July 2021
The two main methods of steelmaking vary greatly in terms of carbon emissions. The typical blast furnace and/or basic oxygen furnace (BF-BOF) has a variety of raw materials such as iron ore, metallurgical coal, limestone and recycled steel. This method also includes the preparation of raw material in the likes of pelletisation and the sintering of iron ore. However, the majority of CO2 emissions in the steelmaking process is derived from the iron ore reduction process in the blast furnace.

The production of one tonne of steel using BF/BOF method on average emits up to 2.2t of CO2. Steel made via an electric arc furnace (EAF) naturally has few raw material inputs, ideally mainly scrap steel and uses electricity to melt the recycled steel. Since steel scrap has already been reduced there are low CO2 emissions associated with the recycled process resulting in lower CO2 intensity.

Depending on the plant facilities DRI or hot metal can be used along with additives such as, alloys to adjust the chemical composition. Typically, the production of one tonne of steel using a scrap based EAF which includes both direct and indirect costs, on average emits as little as 0.4t of CO2

AME estimates average Scope 1 carbon emission in 2021 from a sample of BF/BOF steel mill is approximately 1.63t of CO2. AME estimates average Scope 1 carbon emissions in 2021 from a sample of DRI/HBI facilities is approximately 0.42t of CO2. Lastly, AME estimates average Scope 1 carbon emission in 2021 from a sample of EAF steel mills is approximately 0.22t of CO2. To put this into perspective, AreclorMittal’s total average carbon emissions for an EAF is approximately 0.66t of CO2.



For every ton of steel produced there is on average approximately 2t of carbon dioxide equating to around 8% of global carbon emissions. The key drivers for changes in technology will be scrap based electric arc furnace (EAF) and hydrogen based direct reduced iron (DRI) facilities. Also, major roles will be played by technologies, such as carbon capture, utilisation and storage (CCUS).

The technology change via the scrap based EAF method assumes there will be sufficient supply of high-quality steel scrap available. With the increasing use of steel suggesting demand for steel will exceed the scrap availability. The increasing share of EAF will play a key role in decarbonising the steel industry. Countries with inadequate supply of high-quality scrap will need to rely on other technologies such as optimising DRI and EAF. Large scale EAF’s are likely to become more common, however scaling of facilities and general productivity require improvement.

Another challenge of sourcing scrap are quality restrictions due to impurities (copper) or nitrogen contamination during melting. The major challenge facing the use of hydrogen based DRI is its cost, which are currently substantially high. The assumption of surging carbon prices and decreasing hydrogen costs are critical to ensuring the economic viability of pure hydrogen-based steel production.

The production of DRI powered with natural gas is common and large-scale operations work best in certain markets which benefit from an abundant supply of cheap natural gas. Supplementing to hydrogen process is achievable with existing DRI facilities however the total cost is currently too high, and the technology is yet to be proven on a large scale.   

CCUS technology is ideal for the steelmaking industry when it is not possible to avoid the generation of off-gasses altogether, the CO2 can be captured, utilised to chemicals, or stored underground. CCUS can lower carbon emissions as these facilities can be retrofitted to units like blast furnaces and natural gas based DRI to reduce carbon emissions.

Nippon Steel has developed Energy Saving CO2 Absorption Process (ESCAP) located at its Muroran Works. Completed in 2014 the technology uses hot-blast stove exhaust gas from steel works as the source of CO2. Nippon Steel have several projects under development relating to CCUS, two of these are, CO2 to Para-xylene and CO2 to olefin and kerosene. 

The International Energy Agency (IEA) suggests Net Zero Emissions (NZE) by 2050 can be achieved in iron and steel production if there is a major shift from coal to low emissions electricity (renewable energy). Under IEA’s scenario global CO2 emission from the iron and steel industry will fall from 2.4Gt in 2020, to 1.8Gt in 2030 and 0.2Gt by 2050. In particular, the assumption of EAF and scrap share of production means 24% in 2020, 37% in 2030 and 53% in 2050.

A critical factor supporting these assumptions rely heavily on renewable energy generators to increase substantially. Thus, the share of renewables in total electricity generation globally increases from 29% in 2020, to 61% in 2030 and 88% in 2050.

AME’s technology forecast for use of EAF for steelmaking has, 32% in 2025, 34% in 2030 and 35% in 2035. Thus, from the period of 2020 to 2035 the overall growth change for EAF steelmaking is only 10%. If IEA’s scenarios are going to be achieved significant investment is required in both steelmaking technologies and renewable energy.



Asset Investment Cycles

Average investment cycles for DRI facilities and BF/BOF are approximately 20-25 years, although capital refurbishments will typically extend their lifetime beyond this. Thus, any future new investment in BF/BOF technology will be expected to achieve a reasonable return for shareholders up-to 20 years into the future.

It is common practice for companies to apply BF/BOF efficiency programs to decrease carbon emissions. For instance, optimising the BF burden mix my increasing the iron content of raw material to decrease the usage of coal as a reductant. Also, increase the use of fuel injection via pulverised coal injection (PCI), natural gas, plastics, biomass or hydrogen. 


Decarbonisation Steel Initiatives

In March 2021 ArcelorMittal launched its XCarb Series of steel products providing consumers options for low carbon steel. The three initiatives are XCarb green steel certificates, XCarb recycled and renewably produced and XCarb innovation fund. The XCarb green steel certificates apply to ArcelorMittal Europe flat operations where the company is investing in a broad range of initiatives to reduce carbon emission from the blast furnace.

These methods have the aim to reduce coal use via Torero - which transforms biomass into bio-coal. Also, Carbalyst - which captures carbon-rich blast furnace waste gas and converts it into bio-ethanol, which can be used to make low-carbon chemical products. The end result provides considerable CO2 savings, which can be passed onto customers in the form of the steel industry’s first-ever certification scheme. This will enable consumers to report a reduction in their Scope 3 carbon emissions. The company expects it will have about 0.6Mt available by the end of 2022.

 The XCarb recycled and renewably produced are steel products exclusive made via the EAF using scrap steel. The consumer is offered both flat and long products with steel made using renewable electricity with a low CO2 footprint of 0.3t when metallics are 100% scrap. XCarb Innovation Fund means ArcelorMittal will invest up to US$100m annually in ground-breaking technologies that will accelerate the steel industry’s transition to carbon neutral steelmaking.

In June 2021, the XCarb innovation fund invested an initial US$10m towards Heliogen, a renewable energy technology company which harness sunlight from an array of computer-controlled mirrors (heliostats) that collect and concentrate sunlight towards a purpose-built tower and receiver. ArcelorMittal and Heliogen have also signed a Memorandum of Understanding (MoU) to evaluate the potential of Heliogen’s products in numerous ArcelorMittal’s steel facilities.    

Three Swedish companies – SSAB, LKAB and Vattenfall - set up the initiative for an entire fossil-free value chain from mining to finished steel, launched back in 2016. The solution towards fossil-free steel is via Hydrogen Breakthrough Ironmaking Technology (HYBRIT). The method makes steel from its hydrogen-reduced iron from the HYBRIT pilot plant in Lulea, Sweden, with capacity of 1.3Mt. 

SSAB expects the HYBRIT plant to commence operations in 2026 and aims to supply the market with fossil-free steel at a commercial scale. Volvo will be the first car maker to team-up with SSAB to explore the development of fossil-free steel in the automotive industry. The first concept vehicles will be ready towards the end of 2021 and plans for smaller scale serial production is expected during 2022.

A recent development in late June 2021 for the HYBRIT pilot plant involved SSAB, LKAB and Vattenfall producing the world’s first hydrogen-reduced sponge iron at a pilot scale. This demonstrates the possibility to use fossil-free hydrogen gas to reduce iron ore instead of using the traditional coal and coke to remove oxygen.

The pilot plant produced 100/t of sponge iron, with a reduction of carbon emission by approximately 90%. The purpose is to use fossil-free feedstock and energy in all aspects of the value chain to eliminate carbon dioxide emissions from the steelmaking process. The technology will have almost no carbon footprint and has the potential to create further demand from competitiveness.