Report: Green Steel, The Clear Path Forward
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In 2022, global crude steel production was 1.9 gigatonnes (Gt) and contributed 5% to 7% of the anthropogenic CO2e generated annually in the world. On average, production of one metric tonne (mt) of steel generates nearly 2 mt CO2, and this footprint would need to decrease to 0.2 mt CO2 to limit global warming to 2℃ by 2050 as stated in the 2015 Paris Agreement. Steel decarbonization discussions gained traction only 18 to 36 months ago, while historical innovation in iron and steelmaking focused on operational efficiencies and new types of steel. Decarbonization pathways clearly allow for the production of low-carbon steel but are dependent on the adoption of renewable energy, green hydrogen, carbon capture, and scrap use. Research funding, government grants, and policy initiatives lag behind other cleantech sectors. However, recent US and European development of financial incentives are helping pivot the steel industry toward a lower CO2e future.
Today’s Steel Industry
Globally, 71% of steel is produced via a blast furnace - basic oxygen furnace process (BF-BOF) which reaches temperatures of 1650°C. The BF-BOF process produces 2.3 mt CO2 per mt steel on average. Emissions come not only from high heat requirements but also from reducing agents required to convert iron oxide to iron metal. These often include coke, coal, and natural gas. Direct reduction-electric arc furnace process (DRI-EAF) plants comprise 24% of steel production, which produces an average of 1.65 mt CO2 per mt steel on average. In the US, 67% of steel is produced using the DRI-EAF process. The most sustainable form of steel production today (5% of the market) uses scrap metal with EAF, which produces just 0.7 mt CO2 per mt steel on average because it does not require reducing agents.
A Clear Path Forward
Likely due to the steel industry’s recent focus on decarbonization, this report identifies fewer startup and growth companies than SEP reports for other cleantech sectors. However, the list of such companies does not include those developing hydrogen production and use technologies, deploying renewable power (or innovating next generation technologies), or implementing industrial carbon capture. These topics are discussed in this report but covered in detail in other SEP reports and systems including lists of applicable startup and growth companies and market models.
Due to the importance of hydrogen to the decarbonization of the steel industry, highlights from SEP’s analysis and models of the hydrogen market are covered. SEP’s North American Hydrogen Market Model identified a 13.91 million mt annual hydrogen market valued at over $15 billion that is almost entirely produced by converting natural gas to hydrogen and CO2 (about 2-3% of the North American carbon footprint). That market, composed of 165 merchant production plants and 632 end-use industrial facilities, will need to decarbonize, and new low-carbon production of hydrogen will be needed to support the use of hydrogen by new industry segments such as the steel industry. SEP’s Hydrogen Supply Chain Database identifies 1,626 global companies that participate in the hydrogen ecosystem, in addition to end-users and producers of hydrogen. A high-level breakdown of those companies by type is presented.
The smaller number of companies specifically developing technologies or other solutions to decarbonize steel (in contrast to other cleantech sectors) is likely to grow as the steel industry further pivots toward decarbonization. Examples of pathways for decarbonization include:
Transitioning from BF-BOF to a DRI-EAF process can reduce emissions by 30%.
Implementing green hydrogen for iron oxide reduction (use of hydrogen as a reducing agent) can decrease CO2e in DRI-EAF processes by 91% and CO2e in BF-BOF processes by 21%.
Implementing carbon capture could reduce emissions by up to 65% at a cost of $95 to $191 per mt steel. Learn more about direct air carbon capture and industrial carbon capture here.
Development of new steel substitutes and lower weight types of steel, new energy management and process methods, and new breakthrough technologies.
Other New Technology
New technologies useful in decarbonizing steel can be split into two categories: Generation 1 (can be implemented now) and Generation 2 (needs more research and development prior to implementation).
Generation 1 includes using low carbon coke reducing agents, artificial intelligence tools, heat reuse, and reuse of byproducts. This also includes new steel alloys and types of steel for lightweighting, which offer lower CO2 emissions per application (e.g., automotive).
Generation 2 includes hydrogen-reducing agents, carbon capture, steel substitutes, solid and gas hydrogen-rich fuels, and breakthrough technologies like molten oxide electrolysis, flash ironmaking, and more.
One of the most interesting steel substitutes is high-strength compressed wood. These products are three times as dense as traditional wood with just 20% of the thickness. This technology area has received many SBIR and ARPA-E grant awards compared to other green steel technologies.
INVESTMENT OPPORTUNITIES
SEP found 53 startup and growth companies and 163 investors for Green Steel. The median company is 9 years old, has 28 employees, and $14 million in trailing twelve month revenue (TTM). 11 SBIR and STTR awards and 2 ARPA-E awards were allocated to these companies by the US government. Of those 53 companies, SEP identified 12 companies to be the most interesting. They operate mainly in the Industry Edge and Designed Environment cleantech sectors as defined by SEP. Additional data is presented that tracks investment trends by technology area, time period and stage of funding.
Further, SEP evaluated research trends associated with green steel, hydrogen for steelmaking, and other topics. Research institutions with the leading number of publications and publication citations were identified as well as associated time-based trends. This analysis provides a starting point for identifying and capturing new IP.
PURCHASE THE REPORT
The Green Steel Topic Report includes:
A 213 page report in slide deck format.
A global database of startup and growth companies (with a US focus).
Two hours of individualized support from the SEP team.
Find more details, including an executive summary, and purchase the report on the SEP Marketplace here: https://www.saoradh.com/marketplace
ABOUT TOPIC REPORTS
Topic reports explore cleantech investment spaces with the aim to calibrate investors, uncover opportunities, and identify possible solutions to Solving Climate+ by 2050. SEP produces topic reports once or twice per quarter to gather data and insights important to evaluating key cleantech investment spaces as part of our Innovation Flow Reporting (IFR) service. Recent reports include BattRe (lithium-ion battery recycling), Biochar, Bioplastics, Clean Food, Concrete and Cement, Desalination, Direct Air Capture, Solar Photoconversion, Nitrous Oxide, and Refrigerants.
ABOUT INNOVATION FLOW REPORTING
SEP’s Innovation Flow Reporting (IFR) service is designed to illuminate innovation hubs and identify and capture the best cleantech commercialization opportunities for SEP and our corporate clients. More than just market research, Innovation Flow Reporting delivers actionable information. IFR uncovers new cleantech opportunities for corporate venture capital offices, innovation programs, product development teams, and R&D departments. We know it works because we use it to drive our investing.
ABOUT SAORADH ENTERPRISE PARTNERS
Saoradh Enterprise Partners (SEP) is a cleantech venture capital and research firm based in Boulder, Colorado. SEP partners with innovators, entrepreneurs, and corporations to find solutions at the magical intersection of science (what’s possible), finance (what’s bankable), industry (what’s needed), and planet (what matters). Learn more at www.saoradh.com.