US awards $28M for cutting-edge tech to clean up iron and steel

The DOE picked Electra, Limelight Steel, and other teams that are working to slash steel’s emissions. Experts say their innovations are crucial but still far off.
By Maria Gallucci

  • Link copied to clipboard
(Binh Nguyen/Canary Media/Costfoto/NurPhoto via Getty Images)

A new infusion of federal funding will support some of the most cutting-edge efforts to decarbonize the dirty steel industry.

On Thursday, the U.S. Department of Energy selected 13 projects in nine states to receive a total of $28 million through its Advanced Research Projects Agency-Energy (ARPA-E). The initiative aims to spur solutions that can eliminate carbon dioxide emissions from the ironmaking process and sharply reduce emissions across the entire steel supply chain, according to an announcement shared exclusively with Canary Media.

Iron and steel production are among the most difficult industrial sectors to decarbonize, which is why ARPA-E is laser focused on accelerating game-changing technological breakthroughs to lower emissions from these critical sectors,” Evelyn Wang, the agency’s director, said in an emailed statement.

The awards come just weeks after the Biden administration announced up to $6 billion in federal support for commercial-scale demonstration projects that will curb CO2 from heavy industrial sectors. That program includes up to $500 million each for two new direct reduced iron” plants that run on clean hydrogen instead of coal or fossil gas.

The $28 million initiative is funded by ARPA-E’s appropriations from Congress, while the much larger program announced earlier is funded by the Inflation Reduction Act and Bipartisan Infrastructure Law.

Globally, steel production generates as much as 9 percent of human-caused CO2 emissions every year — more than any other heavy industry.

About 70 percent of those emissions come from the ironmaking process alone. Existing blast furnaces use purified coal (or coke”) and limestone to turn iron ore into molten iron at extremely high temperatures. A separate facility then turns iron into high-strength steel, which goes on to become car parts, structural beams, kitchen appliances, and much more.

ARPA-E said the 13 companies, universities, and research institutions selected for award negotiations are primarily targeting those blast-furnace emissions.

Electra, a startup based in Boulder, Colorado, is developing electrochemical devices similar to batteries that can turn iron ore into iron at about the same temperature as a fresh cup of coffee. The company, which commissioned its first pilot facility in March, claims it can slash emissions from ironmaking by 80 percent and at half the cost of existing traditional processes.

Electra engineers inspect a plate of iron from the startup's low-temperature iron "electrowinning" cell at its pilot plant in Boulder, Colorado. (Electra)

Another startup, Limelight Steel, is designing a furnace that uses laser technology to produce industrial heat and make molten iron. The Oakland, California–based company says its approach could reduce energy consumption from steelmaking by nearly half and curb emissions by over 80 percent. Limelight and Electra are each set to receive $2.9 million for their projects.

Argonne National Laboratory in Lemont, Illinois, is slated for a $3 million award to further develop its zero-emission ironmaking process, which involves using hydrogen plasma in a microwave-powered rotary kiln” reactor. A team from the University of Minnesota in Minneapolis will get $2.8 million to pursue similar methods.

If these and other emerging technologies can successfully scale, that would enable a reduction of global CO2 emissions by over 2.9 metric gigatons annually, or 5.5 percent of total global emissions, according to ARPA-E.

The next generations of cleaner steelmaking

Aside from the size of their funding, there are two key differences between this week’s ARPA-E awards and the larger Department of Energy initiative unveiled last month.

First, the technologies included in Thursday’s announcement are in much earlier phases of development, meaning teams are running laboratory tests or pilot projects, not approaching industrial-scale operations. Second, these novel processes don’t involve using copious amounts of hydrogen — while many of the more advanced green steel” initiatives do.

This effort complements other actions taken by the Biden administration to decarbonize steelmaking,” said Cory Phillips, a program director at ARPA-E who oversees the Revolutionizing Ore to Steel to Impact Emissions (ROSIE) initiative.

But rather than using hydrogen to produce direct reduced iron, ROSIE focuses on funding emerging processing pathways with novel themes, including electrochemistry, hydrogen plasma, and advanced thermal approaches,” he said. The program is also unique because the projects must try to make primary iron with equal or lower cost than the incumbent processes,” he added.

Still, experts say it may take decades before the cutting-edge pathways can reach a scale that meaningfully transforms how the world makes iron and steel.

These technologies are quite far away,” Claire Curry, the global head of technology, industry, and innovation at BloombergNEF (BNEF), told Canary Media.

This month, BNEF named the iron-focused startup Element Zero as one of its 2024 Pioneers. The Australian company uses an electrolysis process that can convert low-quality iron ore into high-quality iron using intermittent renewable power sources, like wind and solar. Boston Metal received the same recognition in 2020. The U.S. company has since raised at least $262 million to develop its molten oxide electrolysis” process for making iron.

Recently, BNEF analysts looked at the role such technologies could play in helping the global steel industry achieve net-zero emissions by 2050. In their model, electricity-based methods represented just 1 percent of total steel production by mid-century. It just takes so long to scale,” Curry said of electrolysis.

This means that, for now, hydrogen-based ironmaking represents one of the clearest paths to reduce the industry’s emissions. Other options include installing systems to capture CO2 emissions directly from blast furnaces, then storing the carbon or repurposing it for industrial uses. Companies can also increase the use of recycled scrap metal to reduce the need for primary iron — the industry’s biggest carbon culprit.

All these approaches face key challenges. Carbon capture, for instance, doesn’t eliminate the other health-harming pollutants that spew from furnaces or reduce the use of coal. And there’s a limit on how much scrap metal in the world can be melted down and remade into steel. Recycled steel, which can contain impurities, also isn’t viable for certain uses, such as car parts.

As for hydrogen, the biggest hurdle steelmakers face is getting their hands on low-carbon supplies. The vast majority of hydrogen today is produced using fossil fuels through emissions-intensive processes. Green hydrogen — made using renewable electricity and water — remains expensive and in extremely limited supply. Making more of it will require massive new investments in solar, wind, and other renewable sources, as well as producing more electrolyzers to split water molecules into hydrogen and oxygen.

We need to begin doubling down on the hydrogen-based steel, CCS [carbon-capture and storage], and scrap this decade, with the idea that we can scale to full electrolysis for steel and iron later,” Curry said.

Is Canary Media your go-to source for news about cleaning up heavy industry? If so, we could really use your support in the form of a tax-deductible donation. As a nonprofit, we rely on funding from our readers to keep doing what we do. Thank you!

Maria Gallucci is a senior reporter at Canary Media. She covers emerging clean energy technologies and efforts to electrify transportation and decarbonize heavy industry.