Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The steel industry is increasingly faced with meeting climate change requirements of net zero emissions targets amid limited detailed guidance.


A structure has been set to develop needed guidance in a recent report, The Net-Zero Steel Pathway Methodology Project: Final Report and Recommendations (NZSPMP), with input from leading steelmakers, such as ArcelorMittal, BlueScope, GFG Alliance, and Tata Steel. 


According to the report, steelmaking will continue to be produced from primary raw materials comprised of iron ore and metallurgical coal after 2050 due to limited ferrous scrap supply. The industry is unable to rely on scrap to decarbonize steelmaking, meaning the iron ore-based method will remain essential past 2050. 


Steel production from scrap emits much fewer greenhouse gas (GHG) emissions but makes up about 45pc of upcoming demand as scrap is limited in availability, a steelmaker noted in the NZSPMP webinar. Establishing different goals for carbon levels and resources for primary versus secondary steelmaking is the main recommendation made in the report. 


Steelmaking decarbonization targets and budgets should be divided between iron ore-based, or primary steel production, and scrap-based, referred to as secondary steel production, which both hold varied decarbonization requirements.


Scrap-based steelmaking presently accounts for close to 30pc of global steel production. While scrap-based production accounts for 0.3mt of scope 2 CO2 emissions and 0.04mt of scope 1 CO2 emissions per ton of steel produced. 


For comparison, iron ore-based steelmaking emissions produced are between 1.4mt and 2.2mt of scope 1 and scope 2 CO2 emissions combined, per ton of steel produced, the report indicated. 


In NZSPMP’s final decarbonization recommendations, adjustments to the steel sector carbon budget is required to assist specific products with varying emission structures, such as stainless steel. 


Limited science-based targets (SBT) presently exist for the steel industry’s decarbonization methods while the sector accounts for 7-9pc of total global carbon emissions, also leading NZSPMP to create recommendations.


Electric arc furnace-based steelmakers have higher levels of scope 3 emissions compared to scope 1 and 2 emissions however the steel sector has not set up advice on measuring scope 3 emissions as downstream industries do, such as the automotive sector.


NZSPMP has recommended that SBTs be launched for crude steel production emissions while adding downstream steel product processing emissions as well. 


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