company that can provide products with a clear carbon reduction value to auto companies.

Tangsteel Co., Ltd. of Hesteel Group exclusively supplies ultra-low carbon steel CR3 to BMW Group, whose surface quality, dimensional accuracy and stamping performance fully meet customer requirements for the manufacture of key parts for new models. This move is to implement the “Memorandum of Cooperation on Building a Green mild steel iron supply chain” signed by Hesteel and BMW, and the two sides will jointly build a green mild steel iron supply chain through comprehensive long-term cooperation on sustainable development.

Japan’s JFE Steel company will start supplying green steel product JGreeXTM in the first half of 2023, and the supply capacity is expected to reach 200,000 tons in the first year. Compared to conventional products, the product can significantly reduce carbon dioxide emissions during steel production. “JGreeXTM” is a steel product that significantly reduces carbon emissions in the steel manufacturing process by applying a “mass balance approach” to allocate reductions created by JFE’s CO2 reduction technology to specific steels. Eishi Shipbuilding has reached an agreement with JFE Steel to adopt “JGreeXTM” for the first time in the shipbuilding industry. JFE Steel plans to begin deliveries in September 2023.

Kobe Steel in Japan for the first time to achieve low carbon dioxide emissions blast furnace steel “Kobenable steel” commercial production, and put into application, has been the world’s first application in the shipbuilding industry, planned to use the type of steel “Kobenable Premier”, for Imaji shipbuilding Company a 180,000 ton bulk carrier construction. Kobenable Steel uses Kobe Steel’s unique blast-furnace CO2 reduction solution. Mainly using MIDREX technology, a large number of hot pressed iron is loaded into the blast furnace, and the carbon dioxide emissions in the iron-making process can be reduced by 20%-40%. In addition, Nissan is also using Kobenable steel in its models from January 2023.