The market for premium low-emission steel has been slow to develop due mainly to there not being a clear, uniform standard to define this material. This needs to be implemented preferably without government regulation, speakers said at last week’s Kallanish Green Steel Strategies in Brussels.
It is pointless to estimate the level of “green premium” without first having this standard. “Instead of talking about a green premium, first, let’s talk about making sure we know what is the level of decarbonisation. The way we measure it, we have a clear methodology, and then after that, I think everything will fall into place,” said Gilles Mirol, chief marketing officer at Hydnum Steel.
“I think standards are important as well … I don’t think today the green still demand is what it is because of the lack of the standards. So it definitely helps in scaling up the demand and also having … uniformity and how we define it, especially in the green budget procurement,” noted SSAB Europe head of business innovation, market intelligence, and sustainability Madhu Sayeenathan. “That’s where we need some sort of European Union level definition or sort of labelling system, which is part of the … Steel and Metals Action Plan.”
Product footprint transparency is doubly important when selling with a low-emission premium to the private sector. “If you’re talking with private customers, then you absolutely need to have transparency in your pricing. Bottom line conclusion is that you cannot defend, let’s say, an additional surcharge of a couple of hundred of euros [without providing the product’s entire environmental footprint],” said Royal Bam Group category manager steel Werner Wijne.
“If it really comes to purchasing green steel, then it’s always a discussion about the cost,” commented LESS aisbl secretary general Carmen Ostwald. “This is also not easy for the steel consuming companies, because they also need the end consumers to pay for the price premium of green steel. And so far, we must really see that there is no willingness by the end consumers to pay for this – only in small, niche markets.”
“From my point of view, it’s very good that the European Commission is discussing a carbon intensity label for steel now, which shall start as a voluntary label, but I think in the midterm, it’s also very important that this will become a mandatory label,” she added.
However, a green steel standard should not be overregulated by government. “I don’t think we should have a government regulation. I think the standard should be like the referee of the green steel market,” said Mirol. Low-emission and “Made in Europe” public procurement mandates are where the government could help, however, he added.
Using more scrap is meanwhile not the only answer for decarbonisation, as steel is already highly recycled and scrap supply will become scarcer in future. Primary steel production also needs incentives to decarbonise, while existing scrap-based steelmakers can still take steps to lower emissions by switching to renewable energy sources, Ostwald noted.
The importance of offtake agreements was acknowledged. “It gives us a signal. It shows us the interest from the customers,” said Sayeenathan. These agreements “give security to the investors that, coming into the project, that there is a demand in various sectors,” added Mirol.
On producing all steel grades using an EAF, Mirol noted: “Of course, you start with the easy stuff … drawing grades, structural grades, using quite a high level of scrap. And slowly but surely, you move yourself up in difficulties, in grades and thickness, in format, in the end users and having more green OBM [ore-based metallic] into it … And the commercial agreements we discuss with customers are based on that.”
Sayeenathan added: “I think some customers, they want all of that to be turned into the low-emission steel operating now … We are already producing in our Americas [division] through the electrical furnace, and then we are paying a lot of knowledge on how to produce even the advanced steel grades for the automotive. So then with that, we can ramp up quite fast, but it’s more about managing the expectation from the customers in terms of the volumes.”
Adam Smith Austria
