“The iron and steel industry is responsible for 9% of CO2 emissions worldwide.”1
Making steel requires two steps. First, you feed rocks into a Blast Furnace (BF) to make iron. And second, you feed that iron into a Basic Oxygen Furnace (or Converter, so BOC) to transform it into steel. The problem is, both steps produce large quantities of CO2, because they rely on fossil fuels to generate the temperatures needed. With the result that,
“One ton of steel releases about 1.85 tons of CO2”1
Broadly speaking, there are 3 ways to address this.
1. Electric Arc Furnaces (EAF)
Instead of producing steel by feeding rocks into a Blast Furnace, you recycle used steel into an Electric Arc Furnace – see diagram below.
This is the way approximately 30% of the steel produced today is made. The problem is, there’s only so much scrap available, so scaling up any further is going to be well-nigh impossible.
Image courtesy of “FutureCoal”
2. Carbon Capture Storage and Utilization (CCS/CCU)
Carbon capturing had, up until recently, been falling out of vogue. The idea seems logical enough. The problem with renewables, whether wind, solar or hydrogen, is that the infrastructure to make them scalable will take years and decades to put in place. And, given that nuclear is not an option – despite how clean it is – we need something in the short-term to help us to meet our energy needs.
CCS and CCU is away of bridging that gap. You take the CO2 produced making steel using blast furnaces, and you bury it somewhere inaccessible, where there’s no danger of it causing any damage. Or, better still, you make use of it by recycling it to produce the likes of green cement.
The problem with that is, there’s the danger that governments and industry will end up seeing this as a permanent solution, rather than as a temporary fix. So instead of focusing on reducing our reliance on fossil fuels, we’re simply brushing it under the carpet.
3. Replacing fossil fuels with renewables
Instead of feeding rocks into furnaces to make steel, we use renewables. Which applies to both steps in the steel making process.
On the one hand, you feed renewables instead of fossils into the BOC to convert the iron into steel. And on the other, instead of feeding coal into the BF, you use liquified natural gas (LNG) or green hydrogen.
At the moment though, using green hydrogen to make steel costs a third more than producing steel conventionally. So in the short term, it had been hoped that industry could have temporarily used LNG. But the war in Ukraine, and the effect that’s had on the price and availability of LNG, has changed all that.
Fortunately, technology is coming to the rescue. And our ability to produce and distribute renewables at scale is improving by the day. So that, by 2030, between the increased costs of carbon taxes, and the economies of scale that are really beginning to kick in now, green steel will cost the same as conventional steel. And then considerably less.
So by 2030, green steel will be the most cost-effective way for manufacturing companies to maximise their margins. In the meantime, we’ll almost certainly have to make more use of CCS and CCU.
What does this mean for enterprise organizations?
If your organization works anywhere in the world of manufacturing, whether that’s in Aerospace and Defense, Engineer-to-order or biopharma, and especially if you’re in construction or transportation, the kind of steel you use, and the amount of CO2 it took to produce it, is going to become more and more of an issue for you.
It doesn’t matter whether you view ESG as an inconvenient if necessary box-ticking exercise, or as an opportunity to transform your company, so that it becomes even more profitable into the future. An ever larger number of your customers, employees and investors are going to be asking you for your ESG metrics. And will be judging you accordingly.
So, as with so many of your day-to-day operations, you’re going to be relying on the software you use to manage your internal organizational structures. The right software will centralize all the relevant data, and make them immediately accessible to anyone who needs them. Keeping all that data up to date, and in real time.
So whenever anyone asks you about the materials you use to produce the goods and services you provide, those metrics are all there on your dashboard.
Find out more about Cora’s software solution here
Sources
1. https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/641552/EPRS_BRI(2020)641552_EN.pdf
