The technology shift in electricity generation is well under way. Europe recorded its greenest electricity year ever in 2020. For the first time, more electricity was generated from renewables (38%) than from fossil fuels (37%), according to a joint analysis by Agora Energiewende and the British think tank Ember.

This is not just good news; it is absolutely necessary if we want to stand a fighting chance of staying below 1.5°C of average global warming.

But renewables are only part of the story. We need many more climate solutions to rapidly scale up. One sector in need of attention is steel production, representing around 7% of global CO₂ emissions.

The steel sector is closely tied to the energy transition. Coal is used to generate heat and to make coke, which is critical to the chemical reactions necessary to produce steel from iron ore. This makes steel the largest industrial consumer of coal, which provides around 75% of its energy demand. It’s no wonder that decarbonising steel is fast becoming a priority for business.

I recently chaired a roundtable at Climate Group’s ‘SteelZero: Raising the demand side voice for net zero steel’ summit, hosted by Ørsted. This brought together leaders from across the steel industry to examine the necessary policy mechanisms that can get the steel industry on track to net zero.

SteelZero is a global initiative run by Climate Group (a member of the We Mean Business Coalition) in partnership with ResponsibleSteel. It brings together businesses to speed up the net zero transition of the steel industry. Members, such as Iberdrola, Ørsted, Siemens Gamesa and Vattenfall BA Wind, commit to an ambitious interim target of using 50% low emission steel by 2030, setting a clear pathway to reaching 100% net zero steel by 2050.

By harnessing the collective purchasing power and influence of business, SteelZero sends a strong demand signal to shift markets and policies towards the responsible production of steel.

Time for governments to act
Businesses, be it on the supply or demand side, are critical to creating and deploying the climate solutions we need. But they cannot do it alone. It’s still early days for steel. Business has shown what is possible; it’s now time for governments around the world to implement policies that support and accelerate the transition to net zero steel production and use.

The message from SteelZero is clear. Its recently published global policy position paper outlines six policy principles for governments to support the net zero transition of the steel industry.

Discussions at the SteelZero summit highlighted the extraordinary level of alignment across the industry. With general agreement on what policies need to be adopted, we’re seeing a powerful business voice grow. Through collective ambition and action, steel-consuming businesses are in the unique position to advocate for stronger supportive policies that can accelerate change at the right pace and scale.

A few years ago, I looked up data for emissions reduction pathways of different sectors and the problem of decarbonising steel production seemed intractable. This was due to low levels of technology readiness, meaning that the reductions would have to wait until at least 2035 or later for the needed technologies to become available.

Unexpected progress 
However, something unexpected happened. In 2018, SSAB, LKAB and Vattenfall embarked on a joint venture called HYBRIT. The HYBRIT process replaces coking coal, traditionally needed for ore-based steel making, with hydrogen. The Swedish Energy Agency played an integral role in getting this project off the ground, granting a total of SEK600mn ($62mn) to the pilot plant.

SteelZero then launched in December 2020, setting the tone and driving the demand for responsibly sourced steel. Founding members such as Ørsted, Lendlease and Multiplex joined the call to action and made the SteelZero commitment to accelerate progress.

Fast forward to 2021 and the HYBRIT pilot plant produced samples of low emission steel. A few months later, SSAB announced that it was planning to accelerate its fossil-free steel conversion by 15 years. Talk, models and reports suddenly became real.

With this shift in perception of what was possible, business and governments have started to take note. Beyond announcements, the first examples of products have been unveiled to the public, with a view to having the first commercially available low emission steel by 2026.

HYBRIT demonstrated how business and government can work together and understand their unique roles and added value. It provides governments around the world with a strong example of how to support the scale-up of crucial technologies that can bring fossil free steel to market. A central point of discussion at the SteelZero summit was inspiring questions and ideas on how to enable more partnerships and progressive collaborations.

What also came to the fore was the need to ensure the transfer of technologies to markets outside Europe. India and China are both key markets for the production and procurement of steel. It’s important that both countries create policies that will support the upscaling of technologies, helping to ensure that companies compete on a level footing globally.

We’ll need collaboration between business and government to transform the steel industry. The industry and SteelZero members are ready to act. Now the question is: How will governments also play their part?

The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.

See also New Energy World articles on Renewable energy offers steel sector a way to decarbonise and Can hard-to-abate industries be decarbonised?