Swedish steel company executive Lars Lundström knows his industry has a big problem with greenhouse gases.
Steel furnaces are enormously energy intensive, and the traditional steelmaking process also relies on a high-carbon coal product called coke that is used to turn iron ore into steel. Most estimates show that steel is responsible for about 7 percent of global CO2 emissions.
"Steel is a true bad boy," Lundström told Newsweek. But H2 Green Steel, the company where Lundström serves as head of product sustainability, is building what would be the first commercial-scale mill to cut steel's CO2 emissions by about 95 percent.
The company's secret lies in its name: H2, the chemical symbol for hydrogen gas.
"In our process, we exchange the coke for hydrogen," Lundström explained. The final product is the same, but hydrogen does the job that coke normally would, pulling oxygen from the iron ore.
Where carbon-heavy coke combined with oxygen, forming CO2, hydrogen instead links to a couple of oxygen atoms to form something more benign.
"Instead of CO2 emitted from a blast furnace, we emit steam," he said.
The company's facility is under construction in northern Sweden in an area with an abundance of water and hydropower in addition to iron ore deposits. Carbon-free electricity will both power the steel mill and produce its green hydrogen.
"That's the basic recipe for our steel," Lundström said. Last month, the company announced it had raised a little more than $6 billion in investment and it plans to begin operation next year.
H2 Green Steel is among the companies at the leading edge of a large-scale effort to cut emissions in one of the toughest industries to decarbonize. Greening steel will require more than just new technology, however. The industry must also overcome a chicken-and-egg type of problem with supply and demand.
What Is Green Steel?
Companies like H2 Green Steel couldn't raise the enormous capital for a new steel plant without market demand for the product. But potential investors and steel purchasers need assurances that the product will deliver on its low-CO2 promise.
"A big part of our work is to provide clear, consistent and credible definitions in terms of tons of carbon per ton of steel," Jen Carson at the nonprofit Climate Group told Newsweek.
Carson leads Climate Group's work on decarbonizing heavy industry, and she works closely with a stakeholder group called Responsible Steel to set standards for just what "green steel" really means.
"There's a growing number of steelmakers who are in the Responsible Steel membership base and tracking towards formal certificates," Carson said.
On the demand side, the climate research and advisory organization RMI worked with steel customers to organize a Sustainable Steel Buyers Platform to help speed delivery of low-carbon steel. Altogether, the platform participants aim to buy 2 million tons of near-zero-emissions steel.
Member companies involved in those efforts include Jindal Steel & Power, Mercedes-Benz and Microsoft, all companies that appear on Newsweek's rankings of Most Trustworthy Companies globally and in the U.S.
The Microsoft Climate Innovation Fund is also an investor in H2 Green Steel, which has leveraged purchase agreements with a range of companies to help fund construction of its new facility.
Automaker Volvo signed a long-term supply contract with H2 Green Steel to help meet its emissions reductions targets to produce 100-percent electric vehicles by 2030 and become a climate-neutral company by 2040.
"Steel is 50 percent of the weight of a car," Volvo's head of global sustainability, Anders Kärrberg, told Newsweek. Steel represents about 30 percent of the life-cycle CO2 emissions in a car, he said, on par with those from aluminum. "Those are the two main headaches when it comes to CO2," he said.
Kärrberg said the prospect of nearly carbon-free steel is exciting, but he realizes that large volume shipments are a long way off. In the meantime, Volvo is finding ways to use more recycled steel and more efficient manufacturing that can reduce the steel required in an auto.
Capturing Steel's Carbon Emissions
Not every steelmaker will have access to the abundant green power that H2 Green Steel enjoys in northern Sweden. For many steel companies, going green will likely require some form of the technology known as Carbon Capture Utilization and Storage, or CCUS.
An Illinois-based company called LanzaTech has a novel twist on the technology that emphasizes the "U" part of CCUS. Instead of simply capturing CO2 and storing it in the earth, as many CCUS projects aim to do, LanzaTech pumps the CO2 and other industrial gases into a vat filled with bacteria.
"The process works like a brewery where this specialized bacteria essentially consumes those gases," LanzaTech Vice President of Public Policy Tom Dower told Newsweek. The gas fermentation process results in ethanol, a fuel source and valuable product in chemical manufacturing.
"It opens up the whole chemical supply chain," Dower said.
Converting CO2 and other waste gases, such as carbon monoxide, into a useful product can help bring down the cost of carbon capture for steelmakers, Dower said.
The Luxembourg-based multinational steel and mining company ArcelorMittal applied LanzaTech's gas fermentation to an industrial-scale demonstration plant in Ghent, Belgium. The company said the project reduces CO2 emissions by 125,000 tons per year while producing about 20 million gallons of ethanol, which is blended with gasoline.
"We have ambitions to be the biggest green steel producer," James Streater, head of sustainable development for ArcelorMittal, told Newsweek. ArcelorMittal is the world's largest steelmaker outside of China.
China is home to the bulk of global steel production, and India's steel industry is projected to grow rapidly in the coming decades. Any meaningful reduction in the industry's overall emissions will require solutions that can scale up for widespread application.
Streater said cost will be a crucial consideration for steelmakers and steel purchasers as they navigate a global market with evolving requirements on carbon emissions.
Cost estimates for green steel vary depending on the type of technology used, and producers expect the costs to come down some as those technologies achieve greater economies of scale. But at the outset, Streater said, he expects green steel to be used in high-value products where manufacturers can afford to charge a premium for the lower emissions profile.
"It boils down to profitability for everyone in the chain," Streater said. "If it isn't profitable for all, then the chain breaks."
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