Contributed by Tadeu Carneiro, chairman and CEO, Boston Metal
An undeniable boon to the United States’ energy transition, the passage of the Inflation Reduction Act also presents a major opportunity for the steel industry’s decarbonization efforts. The historic $369 billion in climate investments aims to ramp up renewable energy generation and domestic manufacturing of solar panels, wind turbines, energy storage, and electric vehicles. Here’s the crux: all of these products require steel – and plenty of it.
Accounting for approximately 10 percent of global carbon emissions, steel production is one of the most carbon-intensive industries in the world. As we work to meet the goals of the energy transition, we must ensure that we’re not continuing to pump more emissions into the atmosphere in the process.
Indeed, steel is a critical material for the transition to a low-carbon economy and is required across the 10 most common sources of clean power. To break it down, for every new megawatt (MW) of solar power deployed, between 35 to 45 tons of steel are required. Each new MW of wind power uses 120 to 180 tons of steel. Consider that 5.8 million tons of steel was used in U.S. solar installations in 2018 alone. Looking forward, it’s estimated that 1.7 billion tons of steel will be needed to build the wind turbines required to reach net zero by 2050.
The oncoming surge in steel demand generated by global climate policy and corporate decarbonization mandates is adding to already high projections for steel production over the next few decades. Despite a pandemic, geopolitical unrest, and a recession, global demand for steel is still forecast to increase by more than a third by 2050. To keep the Earth’s temperature below the Paris Agreement’s 1.5°C target, the steel industry must reduce its emissions 90% by 2050. It may seem like a chicken or the egg problem, but the decarbonization of steel and our power systems must be tackled simultaneously.
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Steelmaking is a complex, age-old process, and innovation has lagged until very recently. A green steel technology that has received much attention uses the direct reduced iron (DRI) method that employs green hydrogen instead of fossil fuel gas as a reductant substitute to produce iron, which is then transformed into steel in an electric arc furnace (EAF) powered by renewable electricity. Last year, Swedish green steel venture HYBRIT delivered the first green steel made with hydrogen DRI to Volvo, which plans to use it in prototype vehicles and components. Another venture, H2 Green Steel, intends to build a green steel plant alongside a sustainable hydrogen facility in the north of Sweden with production starting in 2024. Although this is exciting momentum, only 5% of steel today is made with the traditional DRI method. Another 25 percent is produced from scrap in electric furnaces (essentially steel recycling). The majority – 70% – is made in coal-fired blast furnaces. Furthermore, DRI only works with premium iron ore, which is in short supply.
Molten Oxide Electrolysis (MOE) is an alternative green steel approach that is not dependent on the build-out of green hydrogen infrastructure and shows promise for tackling the 70% of steel produced by blast furnaces. The technology uses electrolysis, powered by renewable energy, to separate the bonds of iron ore and produce liquid metal releasing only oxygen in the process. The simplified method works with even low- and mid-grade iron ore fines and eliminates many of the steps involved in traditional steel production.
Boston Metal’s test facility. Boston Metal expects its green steel technology to be commercially available by 2026. (Courtesy: Boston Metal) Granted, green steel solutions rely on the availability of renewables. Both MOE and hydrogen DRI processes require about four megawatt-hours of clean energy per ton of steel produced. However, it’s significantly less than the five to six megawatt-hours of energy required for conventional integrated steelmaking. And thanks to the Inflation Reduction Act, U.S. steel producers, along with other companies engaged in energy-intensive industrial processes, will be able to leverage nearly $6 billion in grants and loans to deploy new decarbonization technologies such as these.
Achieving emissions-free steel is just one factor in a successful energy transition. Many barriers still need to be overcome to meet the continued demand for renewable energy technologies without causing additional harm to the planet. Securing supplies of essential materials such as lithium, cobalt, and copper, sustainable mining practices, and implementing circular supply chain practices and end-of-life management are all pressing concerns that will require ongoing investment and collaboration by both the private and public sectors. However, with the exponential growth in global renewable energy generation in the last decade and the support of legislation like the Inflation Reduction Act, we can fully expect that green electricity will be available, abundant, reliable, and affordable in the future. The steel industry has no choice but to operate under this assumption and continue innovating to build tomorrow’s sustainable infrastructure on clean steel.
About the author
Tadeu Carneiro has over 40 years of metals industry experience, with expertise in global strategy, technology development, and customer-focused growth. As CEO of CBMM (80% market share for niobium), he grew revenue from $100M to over $2B and led a global program that saw the niobium market increase by more than eightfold. At Boston Metal, Tadeu has overseen two oversubscribed funding rounds and team growth from single digits to 80+ employees. A metallurgical engineer, Tadeu is the lead independent director at Ivanhoe Mines (copper, zinc, nickel, and platinum group metals) and is an invited lecturer at the Department of Materials Science and Engineering at MIT. Boston Metal expects its green steel technology to be commercially available by 2026.
