Last year was the planet’s warmest year on record, according to an analysis by scientists from NOAA’s National Centers for Environmental Information (NCEI)*. The global average temperature in 2024 has already reached a new record of 1.46 degrees Celsius above pre-industrial levels.
If our global greenhouse gas emissions do not change within the next few decades, we might reach levels of 3 to 5 degrees above the pre-industrial average. It is obvious for many scientists and me that decarbonization is not just a goal anymore – it's a critical necessity, requiring companies to invest and implement available and cutting-edge technologies to accelerate the progress of the green transition. We need to move faster than ever, but what is holding us back?
If we take a closer look at the steel industry, in 2023, it reached a market value of $928 billion, producing nearly 2 billion tons of steel. Today the entire industry, both carbon and stainless steel, accounts for 10% of global greenhouse gas emissions. However, by 2050, the emissions need to be cut by 90% compared to 2022 levels in order to reach the ambitious decarbonization targets of many companies. Over the past few decades, this sector has experienced significant transformations: new players have entered the global stage, and both economic and environmental challenges have intensified. At the same time, there is a global focus on developing innovative approaches to decarbonize production processes with a bit of a different decarbonization pathways in each region:
But is carbon removal an essential solution to be implemented alongside carbon reduction? Or is it just a dangerous distraction?
Before answering this question, it's important to understand the context of carbon emissions in the steel industry, and the fact that for every ton of steel produced today, almost two tons of CO₂ (1.89t) is released. This makes steelmaking a fundamentally emission-intensive process.
From looking at our own emissions in producing stainless steel, where we have despite the high amount of alloying components an average emission of 1.52 tons of CO₂ per ton of crude steel (2023), here’s what we’ve learned:
- When we look at our Scope 1 (direct) emissions, it is up to us to enable emissions reduction – and in most areas, solutions are already there. As a stainless steel and Ferrochrome producer, more than 50% of our Scope 1 emissions come from carbon in forms like coal that is used as a reductant in the chrome manufacturing process. These emissions can be reduced by bio-based material or by developing a carbon-free reduction process. The second contributor to our Scope 1 emissions is Liquefied Natural Gas (LNG), which is used to heat furnaces, for example. Electrification is one clear option here.
- When looking at Scope 2 (indirect) emissions, carbon free energy technologies are being rapidly built up, including solar, wind, nuclear and hydro energy. In many countries, fossil fuel energy is still utilized for energy generation. In Europe, the biggest improvements in the energy sector have lately been achieved in the UK, which has decreased emissions by 60% between 2005 and 2017, according to a study of Vieira et al**. Meanwhile, this has improved the least in Germany, which has reduced emissions by 17%. One of the main drivers for this massive reduction compared to the manufacturing sector is the strong regulation from The European Union Emissions Trading System (EU ETS) jurisdiction. Free emission allowances ended in 2013 for the energy sector which drove more technology switches to lower carbon emission energy generation. So, for this scope, in my opinion, no carbon capture is necessary. We instead need to increase the demand for carbon-free energy and find suitable ways to store energy when it is available.
- Finally, in Scope 3 (value chain) emissions, carbon capture is often required due to the limitation of available raw materials. If such carbon free raw materials are not sufficiently available, measures have to be taken to capture carbon emissions. The earlier supply chain solutions are figured out and deployed, the less amount of carbon capture will most likely be required by such companies. However, there’s an urgent need to reduce carbon emissions today – so we can’t necessarily wait for the perfect solution.
So, we need both reduction and removal – but what is the right balance?
The most critical question: Despite carbon capture methods being ready for implementation, why is it not being executed on a major scale?
How can governments and policies support an overarching supply-chain view and reduction of carbon emissions? There are a few crucial areas that can be prioritized:
- Policies that support industrial collaborations encouraging "industrial symbiosis”, with the aim of fully utilize zero carbon containing emissions across industries.
- Strengthen the generation and availability of green energy.
- Expanding global carbon pricing mechanism is pivotal to boost the transition in the steel sector and to give incentive for decarbonization.
- Regulation to influence both green investments and market demand is needed to create a level playing field.
- Both private and public green investment floodgates need to open, and decarbonization should be seen as a long-term investment, including all available technologies in green investments.
The next big technology for Outokumpu in reducing emissions is carbon capture. We’re actively exploring both utilization and storage opportunities for our carbon gases, that will also convert from gray to green as we proceed with our biocoke implementation.
I’m participating in the Carbon Capture Summit in Amsterdam on February 6, organized by the Economist. Hope to meet you there!
Stefan Erdmann, Chief Technology Officer
*) 2024 was the world’s warmest year on record | National Oceanic and Atmospheric Administration