Overcoming Geopolitical and Technological Barriers in the Green Steel Transition
Decarbonising the steel industry is a critical goal to reduce global greenhouse gas emissions, which account for about 7 percent worldwide. Achieving a half reduction in emissions by 2030 requires overcoming significant supply chain and technological hurdles. The reliance on steel scrap recycling is high, with an estimated 85-90 percent of steel recovered from end-of-life sources, but demand now surpasses supply due to limitations in scrap availability. One of the main constraints is the long lifespan of steel, averaging 40 years, which limits immediate scrap supply and hampers rapid decarbonization efforts.
Geopolitical and regional disparities further complicate the scenario. Countries like the US, China, Japan, and extensive regions within the EU hold large scrap reserves but do not necessarily export them, creating imbalance and shortages elsewhere. Restrictive policies, especially in China, aimed at preserving domestic scrap for local use, intensify scarcity and hinder international cooperation. Meanwhile, rising demand for electric arc furnaces, which rely on scrap, strains supply and escalates the challenge of meeting decarbonisation deadlines.
Quality assurance of scrap steel is another obstacle. Contaminants such as copper can compromise the material's suitability, especially for sensitive applications like automotive manufacturing. Electric arc furnaces lack the capacity to remove such impurities effectively, leading to limitations on scrap usage in high-precision industries. Innovations in technology must address both purity and process efficiency to expand the utilization of sustainable scrap steel sources.
Technological innovation is at the heart of the solution. Hydrogen-based steelmaking presents a promising pathway by substituting carbon with hydrogen, reducing emissions substantially. However, this method entails high costs and significant infrastructure demands, including access to renewable energy. Countries lacking abundant renewables may find it difficult to adopt these green technologies without substantial investment and international support. Building scalable, AI-enhanced solutions for real-time monitoring and predictive analytics can optimize resource use, reduce waste, and enable proactive management of supply chain disruptions.
Global collaboration and knowledge sharing are essential for harmonizing efforts across regions. Governments and industry players like Japan and Germany are investing heavily in R&D to advance hydrogen and electric steelmaking, illustrating a collective push towards greener production. Cross-industry and cross-border cooperation will facilitate the dissemination of innovations, mitigating regional disparities and promoting sustainable growth. The integration of AI technologies – such as predictive analytics, computer vision, and automation – can further accelerate progress by improving process efficiencies and providing critical ESG insights.
In conclusion, overcoming the fragmented landscape of supply, technology, and geopolitics will require a concerted effort. Sharing expertise, fostering international partnerships, and deploying emerging AI-driven solutions will be vital in creating a resilient, sustainable steel industry capable of meeting global decarbonisation targets.