On the last day of March, Joe Biden went to Pittsburgh, known as the Steel City, to whip up support for his $2 trillion plan to rejuvenate America’s infrastructure. That plan is just the first phase of his “Build Back Better” policy, which calls for a decade-long deluge of new federal spending to upgrade roads and bridges, repave highways, install new climate change mitigation technology and extend internet access.
Pittsburgh was an auspicious site for Biden to launch his campaign for infrastructure legislation. It earned its Steel City moniker by leading both U.S. and global steel production for over a century. When Pittsburgh’s steel mills began to shutter in the 1980s, America toppled from its perch as the world’s leading steel producer. Today, the U.S. only accounts for about 5 percent of global steel production capacity.
If the U.S. is to achieve Biden’s vision of a new deal for America, complete with infrastructure upgrades, domestically sourced materials and net-zero emissions, the country needs not only to reverse its flagging fortunes in the steel market but also to foster new technologies that will enable it to produce "green" steel with a minimum of carbon dioxide emissions. Such new technologies are now under development, although their entry into the marketplace is going to require time, investment and government support.
Steel is real
The same day as Biden’s Pittsburgh visit, the White House released a policy statement titled The American Jobs Plan. It calls for legislation to “fix highways, rebuild bridges, upgrade ports, airports, and transit systems,” as well as to retrofit millions of homes with energy-efficient equipment such as heat pumps, build more clean electricity generation and storage and manufacture more electric vehicles. What’s more, it declares that these “investments will use more sustainable and innovative materials, including cleaner steel and cement, and component parts Made in America.”
To accomplish such lofty goals, the U.S. is going to need more steel. Heat-pump water heaters, wind turbine towers and electric vehicles all contain copious amounts of the metal. If that steel is made in America, the bar is raised even higher. According to the American Iron and Steel Institute, U.S. steel mills are operating at close to 80 percent capacity. Boosting production is going to require more capacity, and that may be incompatible with another of The American Jobs Plan’s goals: net-zero carbon emissions by the year 2050.
Steel production is one of humanity’s most environmentally destructive activities. Even in its diminished state, the U.S. steel industry releases more carbon dioxide emissions than nearly all other other domestic industries — nearly a ton of carbon dioxide for every ton of steel produced, according to consulting company Global Efficiency Intelligence. That’s largely because steel-making relies on coal and natural gas for most of its hefty energy consumption. The world needs new production technology that doesn’t consume fossil fuels, releases little to no carbon dioxide and is readily scalable.
Incremental improvements in the short term
It’s unlikely that any new “silver bullet” technologies will come to the fore in the next decade, which is the timeframe the Biden administration is targeting for infrastructure growth. That means steel industry emissions must be mitigated at first by eking out small improvements to a wide variety of production stages. Simply using steel more efficiently is the first step. For example, some new forms of concrete are structurally stable without the use of steel reinforcing bars. Also, other materials can be substituted for steel; one young company called Inventwood is developing a process that transforms wood into a material strong enough to be used in place of steel.
Another technique is to recycle more steel. According to the International Energy Agency, producing steel from recycled scrap requires only one-eighth the energy associated with producing steel from iron ore. Scrap accounts for about 70 percent of the raw metal input to U.S. steel production today, a figure that can be boosted.
But that alone won’t obviate the need for new steel mills, since future demand for steel will outpace past supply. Instead, the U.S. will have to make new steel from iron ore and mitigate the emissions stemming from that process.
Limited opportunities to reduce the carbon produced by today's steel-making processes
To better understand the options for improvement, let’s review how steel is typically made. First, iron ore and fossil fuels (usually either specially refined coal or natural gas) are put in a furnace, where the fuels are burned to produce heat, carbon monoxide and carbon dioxide. The carbon monoxide combines with oxygen from the iron oxide contained in the ore, forming carbon dioxide and leaving behind a quantity of nearly pure iron. That iron is then conveyed either to a specially lined vat where oxygen is blown through liquid iron or to an electric furnace. In these secondary vessels, the iron is further purified and combined with small amounts of carbon to make steel.
One way to mitigate the carbon emissions from this process is to capture carbon dioxide from the furnace and sequester it in underground reservoirs. The American Jobs Plan specifically calls for the government to “establish 10 pioneer facilities that demonstrate carbon capture retrofits for large steel, cement, and chemical production facilities.” While on the surface this seems to be a reasonable idea, a closer look reveals that it’s problematic. Most carbon-capture facilities don’t actually sequester the carbon dioxide they capture. Instead, they sell it to oil companies that then pump it underground to force oil to the surface, a process known as enhanced oil recovery (EOR).
The only operating steel plant using carbon capture at scale, the Al Reyadah plant in Abu Dhabi, employs this technique. According to Canary Media’s very own David Roberts, it’s not clear that EOR sequestration actually reduces emissions on a net basis if the calculation includes the carbon dioxide released by burning the oil that’s produced. Since any U.S. steel plants using carbon capture are also likely to go the EOR route, it’s unlikely this technique will result in significant reductions of net emissions.
Other techniques include improving the efficiency of the ore processing furnaces and replacing coal furnaces with natural-gas furnaces. These techniques will only provide marginal emission reductions, however. If America is going to continue to manufacture steel and get to net-zero emissions, it needs entirely new steel-making technologies.
New steel-making technologies for a net-zero world
The two leading steel-making technologies with the potential to nearly eliminate carbon dioxide emissions use a common chemical process known as electrolysis. This is the core technology behind the trillions of dollars of green hydrogen investment being planned around the world, but it may be familiar to middle-school chemistry students as well. Electrolysis involves running an electric current through water to separate its constituent elements: hydrogen and oxygen. The lab class version usually ends with a loud pop when the collected hydrogen is ignited. The same technique may also be employed to separate other elements from oxygen.
One technology that’s well on its way is called "hydrogen direct reduced iron" (H2 DRI). It is now being demonstrated in Sweden, Japan and Germany. H2 DRI substitutes hydrogen (preferably, but not necessarily, made with clean energy) for the coal or natural gas used in the typical furnace process. In a DRI furnace, the iron ore is heated but not to the point of melting. Hydrogen then passes over the hot ore, combining with oxygen liberated from the iron oxide to form water and leaving relatively pure iron behind. Typically, that still-hot iron is then transferred to an electric furnace for additional processing to turn it into steel. If the electricity used to produce the hydrogen and run the furnace comes from non-carbon-emitting sources, then the overall process results in little to no carbon dioxide emissions.
In Sweden, a joint venture dubbed HYBRIT (comprising utility Vattenfall, iron ore processor LKAB and steel maker SSAB) is running a pilot H2 DRI plant. This spring, it started to use hydrogen produced via electrolysis from electricity generated by fossil-free sources. (This being Sweden, those probably consist of nuclear and hydropower, with a bit of wind power sprinkled in.) Building a full-scale H2 DRI plant, including electrolyzers to produce hydrogen from clean electricity, costs billions of dollars, and the process consumes prodigious amounts of electricity. Its economics strongly depend on the cost of that electricity and the value of the avoided carbon dioxide emissions. According to the consultancy McKinsey, H2 DRI is not expected to be cost-effective in Europe until sometime between 2030 and 2040.
The other technology under development, molten oxide electrolysis (MOE), also employs electrolysis. But in this case, it’s applied directly to the iron oxide ore by placing it in an electrolytic cell filled with a mineral-bearing solution. An electric current is run through the solution, heating it up beyond the melting point of iron, and separating oxygen from iron. If the electricity used to power the MOE process comes from clean sources, the steel can be made with virtually no carbon dioxide emissions.
In the U.S., MOE is being developed by Boston Metal, a company spun out of the Massachusetts Institute of Technology. Like H2 DRI, MOE economics are heavily dependent on the cost of clean electricity. Boston Metal is currently gearing up to build its first pilot plant in Massachusetts, and it is looking into building a larger facility in Quebec or another location with cheap hydroelectricity.
Of the two technologies, H2 DRI is clearly further along, with a pilot plant in operation and a full-scale plant in development. MOE has some intriguing advantages for the U.S. market, however. First, it’s more efficient, requiring somewhere between 15 and 30 percent less electricity than H2 DRI per ton of steel output. Second, MOE facilities can be constructed in much smaller increments than H2 DRI, although exactly how small isn’t clear just yet. That’s a big deal in the U.S., where a diminished steel industry is unlikely to invest billions of dollars for a new steel plant based on new technology.
Furthermore, Boston Metal’s electrolysis cells are so clean that developers would have far more flexibility in where they’re located. For example, they could be placed near inexpensive sources of clean electricity or iron ore, or maybe even in Pittsburgh. Both technologies are going to take at least a decade before they’re ready to start claiming significant amounts of market share, but over the long run, the odds of Boston Metal’s MOE technology gaining traction in the U.S. market appear to be better.
There’s no stopping this steel
Climate change imperatives dictate the decarbonization of the global steel industry, and there’s a lot that investors, policymakers and environmental advocates can do to help speed it along. Numerous companies are seeking capital for green steel projects, including Boston Metal, ArcelorMittal and SSAB. The International Energy Agency forecasts that the global green steel industry will require nearly $100 billion in incremental investments over the next 30 years.
On the regulatory front, there are a number of pathways that policymakers and other government stakeholders can take. These include phasing out coal-fueled furnaces, requiring new plants to be ready for hydrogen or carbon capture, requiring that electric furnaces be powered using clean electricity, funding research and development, funding demonstration projects and requiring that government-funded construction projects source at least a portion of their steel from low-carbon-emitting producers.
Environmental advocates can help move things along by encouraging consumers to purchase products that contain green steel. For example, Volvo and SSAB recently signed an agreement to develop cars made with green steel. How will consumers know which products they should buy? Environmentalists and industry representatives can jointly develop a “Green Steel Inside” sticker, much like those “Intel Inside” stickers that identify products containing Intel’s microprocessor chips. There will probably be some contention over the requirements to obtain the green steel imprimatur, but some form of labeling will be necessary if consumers are going to be able to choose such products.
Consumers will probably have to pay a bit more for such products — at least at first. Because steel constitutes just a small portion of most products of which it’s a component, that price premium is likely to be small. For example, the International Energy Agency estimates that using green steel would increase the cost of a midsized car by around 0.1%. That seems like a small price to pay to help clean up one of the world's most carbon-intensive industries.
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