Investment between $4bn and $34bn will be needed in green hydrogen steelmaking if the steel industry is going to transition successfully, according to a report.
Industry Tracker has published the paper Steeling for Net Zero, which analysed 10 European steel companies that make up 68% of steel production in Europe. Steel production contributes 7-9% of global CO2 emissions, with European emissions from steel accounting for 6%.
The companies, which include SSAB, ArcelorMittal, Voestalpine, Tata Steel and Salzgitter, were given a score between zero and 100 based on 13 metrics covering three elements of the Taskforce for Climate-related Financial Disclosures: transition risks, transition opportunities, and governance and strategy.
The study found these companies have collectively used up three-quarters of their 2050 carbon budget, and in the worst projection, three have already exceeded their budget from locked-in emissions.
To combat this, new technologies that present alternatives to blast furnace steel production will be needed.
These include SSAB’s fossil-free hydrogen technology and ArcelorMittal’s portfolio of low-carbon solutions.
Five companies are investing in hydrogen-based direct reduction, and seven are investing in projects to secure hydrogen supply.
But the report warns if companies leave emissions reductions until after 2030, as many of their commitments suggest, they are “at high risk of missing the window for investing in vital new technologies”, which could cost anywhere between $4bn and $34bn.
Carole Ferguson, managing director of Industry Tracker, said: “Steel is used across many products and sectors that are integral to the way we live. However, with a large carbon footprint and a growing emissions profile, steel remains a problem child in the path to net zero.”
She added: “With momentum starting to build for new technologies, particularly green hydrogen, steel companies have the opportunity to break out of their current capital intensive business models. I am optimistic that with public support, cross sector partnerships and investment capital seeking to solve the climate crisis, steel companies have the potential to lead the way in the transition and drive the green hydrogen economy.”