- Several analyses show that steelmaking can be almost fully decarbonised by 2050 by retrofitting blast furnaces and adding carbon capture and storage (CCS), scaling up hydrogen-based direct reduced iron (DRI), boosting steel recycling, and slowing demand growth through more efficient steel use.
- Major investments in steelmaking capacity are coming. To avoid locking in high levels of emissions, or else creating stranded assets, rapid action is needed to initiate the sector’s transition right away and prevent new blast furnaces from being added – and existing ones from being relined – by about 2025.
- Policy-makers have key roles to play in enabling the sector’s transition, by ensuring ample supplies of clean electricity as well as green hydrogen; creating lead markets for green steel; supporting research and innovation; and using climate policies, standards and regulation to steer the sector.
- International cooperation is essential to ensure that the sector as a whole moves in the right direction, and laggards do not undercut frontrunners’ efforts. It can also help the sector make the most of different countries’ strengths, such as abundant renewable energy, to accelerate decarbonisation.
Steel is an essential component of modern economies, used in everything from buildings, to transport infrastructure, heavy equipment, vehicles and consumer goods. It is also used in key green technologies: wind turbines, electric vehicles, public transit, advanced manufacturing.
Yet steel is also a major carbon emitter, producing 7% of global greenhouse gas (GHG) emissions and 10% of global CO2 emissions in 2018. Primary steel production – made from iron ore, not from recycled scrap – is the main source of those emissions, due to its reliance on metallurgical coal in blast furnaces.
Moreover, global steel demand continues to rise, and global crude steel production capacity has more than doubled in the past two decades. Steel production, already 1,950 Mt today, could increase by a third by 2050. Without a dramatic shift in the industry, steelmaking could emit another 90 Gt of CO2 by 2050 – almost 20% of the remaining global CO2 budget for a 50% chance to keep global warming below 1.5°C.
For decades, policy-makers have treated steel as a “hard-to-abate” sector, citing a lack of viable alternative technologies for primary production and the long lifetimes of steel mills and their equipment. However, technologies have advanced, and multiple analyses now show that with the right policies and investments, the steel sector can be almost completely decarbonised by 2050.
More important, steelmaking has to be decarbonised – quickly – if the world is to avoid catastrophic climate change impacts. The 1.5°C scenario published recently by the International Energy Agency (IEA), for instance, calls for the sector’s emissions to drop by 24% by 2030 and almost 91% by 2050.