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This Swedish company wants to solve the high climate cost of steel

At a steelworks in Lulea, Sweden, workers make the world’s most essential building material the old-fashioned way: pile iron ore and coke, a kind of fuel derived from coal, into a huge blast furnace, heat the mixture to enormous temperatures, then ” tap” the cauldron of molten metal, which sends a stream of white-hot cast iron – and showers of sparks – swirling down a sluice.

But less than a mile away, factory owner SSAB is piloting a less spectacular steel-making process at a new facility. “It doesn’t look that spectacular,” says Martin Pei, executive vice president and chief technology officer at the Swedish steelmaker. “You don’t see much either, because everything is controlled automatically.”

It’s spectacular in a different way, though. Traditional blast furnaces emit huge amounts of CO2. But SSAB’s HYBRIT pilot plant, built in conjunction with Sweden’s state-owned mining company LKAB and state-owned power company Vattenfall, only emits water vapor when refining iron ore. Last summer, the plant produced iron for the world’s first fossil-free steel, paving the way to decarbonize one of the world’s dirtiest industries.

Steel is one of the most important materials in modern society, entering everything from buildings and bridges to cars and bicycles. It is also essential to build renewable energy infrastructure like wind turbines, which the world needs to phase out fossil fuels. But its manufacture is an incredibly polluting process, with the industry responsible for 8% of global CO2 emissions. Tackling these emissions is one of the most pressing and difficult challenges of the global energy transition.

With the success of the HYBRIT project, SSAB CEO Martin Lindqvist set the company on perhaps the most aggressive decarbonization plan in the industry, increasing production of green steel and switching to electrical steel to reduce most of the company’s emissions from its operations in Sweden and Finland by around 2030. Their green steel business might have been considered a pipe dream just a few years ago. “Our industry colleagues, they were just [shaking] their heads, and we thought we were naïve at best,” says SSAB CEO Martin Lindqvist. “Now everyone seems to think that’s the right way to go.”

About 75% of the world’s steel is made using blast furnaces like the traditional one in Lulea, which uses huge amounts of fossil fuels to refine iron ore. Running this process without fossil fuels, especially coke, is a serious metallurgical challenge. Iron is one of the most common elements on the Earth’s surface, but it is found almost entirely as iron ore, where the iron atoms are tightly bound to oxygen. The task of turning this ore into iron, and then into steel, first involves removing these oxygen atoms. In a blast furnace, the carbon monoxide generated by burning coke does this job, extracting oxygen from the iron ore to form carbon dioxide, which is then released into the atmosphere. SSAB’s HYBRIT plant accomplishes the same task using hydrogen separated from water using renewable energy. For this hydrogen-based reduction to work, hydrogen is heated to approximately 1,600°F with renewable-generated electricity, then injected into a furnace containing iron ore pellets. Hydrogen combines with oxygen in iron ore to form water vapor, leaving behind what is called sponge iron which can then be smelted with recycled scrap metal to make steel .

SSAB and its partners began work on the project in 2016. At the time, Lindqvist says, most other steelmakers trying to go green were talking about diverting the carbon dioxide produced during steelmaking and burying it under earth, a process known as carbon capture and storage (CCS). “For us, CCS was giving a bandage to a patient with a broken leg,” says Lindqvist. “If we have the chance to really fix the root cause of the real problem, why not do it?”

SSAB, LKAB and Vattenfall spent around $2 million investigating hydrogen steel technology, and in 2017 they achieved one of their first successes. “I still remember when I held that first piece of fossil-free steel made in a lab in Stockholm,” Lindqvist says. “I thought, ‘This might work.’ Lindqvist and other executives then approached their company boards and asked for $160 million to build a pilot plant to further develop the technology. If this trial was successful, the next step was to build a full-scale production plant.

Last August, SSAB used the pilot plant to produce its first emission-free steel. The workers involved in the process made a video documenting the effort. “When I saw this video…I almost had tears in my eyes because they were so proud,” Lindqvist says. “They felt we were doing something very important and part of a solution.”

With the success of HYBRIT, SSAB is moving forward with plans to expand its green steel process to one million tonnes per year by 2026. But there are significant hurdles to a similar ramp-up for other steelmakers around the world. For one thing, green steel costs about 25% more to manufacture than its conventional counterpart, according to RMI, a climate think tank. Some steel buyers, such as automakers, have been keen to purchase slightly more expensive “green steel” in an effort to reduce emissions from the value chain of their products. Volvo, for example, made the world’s first vehicle using steel completely without fossil fuels. from SSAB last October. But some analysts doubt the broader market of steel buyers is willing to pay more.

Another problem is that the method of making green hydrogen steel only works with a very high-grade kind of iron ore, which not everyone uses – although companies researching the technology say they are also developing ways to use lower-grade ores. There is also an international dimension: although policies in Europe and the United States are helping to facilitate a transition to zero carbon steel, the biggest actor remains China, which produces half of the world’s steel, in largely in coal-fired blast furnaces. “China is still a bit of a mystery box,” says Thomas Koch Blank, director of RMI. “China has very high top-down aspirations [to decarbonize steel]and it’s a bit difficult to know how quickly they trickle down to real market politics.

There is also the simple fact of knowing how many things have to change in such a short time. The world produced almost 2 billion tonnes of steel in 2021. Even if SSAB decarbonizes all of its furnaces, this will only represent just under half a percent of global annual production. “Things are moving very quickly,” says Domien Vangenechten, policy adviser at the European climate think tank E3G. “But it is far too early to say that we are on the right trajectory towards net zero emissions in the steel industry.”

Still, says Vangenechten, the past three years have been “remarkable” compared to what they were before. SSAB is not the only company leading this change. Swedish startup H2 Green Steel, for example, also aims to commercialize hydrogen-based steel production in the coming years. What is unique about SSAB is that they have been in the steel business for over 140 years, an anomaly in a world where many traditional companies tend to do whatever they can to delay climate action. And while the conventional climate narrative has been that polluting sectors only change when outside disruptors like Elon Musk or Engine No. 1 shake things up, Lindqvist, SSAB’s CEO since 2011, is a veteran of the steel world. , having worked in the company. for nearly two and a half decades.

These facts could be an exception that confirms a rule concerning old and polluting industries. Or maybe it’s a signal that these companies actually have more capacity to change than their leaders assume, if they decide to act in the moment. For Lindqvist, the decision to pursue radical decarbonization came partly as a cold business plan and partly because it was the right thing to do. “Everyone has a responsibility to reduce emissions,” he says. “But as CEO of a major carbon dioxide emitter, I have a great responsibility.”

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Write to Alejandro de la Garza at [email protected]