The automotive industry can play an essential role in supporting green steel projects by European mills to market-readiness, says Agora Industry, a European think-tank promoting the transition to climate-neutrality.
As steelmakers require robust, long-term demand signals for low- and near-zero emission steel to secure investments, the automotive sector can play a key role in stimulating these market signals. The sector requires around 15 million tonnes of primarily flat and high-quality steel depending on the year, Agora states.
For the steel industry transformation, Agora Industry has identified 34mt of announced near-zero capable steel projects in Europe using direct reduced iron (DRI) technology, Kallanish learns.
Its analysis has found that 25mt of these projects are moving forward through the pipeline, albeit at varying stages, with only a small number of projects reaching the crucial final investment decision (FID) stage and even fewer have started construction. These stages critically depend on solid demand signals from offtake agreements and clear lead market policies, Agora notes.
Automotive is a potential catalyst for this transition, because of the obvious volumes it consumes, and because of the low cost impact on consumer. An Agora analysis shows that steel represents only a small share of the final cost of a vehicle, accounting for less than 1% of the end price of a car.
“The project pipeline for clean steel production in Europe is there,” Agora says. “To turbo-charge Europe’s clean steel projects into the construction phase requires turning market signals from steel buyers into a bankable investment case.”
