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Net zero steel: what does it mean and how do we get there?

3 December 2020, 11:26 GMT 3 min read

Full recording of our SteelZero panel event: Net zero steel - what does it mean and how do we get there?

To mark the launch of SteelZero this week, we were delighted to bring together a prominent panel of business leaders and experts as part of our event: Net zero steel - what does it mean and how do we get there?

Expertly moderated by Peggy Hollinger, International Business Editor of the Financial Times, and with a live audience of close to 300, we heard from speakers at Ørsted, Lendlease, ArcelorMittal and Environmental Resources Management (ERM), who provided valuable insight into the challenges and opportunities in decarbonising the steel sector.

Here are our top takeaways: 

It won’t be easy – but it’s definitely possible 

A resounding message of optimisim was delivered by all panellists, that yes, it is technically possible to produce steel without carbon emissions - the technologies exist, but it’s going to cost. Substantial enablers, from regulatory frameworks to investment, are needed to ramp up net zero steel production and make it commercially viable. 

This innovation and scaling up challenge is something that Jakob Askou Bøss from Ørsted, likened to the journey they’ve been on with offshore wind, where back in 2012, it was among the most expensive renewable energy technologies out there. But fast forward a few years, and by 2017, it was already cost-competitive with fossil fuel production. In his words:

“We’ve seen in our industry that it’s possible to solve this challenge – but it requires significant innovation, market demand and a lot of policy to make it work.”

Corporate climate targets need net zero steel

We heard from both Lendlease and Ørsted about their ambitious targets to reach net zero in their supply chain (Scope 3) emissions by 2040. Given their businesses, like many others in the construction and renewable energy sectors, rely heavily on the use of steel, decarbonising steelmaking is critical for meeting these targets. 

But Cate Harris from Lendlease also added a word to the wise for steel producers – when construction companies are pursuing sustainability targets, they’re constantly making decisions on designs and materials. Steel is no different – if no viable low carbon steel is available at scale, they may be forced to use alternative materials to meet their overall targets. 

Government has a role to play

The role of government was agreed to be crucial in supporting the transition to net zero steel, from specifying responsible materials in public procurement to providing the right policy environment to incentivise steel supply chains. 

Carbon border adjustment mechanisms in particular were talked about favourably, specifically by Alan Knight from ArcelorMittal, as they can help to ensure that producers that act on emissions remain competitive against those who don’t. Attendees also held similar views, with an audience poll showing over three-quarters were in support of a carbon border adjustment mechanism being used to accelerate the transition to net zero steel.

New business models could be considered

Looking at different business models, particularly with a more circular economy approach, is something that some panellists believed the steel sector and its supply chain should be open to considering.

Dirk Nuyens from ERM shared an example of how automotive businesses are adapting to changing consumer views towards car ownership and posed the idea: could a leasing business model also apply to steel? In construction where steel could potentially be recovered from building demolitions, there may be an opportunity to give it a new life, and with it, the concept of circular steel could be looked upon as a standard.

Collaboration is key 

It was clear from the discussion that the challenge of decarbonising the steel sector can only be solved together. As Cate Harris from Lendlease put it, it requires “a collaborative of unlikely allies - groups you wouldn’t necessarily see working together and pulling in the same direction, but when we do, that’s when we have the potential to create a scale of solution and a scale of outcome.”

And while ultimately there needs to be huge investment in net zero steel production, what producers really need is the certainty that the market is there. So collaboration between policy, the market and steelmakers is the way forward. The more buyers there are that want and call for net zero steel, the more confidence it will give producers to invest in its production, which is why SteelZero is such an important initiative for signalling demand.

SteelZero infographic showing how the demand signal can influence policy, investment and production.

Overall, the event made it clear that the journey to net zero steel won’t be without its difficulties, but it also demonstrated how engaged and committed people and their organisations are to finding solutions and leading the way.