Major steel companies are currently introducing ‘green steel’ materials. Even though each company has secured several contracts, challenges remain, including dissemination in the public sector and the establishment of global rules.

‘Green Steel’ is recognised for emitting less carbon dioxide (CO2) during production. Following Kobe Steel, which pioneered this system, JFE Steel announced its first order in June 2023, and Nippon Steel followed suit in September 2023.

Certified by a third-party organisation using the ‘mass balance method,’ which allocates each company’s actual CO2 emission reduction to specific products, green steel products maintain the same functions and quality as conventional materials but are priced higher due to the added ‘environmental value.’

Some manufacturers use Nippon Steel’s green steel materials to manufacture boxes for sweets, etc. Picture courtesy of Soba Can Seiki

Kobe Steel has secured contracts for automobiles and redevelopment plans. Nippon Steel has received orders ranging from candy cans to heat exchangers, and JFE has received orders for thick plates used in office buildings. Nippon Steel and JFE have also committed to using electrical steel sheets for overseas transformers.

JFE’s project involving thick steel plates for shipbuilding is particularly noteworthy. In addition to delivery, they have developed a model in which the increase in steel costs is shared as ‘environment value’ with eight domestic shipping companies that utilise the steel.

According to JFE, ‘There is no example in the world of a social distribution model where the burden is shared broadly throughout the supply chain.’ The company itself participates in the burden as a shipper of steel materials, making it a convincing framework.

Green steel is still in its infancy, and major steel companies are striving to gain public understanding and government support. In October 2023, the Japan Iron and Steel Federation formulated detailed guidelines for green steel materials. The amount of greenhouse gas (GHG) reduction available to customers who purchase the same steel material with a certificate showing its reduction performance differs from the carbon footprint (total emissions from manufacturing to disposal), and it has been stipulated that certificates alone without products will not be distributed.

The definition of the steel material and ensuring transparency are also under discussion at the World Steel Association, which aims for standardisation, stating, “We want to lead international efforts based on detailed guidelines.”

“Conversely, a growing voice in the domestic industry, led by steel, suggests the need for an incentive system to expand the market for green products.”

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Steelmaking is responsible for nearly three times the emissions of aviation. Companies are trying to transform the industry.

With Rio Tinto, BHP and BlueScope Steel announcing they are now working together on making Pilbara iron ore suitable for direct reduced iron (DRI) processes that don’t use coal, it is becoming even clearer that carbon capture utilisation and storage (CCUS) will not play a meaningful role in steel decarbonisation. BHP and Rio now also have even less reason not to set measurable Scope 3 emissions targets.

The steel technology transition away from coal is accelerating with global steelmakers increasingly turning to scrap steel recycling and DRI as alternatives to blast furnaces.

The steel company SSAB plans to bring a bigger volume of green steel to the market by 2026. ArcelorMittal, a global steel giant, also has green steel projects in development, including a steel mill in Portugal that aims to have a zero-emissions production process in place by 2025. But it will be difficult for the entire industry to transform.

China, which produces the majority of the world’s steel, isn’t moving as quickly to transition to hydrogen as Europe.