Schneider Electric: How the Quest for Green Steel is Revolutionizing the Once Mature Industry

Steel is ubiquitous. The most commonly used metal for nearly two centuries, it is a key component in nearly all infrastructures that supports our modern industrial society. Its value chain contributes nearly $3 trillion of economic activity and accounts for tens of millions of jobs. Unfortunately, its production process is also the second-largest producer of atmospheric greenhouse gasses (GHG), at nearly 8%, second only to power generation. Yet, like so many mature industries today, disruption is in full swing, with social, environmental, and regulatory developments providing the impetus for players in the steel industry to make increasing sustainability a priority. Failing to establish a decarbonization plan and begin achieving greenhouse gas, GHG reduction benchmarks now could severely impact the industry’s social license and future value, as companies examine how to reach the ultimate goal of producing steel with net-zero emissions across the entire value chain.

Investments in new technology are primed to produce a big payback

Currently, the basic blast furnace techniques used to form new steel involves using significant amounts of Coking Coke to create the final, refined product. While still the most economical process for producing virgin steel, there is significant public, government, and investor interest in promoting the manufacture of much greener steel products. These pressures have caused the industry to prioritize the development of decarbonization strategies, including initiating several pilot plants to validate novel production techniques and new technologies. The push to achieve their environmental targets is projected to require up to $1.5 trillion in new and upgraded plant and training investments, representing an exciting opportunity to rethink social, economic, and scientific engagements within the steel ecosystem and communities at large.

Five opportunities in the mission towards green steel

Leading steel and mining companies are already pursuing a variety of strategies over a range of GHG reduction possibilities that include:

1. Switching from coal to biomass for use as a reductant and fuel.
2. Improving blast furnace (BOF) efficiency to reduce energy consumption and production losses.
3. Increasing scrap steel recycling using more environmentally friendly electric arc furnaces, (EAF).
4. Capturing carbon emissions for reuse in creating new products for the chemical industry.
5. Perfecting and commercializing transformational, low environmental impact technologies such as Hydrogen Based Direct Reduction Iron (DRI).

While all of these initiatives have a role to play in reducing steel’s environmental footprint, the largest positive impact is likely to accrue from hi-tech innovations like hydrogen DRI. One of the world’s largest steel producers, ArcelorMittal has developed a comprehensive and well-regarded green steel roadmap and is using a combination of smart carbon technologies, including hydrogen-based DRI. In fact, they have already produced some “green steel” and launched a new low-emissions products line. H2 Green Steel has announced plans to build a new 5 million tons green steel plant in Sweden using green hydrogen and employing the DRI / EAF method, with the process gaining momentum as the most validated technology for CO₂ emissions avoidance in the steelmaking process.

Innovation across the entire steel production value chain

The interest in green steel has also captured the attention of large iron ore mining companies after all their iron ore exports are the feedstock of their end-users the steelmaker’s blast furnaces and emissions from blast furnaces would count as scope 3 emissions for extractors who have made decarbonization commitments to their stake and shareholders. Fortescue Metals hopes to be producing commercial quantities of green hydrogen for use in steel production as early as 2023, enabling the company to target carbon neutrality on Scope 1 and 2 emissions by 2030, 10 years earlier than planned.

Iron ore miners’ interest is processing near mining operations and exporting low-emissions, hot briquetted iron (HBI) is an interesting new dynamic in the steel value chain. Traditionally, 70% of steel is produced in facilities using ore imported from other countries. The potential decoupling in this value chain is upon us, and if Australia and Brazil, for instance, can process their iron ore into higher value “Green HBI” and export directly to end-user markets, this would represent a major shift in market dynamics and the steelmaking value chain.

Smart innovation embraced by a long-established industry

These exciting developments in the iron and steel industry align perfectly with Schneider Electric’s goal to spur greater sustainability and efficiency through smart digital technology and professional partnerships. Innovation is key to building a greener, more resilient future. Learn more at our website. For an industry deep dive, download the IDC Technology Spotlight report.

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