No ‘one size fits all’ approach to green steel: AISI’s Dempsey

“Green steel” will not have a single definition or path to success but will vary by product and location, and will change over time, the American Iron and Steel Institute’s (AISI) top executive told Fastmarkets

“‘Green steel’ isn’t one size fits all,” Kevin Dempsey, president and chief executive officer of AISI, said in an interview on Wednesday January 18, during Fastmarkets’ Scrap & Steel North America 2023 conference in Dallas. “Scrap and an increase in electric-arc furnaces [EAFs] will play a big part, but we’ll still need ores, DRI [direct-reduced iron] and other raw materials for a full range.”

“We need to work on scrap, hydrogen, carbon capture, decarbonizing the energy grid — scrap won’t get us all the way,” Dempsey continued. “Places with natural gas will use natural gas, whereas Sweden has plentiful “hydropower,” which it can use to make clean hydrogen” — all of it has a role to play.”

Stepping-stone solutions will be vital and varied

Some processes or raw materials that may be less than ideal in the long run will still play a crucial role in reducing emissions until stronger solutions can be achieved, Dempsey said.

For example, “everyone agrees that ‘green’ hydrogen — produced with no greenhouse gas emissions — is ideal, but no one has solved the scale,” he said.

In the meantime, he said, alternatives such as “pink” hydrogen, which is produced using nuclear power, or “blue” hydrogen, which is produced using fossil fuels but utilizes carbon capture, offer flexible approaches that will enable companies to reduce emissions sooner.

Similarly, while EAFs and blast furnaces (BFs) are often viewed in opposition, “the future is a blend in a lot of respects,” Dempsey said.

While EAFs are largely viewed as the most sustainable option, a full industry-wide conversion is unrealistic anytime soon, he added.

Not all steel types can currently be produced entirely without BFs, and most of the world lags behind the US in developing a reservoir of scrap metal for EAF production, Dempsey added.

Instead, using blast furnaces powered by a cleaner energy grid and using lower-emission raw materials than traditional coke are more immediate steps that are already making an impact, he explained.

“The future will bring traditional aspects of integrated steelmaking along with increased use of EAFs,” Dempsey said. “It’s too simplistic to totally separate the two. The traditional categories are changing, and it won’t be a flip of a switch — it will happen over decades.”

Government policies will shape global differences

Approaches to “green” steel production will vary not just based on the limitations and local availability of materials and processes, but also based on differences in government policy around the world, Dempsey noted.

“The idea of a ‘green’ steel premium is a European concept, and Europe has a more government-direct approach,” he said. “The US has a more market-driven approach: buyers decide what they’re willing to pay for a product.”

As such, he continued, “green” steel in the US will likely find support through the competitive advantage of increased demand rather than by sellers charging a premium.

Additionally, government policies in the US treat steel as part of a more holistic sustainability initiative, Dempsey noted.

“Department of Energy initiatives are focused on the larger scope, not just steel,” he explained.

For example, he added, the US government has offered funding toward regional “hydrogen hubs” — cross-industry initiatives such as the one announced by US Steel in 2022 — to support collaborative production and utilization of hydrogen between energy companies, steelmakers and other relevant entities.

Necessity-driven innovation has already pushed everyone to do more with what they have — for example, finding ways to stretch supplies of raw materials when supply chains from Russia and Ukraine were disrupted by the war, Dempsey said.

Such innovations will lead to more diversity in sustainable approaches, not less, and the US is well-positioned for such changes, he added.

“The US has had to evolve time and again, which keeps us innovative and competitive,” Dempsey said.

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