In the Green-Steel Race, the Biggest Producers Are Laggards Green steelmaking is becoming a reality—just in the wrong place
By Ed Ballard
In the Green-Steel Race, the Biggest Producers Are Laggards
By Ed Ballard
Green steelmaking is becoming a reality—just in the wrong places.
Steel, crucial for everything from ships to apartment buildings, contributes 7% of global carbon emissions, according to the International Energy Agency. That mostly comes from blast furnaces that smelt iron ore with coke at above 3,000 degrees Fahrenheit to make iron.
New alternatives to the centuries-old technology are emerging, aided by regulations, climate-tech investment and demand from buyers like auto and appliance makers that want to reduce the carbon emissions of their products. Steelmakers in Europe are embracing the new technologies.
The problem is that China and India, by far the biggest builders of new steel plants, are still building the traditional, heavily polluting kind.
In China alone, planned blast furnaces will have 160 million tons of combined annual capacity, according to a new report by researchers at Global Energy Monitor and the Leadership Group for Industry Transition. India is planning to add roughly 70 million tons of annual capacity, though much of that is in the early stages so there’s a greater chance some won’t materialize, according to Global Energy Monitor analyst Caitlin Swalec.
The capacity of the new plants in China, which are largely replacements for existing ones, equates to roughly 16% of its 2022 production, according to the World Steel Association. They dwarf the green steel plants being added in Europe.
“These blast furnaces are a block in the way of investment or research and development in these low-carbon technologies,” said Xinyi Shen, an analyst at the Centre for Research on Energy and Clean Air, a think tank.
China’s industrial giants are working on green-steel projects, responding to Beijing’s climate targets and international demand. HBIS, the sixth-largest steelmaker, has a plan to supply low-carbon steel to BMW, for instance, and it’s looking into various ways of cutting emissions.
But those efforts look like a sideshow compared with a new generation of blast furnaces. These steel plants could operate for decades, similar to China’s wave of new coal plants. The new steel and coal plants will make it hard for China to hit its target of becoming carbon neutral by 2060.
The downturn in China’s construction sector, the world’s largest steel consumer, is weighing on global steel demand. Shen said new blast-furnace plans are driven less by demand forecasts than by government support and low-cost financing for job-creating infrastructure projects. Those efforts to keep people working amid amid the slowdown will have a long legacy.
Capturing carbon from blast furnaces could offer a way to decarbonize them, but carbon-capture projects have faced technical problems and cost overruns. Several European green-steel projects will use hydrogen instead of coal, sidestepping the blast furnace (see the Data Point section lower down). These methods will likely cost more for years.
Many experts think the real shift in Chinese steel production won’t rely on new technologies but will instead follow the pattern of the U.S., where steel is mostly made from scrap using electric-arc furnaces. China too is entering the age of scrap as the buildings, bridges and cars of the boom years age. It’s building electric-arc furnaces to handle it.
Emissions from that process vary depending on where the electricity comes from, but it’s cleaner than making crude steel using a blast furnace.
In the meantime, if Beijing eventually decides that new blast furnaces clash with its climate goals, one possibility is a financial hit down the line for the generally state-controlled banks that financed them. The Centre for Research on Energy and Clean Air estimates that steel mills approved since 2020 represent $100 billion in assets that could be stranded by the energy transition.