I am writing these words a few days after COP26 has ended. Is it a coincidence? Probably. Had I been given the opportunity to write a newspaper article about the steel industry at any given moment in the past few months, my topic of choice would definitely have been decarbonisation. It needs to be said, however, that the attention of the global audience on the COP26 summit in recent weeks confirmed yet again that the need to decarbonise is an issue which needs to be addressed globally.
Although a chemical engineer by education, I have been in the steel industry for most of my professional career. At ArcelorMittal, we like to describe steel as “the fabric of life”. And while I do realise that, more often than not, steelmaking is associated by many with chimney stacks and a significant environmental footprint, I encourage you to close your eyes for a moment and try to imagine your life without steel. Imagine your life without household appliances – a kitchen without a cooker or a fridge. A living room without a TV set. Imagine staying in touch with your loved ones without a mobile phone or computer, or traveling to see them without a convenient means of transport – bikes, cars, trams, buses, trains. Imagine…
The key to low carbon and the circular economy
Steel is already the material of choice due to its lower carbon footprint and infinite recyclability. Indeed, as much as 85-95% of end-of-life steel is currently recycled. This is the circular economy in practice! More importantly, steel has a vital role to play in successful decarbonisation – steel is used in photovoltaic panels, wind turbines, electric vehicles and high-speed railways, and the pipelines that will carry hydrogen to power the economy of the future. Global demand for steel is forecast to increase from 1.7 billion tonnes in 2018 to over 2.6 billion tonnes by 2050. Thus, the innovations which we are able to offer to our customers will enhance their contribution to a low carbon and circular economy. Our steels enable architects and engineers to design building solutions that minimise material use while maximising space, flexibility and end-of-life recyclability. Our body-in-white, chassis and battery pack steel solutions for electric vehicles enable carmakers to extend drive range and enhance safety at the most affordable cost. We also offer steel grades with enhanced corrosion resistance for solar projects in harsh conditions, even in deserts and on water. Zero carbon-emissions steel has the potential to be the backbone of the buildings, infrastructure and transport systems that will enable governments, customers and investors to meet their net-zero commitments. But how do we get to the net zero we committed to reach by 2050?
In our view, the Coronavirus pandemic has accelerated the global debate on climate change. ArcelorMittal not only has a net-zero target for 2050, but has also recently announced plans to create the world’s first full-scale zero carbon-emissions steel plant in Sestao, Spain. During the summer, we raised our goal for reducing carbon emissions in Europe – from 30 to 35 per cent by 2030, from a 2018 baseline. These plans will enable us to be ahead of our sector in the net-zero transition, and we are working extremely hard to ensure success.
In Europe, our strategy at present is largely focused on two pathways: Innovative DRI and Smart Carbon. The success of the former will depend, to a large extent, on the availability of green hydrogen at competitive prices. This is the foundation of zero carbon-emissions through the DRI-EAF route (Direct Reduced Iron-Electric Arc Furnace). Smart Carbon also has the potential to achieve zero carbon-emissions. With the potential to also become carbon-negative, Smart Carbon harnesses bioenergy and carbon capture utilisation and storage (CCUS) – all technologies that the International Energy Agency and the UN Intergovernmental Panel on Climate Change see as critical to achieving net-zero by 2050.
A fair competitive landscape
However, it needs to be highlighted that the speed of decarbonisation will be different for different regions. They will move at very different paces and the level of climate ambition will differ between jurisdictions. In our opinion, the introduction of climate-friendly policies in other regions will be 5-10 years behind Europe. So how can we provide a fair competitive landscape for those who want to be at the forefront of innovations and decarbonise faster, particularly bearing in mind that those companies will have to make large-scale investments and bear higher OPEX costs and that steel, for one, is traded globally? A few things come to mind. Firstly, public support to help innovation and long-term investments. Secondly, access to sufficient clean energy and infrastructure at affordable prices. And lastly, an effective carbon border adjustment mechanism so that steel produced outside the EU, with a much higher environmental and carbon footprint, is not traded in Europe at unfair prices, which renders European steel producers uncompetitive at a time when they continue to invest significant amounts in the decarbonisation of their processes.
At ArcelorMittal, we have a clear roadmap indicating how we want to transform to reach climate neutrality by 2050. It will not happen overnight, but we can say that history is indeed happening in front of our very eyes. Never before has the pace of transformation in the steel industry been so fast. This is a very exciting process, and it creates lots of opportunities for future generations. Just imagine…
SANJAY SAMADDAR, CEO and Chairman of the Board of Directors, ArcelorMittal Poland