This blog article is based on the McKinsey report titled "Spotting green business opportunities in a surging net-zero world: Transition to net zero: Steel." ¹

By reading this article, you will learn more about:

• Steel Industry's Carbon Footprint
• Challenges in Decarbonizing the Steel Industry
• Opportunities for Decarbonization
  

Importance of Decarbonizing the Steel Industry

The ferrous metal industry is responsible for 7.2% of global greenhouse gas emissions. Only the steel industry is responsible for  5% of EU CO2 emissions and faces challenges in aligning with the EU's climate targets.^2,3,4

The steel industry plays a critical role in the global economy. Demand for steel is expected to increase as the world continues to develop and urbanize. However, the production of steel is energy-intensive and relies heavily on fossil fuels, which contributes significantly to global greenhouse gas emissions. Therefore, decarbonizing the steel industry is essential to achieving global emissions reduction targets and ensuring a sustainable future.

Challenges 

Decarbonizing the steel industry is a complex and challenging task, as the industry faces several technological, economic, and regulatory barriers.

Some of the key challenges include:

• Limited availability of low-carbon raw materials and energy sources,
• High capital costs associated with transitioning to low-carbon technologies,
• Limited regulatory frameworks and policies to incentivize and support decarbonization efforts,
• Large-scale investment in research and development is needed to drive innovation and improve efficiency.
  

Opportunities

Despite the challenges, there are significant opportunities for decarbonizing the steel industry. These include:

• The use of renewable energy sources such as solar and wind power to replace fossil fuels in steel production,
• The use of hydrogen as a low-carbon fuel source in steel production,
• The use of carbon capture technologies to capture and store carbon emissions from steel production,
• The development of innovative steel production methods, such as electric arc furnaces, that use scrap steel as a feedstock and require less energy than traditional blast furnaces.
  

Collaboration and Investment

Decarbonizing the steel industry requires collaboration and investment from the industry, investors, and governments.

Industry can drive innovation and invest in new technologies to improve the efficiency of steel production. Investors can provide capital to support the development and deployment of low-carbon technologies. Governments can play a critical role in creating policy frameworks that incentivize low-carbon steel production and provide financial support for research and development.

Recycling

Recycling is one of the critical solutions to reducing steel industry emissions. It conserves natural resources and significantly reduces steel production's carbon footprint. 

Recycled steel saves on producing raw materials and reduces the energy required to create new steel which produces less greenhouse gas emissions and therefore contributes to meeting UN’s climate targets. It also creates a closed-loop system where waste from one process is used as a resource for another.

Are you looking for a trusted partner in your recycling journey? 

Explore Metaloop’s services by scheduling a meeting with our Head of Growth and discover more about how we can make a difference together: Schedule a Call

Works Cited

¹ Vercammen, Steven. “Spotting green business opportunities in a surging net-zero world: Transition to net zero: Steel.” McKinsey, McKinsey & Company Accessed 21 March 2023.

² Ritchie, Hannah. “Sector by sector: where do global greenhouse gas emissions come from?” Our World in Data, 18 September 2020, https://ourworldindata.org/ghg-emissions-by-sector. Accessed 21 March 2023.

³ Bolotova, Julia. “How the European steel industry is going green.” Fastmarkets, 8 March 2024, https://www.fastmarkets.com/insights/how-the-european-steel-industry-is-going-green/. Accessed 23 April 2024.

⁴ “EU climate targets: how to decarbonise the steel industry.” EU Science Hub, 15 June 2022,https://joint-research-centre.ec.europa.eu/jrc-news/eu-climate-targets-how-decarbonise-steel-industry-2022-06-15_en. Accessed 22 March 2023.