The premium for green steel may only serve as a short-term uptick to pay off capital expenditure and will not be a long-term feature of the market, Marian D’Auria, Liberty Steel’s global head of risk & sustainability, said at the Innovation Zero event in London, attended by Kallanish.
The premium should be expanded to other sectors from the few currently paying it, such as automotive, she added. There are however challenges with this depending on the amount of steel in the product, with railway slabs likely to command a far higher premium than “palatable.”
“Premiums are complicated,” she told attendees. “Green” does not have to cost more, she said, noting levels of capex and availability of cheap electricity. In the long term, she suggested there was “no reason” for green steel to cost more than fossil fuel-based steel.
She suggested the costs of the premium be shared by those in the value chain, between governments purchasing tonnes under public procurement, downstream users, and even producers themselves. She also mulled that rather than paying for a premium for clean metal, the market should remove the “dirty discount” for steel made with fossil fuels.
Elsewhere, for the UK market, she sees electrification as the future of the steel sector, utilising domestic scrap, with potentially some imports of direct reduced iron. Green hydrogen is meanwhile “a long way off being viable”, she continued, noting challenges with grid connections, permits, and required volumes.
She also suggested the UK scrap policy needed an overhaul when it came to sorting and processing, which could help sustain the industry over the long term.
Carrie Bone UK
