Powering the steel transformation

Anna Ekdahl, Director of Energy Intensive Industries for Ramboll, gives her views on the market outlook for lower emission steel and the steps that steel producers can take to get started on their decatbonisation journeys.

What are your thoughts about the findings of Ramboll and Climate Group’s new report: “2024 Market Outlook on Lower Emission Steel and Concrete”?

Anna: My initial thought is that more companies than I anticipated are willing to pay for lower emission steel, which is essential for justifying the business cases for reducing emissions.

However, from an energy perspective I also want to stress how complex and expensive this transition is. The Energy Transitions Commission, for example, recently underlined the need for a $1.1 trillion annual investment in grid infrastructure until 2050 to attain the global net zero emissions objective. And that is just the grid investment side! Then, there are the technical, commercial and environmental complexities, which also need to be addressed.

Already, we see that green hydrogen and green electricity will not be able to meet communicated demands, something that will only get worse in the coming years. It is sometimes easy to communicate ambitions, but when you scratch the surface everything is not in place to back up the claims. It’s important that companies can challenge statements and see through the hype to properly understand risk.

Effectively, what we are looking into is a complete transformation of the entire energy ecosystem to decarbonise the steel industry – so we need to start moving the needle now.

What options exist to decarbonise the steel industry?

Anna: What most decarbonisation projects are communicating right now is wind power and green hydrogen, which is of course a good strategy if it was not for the fact that this energy is currently not available.

The extreme electricity consumption that this transition to hydrogen entails means that a massive increase in electricity production and the power grid is required, which must be financed and realised in a way that is both economically justified for society and does not jeopardise the competitiveness of companies. The magnitude of this change means that there would be significant consequences for society if these hydrogen investments do not materialise or are smaller than planned.

The good news, however, is there are several other energy supply options with risk profiles that are significantly different to green hydrogen. For example, hydrogen production does not solely rely on electricity; it can also be derived from natural gas. And bio-syngas is a third option. Alternatives and risk profiles can vary significantly across regions.