Major steel users band together to place first big ​‘green steel’ order

NEW YORK CITY — Companies that use huge amounts of steel to construct buildings or clean-energy equipment are banding together to push North American steelmakers to adopt greener manufacturing methods.

On Wednesday, corporations including tech giant Microsoft, major U.S. real estate developer Trammell Crow and solar-hardware-maker Nextracker announced a plan to jointly request a total of 2 million metric tons of ​“near-zero emissions” steel from producers. The broadly defined category can include steel that’s produced using renewable electricity, clean hydrogen or potentially with carbon-capture technology.

The initiative, named the Sustainable Steel Buyers Platform, was convened by the clean energy think tank RMI and unveiled at Microsoft’s Times Square office during Climate Week NYC. Representatives from global steel giant ArcelorMittal, Swedish startup H2 Green Steel and the automaker Volvo Group also attended the event. (Canary Media is an independent affiliate of RMI.)

The platform is an attempt to close the gap between the buyers that want to purchase green steel — and are willing to pay a premium for the product — and the manufacturers that are faced with making multibillion-dollar investments to retrofit old facilities or build new ones.

“What we’re finding in the market is that the buyers are trying to initiate these [green-steel] deals, but it’s not enough to shift the investment case for a producer,” Chathu Gamage, a principal in RMI’s Climate-Aligned Industries Program, told Canary Media.

Globally, steel production is responsible for between 7 and 9 percent of human-caused carbon dioxide emissions every year.

Existing efforts to jump-start a U.S. green-steel industry include the First Movers Coalition — organized by the U.S. State Department and the World Economic Forum — and SteelZero, an initiative led by Climate Week NYC’s organizer Climate Group. In both of these consortia, companies have pledged to buy a certain portion of green steel by 2030 and to source only green steel by 2050.

The new platform ​“is a way to aggregate this demand, because no one steel buyer can do this alone,” Gamage said.

In a related announcement, the First Movers Coalition on Wednesday launched the Near-Zero Steel 2030 Challenge, a global initiative to identify ways for steel producers, buyers and technology providers to partner on boosting the supply of near-zero steel in the coming years. A recent example of such a collaboration is the long-term supply agreement that Volvo just signed with H2 Green Steel. The startup says it expects to start delivering the high-strength material starting in mid-2026.

“Steel is a big contributor to the footprint of our products,” Andrea Fuder, chief purchasing officer of Volvo Group, said in a statement last week. ​“Working together with both established and new players for developing decarbonized materials is key to advancing our progress in sustainable transport and infrastructure solutions.”

Kicking fossil fuels out of steel production

The 2-million-metric-ton order from the Sustainable Steel Buyers Platform represents a sizable volume for steelmakers, equal to the annual production of an average-size steel plant. It’s also only a tiny fraction — about 0.1 percent — of the nearly 2 billion metric tons of high-strength material that global steelmakers produce each year to build everything from bridges, roads and buildings to cars, ships, wind turbines and solar-panel racks.

Traditional steelmaking processes use copious amounts of fossil fuels to transform raw iron ore into gleaming coils of finished steel. About 70 percent of the world’s primary steel is made in ​“integrated mills” that use extremely hot, coal-hungry blast furnaces and basic oxygen furnaces.

Most of the remaining 30 percent is made by melting scrap metal in electric arc furnaces — a process that can dramatically reduce the emissions associated with steelmaking but doesn’t entirely replace the industry’s need for nonrecycled steel. Automakers in particular need primary material to make a car’s chassis and body.

In the United States, the story plays out in reverse: About 70 percent of steel is made using scrap and electric arc furnaces, while roughly 30 percent is produced in the nation’s eight remaining integrated mills.

The industry hasn’t yet adopted a concrete definition of what counts as ​“green steel.” The term can be used loosely today to describe scrap-based steel made in electric furnaces — even those powered by nonrenewable electricity — and it can sometimes include coal- or gas-using facilities that install equipment to capture carbon dioxide from the facilities’ flue streams.

For many clean-energy advocates, an ideal setup for primary steelmaking involves replacing blast furnaces with a hydrogen-fueled technology that processes iron ore into what’s known as direct reduced iron, or DRI. Ideally, the hydrogen is made only by using renewable-powered electrolyzers, which split water into hydrogen and oxygen. The DRI is then converted into steel using electric arc furnaces that are also powered entirely by renewables.

Alternately, iron can be converted directly into steel using novel methods like ​“molten oxide electrolysis,” which the startup Boston Metal is attempting to scale up and commercialize.

The United States currently has three DRI facilities, but they all primarily use fossil gas to process iron ore. Replacing fossil fuels with clean hydrogen in such facilities will require building significantly more electrolyzers — and renewable energy to power them. In Sweden, H2 Green Steel plans to use more than 700 megawatts of hydrogen electrolyzers at its forthcoming facility, which will be capable of producing up to 5 million metric tons of green steel by 2030.

At Wednesday’s event, members of the Sustainable Steel Buyers Platform said their goal is to accelerate the business case for steel producers that are considering converting or building new green-steel facilities. The buyers’ strategy will play out in two steps.

To start, participants issued a ​“request for information” to North American steelmakers to determine what is possible, in terms of how much green-steel manufacturers can realistically produce, by when, and using which alternative methods. Then, early next year, the buyers group plans to formally request proposals from manufacturers to supply the collective 2 million metric tons of steel.

Gamage said that companies will likely make a one-time request for the steel, though it could play out over multiple bidding rounds. While buyers are looking to get their green steel on ​“accelerated timelines,” it will probably still take several years for steelmakers to ramp up production to fulfill the orders, she added.

How participating companies will define green or ​“near-zero-emissions” steel is entirely up to the participating companies, Gamage said. She noted they could follow the blueprint offered by an industry standard known as ResponsibleSteel, which maps out how producers evaluate and report emissions associated with steelmaking.

“The hope is that we’re all running this process to either retrofit or create new facilities that can make cleaner primary steel,” she said.