Steel comprises 75% energy transition material requirement: ETC

Cumulative steel demand for the energy transition between 2022 and 2050 will be almost 5 billion tonnes, accounting for 75% of total material requirement. This compares to 8 billion of annual global coal demand today, the Energy Transitions Commission (ETC) points out in a new report seen by Kallanish.

The average annual steel requirement of 170 million tonnes would still account for less than 10% of today’s global steel production of about 1.9 billion t/year. This would correspond to approximately a doubling from current levels of steel demand from the fossil fuel industry of 70-80m t/y, ETC says.

In ETC’s baseline decarbonisation scenario, steel and aluminium demand will grow significantly to 2030, but primarily because of growth in non-energy related demands, with greater urbanisation and industrialisation driving demand for steel in lower-income countries.

Steel and aluminium supply will grow broadly in line with increased demand to 2030, with a large and growing percentage of supply coming from secondary, recycled material – reflecting high existing end-of-life recycling rates for both materials.

Improving technology performance and falling materials intensity could see cumulative energy transition-related steel demand fall 25% to 3.7 billion tonnes, predominantly as a result of reduced requirements in wind and solar installations. Combining efficiency and recycling could see this demand fall to 3.4 billion t.

However, long technology lifetimes – for example, 30 years for a solar or wind farm – mean that volumes of recycled steel supply from clean energy technologies would remain low even in 2050 – but with strong potential in subsequent years.

For wind turbines, over 90% of total material requirements are steel and concrete. Steel requirement is projected to fall from 140 tonnes/MW to 110t/MW by 2050 for gearbox turbines, and from 400 t/MW to 320 t/MW for direct-drive turbines. Nuclear power is meanwhile seen needing 72 t/MW in 2050 versus 90 t/MW today, ETC says.

An important factor for the energy transition will be ensuring financing activities reflect the necessary pathway to a net-zero economy, recognising the critical need for much greater investment in mining for energy transition metals. This entails developing an understanding of what transition pathways for the mining and aluminium/steel sectors should look like and what this means for investment along this transition, ETC concludes.

Adam Smith Poland