Steelmaker SSAB and auto group Volvo Cars expect new EU standards defining low-emissions steel, which includes clarification on the role of ferrous scrap, to accelerate investments and demand for so-called green steel, company executives said Oct. 25.
Standardizing low emissions steel with involvement from the European Commission, and industry stakeholder groups such as ResponsibleSteel, may facilitate investments and support for new plants against climate targets, while new procurement criteria may drive market interest in compliant grades.
Currently, new low-emissions steel supply is made up mainly of carbon-accounted flat steel via blast furnaces, with certifications on emissions savings allocated to specific volumes, with focus on renewable energy use for existing scrap-based steel. Some sales and trials using new or adapted production processes are taking place, led by auto and truckmakers as well as white goods manufacturers. Use of emissions savings certificates need to be addressed in a common standard for low-emissions steel, Celine Domecq, EU head of public affairs at Volvo Cars said at an EC webinar.
“We are interested in a standard or a harmonized definition of what is near-zero steel,” she said. “There is a lot about mass balancing and certificates and we need this to be addressed, and be very clear what is acceptable and what is not acceptable, otherwise you will have a lot of creative accounting on what is clean, and what it not clean.”
A common standard needs to be robust and technologically neutral in a way to be able to adopt with new steel production processes, she said.
Volvo Cars needs to be sure around the basis of carbon emissions data for its steel procurement, and for its communications with customers, she said.
While clearer definitions and a common European standard may help, the cost of renewable power underpinning low emission steel production has surged, pitching costs at a multiple of input costs via traditional blast furnaces using met coal and a variety of iron ore. Difficulties in securing scarce iron ore grades used in traditional direct-reduced iron production transitioning to deploy green hydrogen to slash emissions add to concerns around volumes, as new DRI projects in many EU countries are announced.
Sweden’s SSAB is still in its pilot stage of testing green hydrogen-based steelmaking under small batches with end-users such as AB Volvo. SSAB’s joint venture HYBRIT will only start up a larger demonstration DRI plant in 2026. Steel groups such as ArcelorMittal, Salzgitter, ThyssenKrupp and Tata Steel Europe have plans for new DRI plants starting this decade, which may increase volumes available.
“We need to have an ambitious standard, that drives investments towards transformative technology, because without investing in technology that removes emissions from iron ore-based steelmaking, we will not have enough steel by only relying on recycled scrap-based steel,” SSAB’s chief technology officer Martin Pei said in the seminar hosted by member of the European Parliament Jessica Polfjard.
“Worldwide, we produce a lot of steel every year, starting from iron ore, so focusing on the standard that drives the transition of that part of the industry is going to be the key to solve the climate crisis,” he said.
SSAB has accelerated investments to adopt electric arc furnace steelmaking at existing sites with blast furnaces, while the company sees the pace of development determined by permitting approvals for new plants and high power transmission lines.
Scrap metal will remain key for lower emissions steel, where available.
“We need to use as much as possible recycled scrap, that’s the best way to save CO2 emissions,” Pei added.
Volvo Cars sees the importance of scrap to be included in any benchmarking standard, taking into account recycled steel is crucial to meet EU circular objectives.
Ambitious targets for recycled content could be an obstacle for standardization for low-emissons steel, said Polfjard.
Steel is expected to be covered by the EU’s Ecodesign Standards for Sustainable Products Regulation, or ESPR, according to SSAB. In parallel to the ESPR, the EC aims to regulate the creation of reliable, comparable and verifiable environmental labels across the EU.
Steel may be a strong industry candidate for inclusion in the first report for consultation on the topic, Jean Bergevin, senior expert for energy intensive industries unit DG Grow said at the webinar.
Begevin suggested demand for steel differentiated around carbon emissions will drive the transition, more so than by energy supply factors. There is strong interest for low-emissions steel in some segments, while a difficult regional economy with cost pressures could make users substitute for other types of lower cost steel if possible.
While the largest EU steelmaker ArcelorMittal is using a carbon-accounted steel approach, as well as benchmarking steel carbon intensity, the company is advocating inherent steel emissions-based standardization. ArcelorMittal, which offers a range of lower-emissions steel products, has 600,000 mt of low-emissions steel certificates available for sale by the end of 2022, it said.
Integrated steel producers have looked at ways to allocate effective cuts to carbon emissions into their steel offering, rather than work off smaller contributions to individual steel product emissions across overall production volumes.
The so-called mass balance methodology used by ThyssenKrupp, Austria’s Voestalpine, Tata Steel Europe and Kobe Steel, allocates emissions savings to a portion of steel products. ThyssenKrupp said its saving are directly related to the blast furnace production process by adapting feedstocks with scrap or hot-briquetted iron.
ArcelorMittal said July 28 that its steel decarbonization standards tracking inherent emissions in hot-rolled steel product — introduced in June for industry consultation — is complementary to methods “rewarding virtual low-carbon steel, at least until significant amounts of physical low-carbon are available.”
Steel pricing and premium discussions, along with benchmarking around the inclusion and allocation of emissions, continues. However, the relative cost of producing lower emissions steel for markets may become more focal as new steel standards consolidate and energy and carbon prices are factored in.
— Hector Forster