Steelmaking giant ArcelorMittal has announced plans to cut its carbon intensity by a quarter by 2030 from 2018 levels, backed by $10 billion investment over the next decade to help support its transition away from fossil fuels towards greener manufacturing technologies and clean energy sources.
As the firm unveiled its latest financial results July 29, it announced a host of fresh medium-term climate commitments, including plans to work with the Science-Based Targets initiative to set fresh climate goals within the next two years, the achievement of which it also intends to link to its executive pay package. It follows the company’s announcement last year that it intends to target net zero emissions by 2050.
The global steel sector is a major greenhouse gas emitter and is therefore under intensifying pressure to decarbonize, but shifting away from fossil fueled blast furnaces is seen as a major and cost-intensive challenge for the industry.
However, ArcelorMittal said it expected the sector to undergo a major transformation in the coming years, with low carbon steelmaking technologies becoming more competitive than traditional high-carbon manufacturing over time. But it stressed that a combination of policy support and private sector investment was needed to accelerate the transition.
As such, it unveiled a new climate action report, which sets out a vision focused on moving away from coal use in steel blast furnaces and fossil fuel gas for iron production, and shifting towards greater use of scrap metal recycling and renewable energy sources, as well as clean technologies such as hydrogen and carbon capture.
ArcelorMittal CEO Aditya Mittal said steel had a major role to play in the growing green economy as a key material for manufacturing clean technologies such as wind farms, adding that it is also highly recyclable. But he said the sector “can and must go further,” and warned that with COP26 around the corner and a growing clamor for rapid decarbonization “it may be that we will see a swifter evolution of this policy environment than is currently envisaged.”
“ArcelorMittal has been working hard to be at the forefront of our sector in the net zero transition, as we believe not only will this help decarbonize the global economy but will also generate opportunities in multiple aspects of our business,” Mittal said.
Fresh goals announced by the firm — in addition to cutting its Scope 1 and 2 carbon intensity by 25 percent by 2030 from a 2018 baseline — include an increased target for its Europe operations to cutting CO2 by 35 percent, up from the previous goal of 30 percent over the same timeframe.
The company, which previously announced a net zero by 2050 ambition in September 2020, said its new $10 billion investment program would help the firm to deliver on its climate targets, with 35 percent of that budget earmarked to be spent by 2025.
ArcelorMittal is aiming to turn its Sestao operation in Spain into the “world’s first full-scale zero carbon-emissions steel plant” by 2025, which it said would halve the firm’s overall emissions in Spain. It plans to develop a new 2.3 million metric ton hydrogen-powered iron reduction system alongside a hybrid-electric arc furnace powered by renewable energy in order to replace fossil fuels at the site.
The project is envisaged as a precursor to transforming a raft of its other steelmaking facilities across Europe to run on hydrogen technologies, with further investment expected in the decades ahead at sites in Gijon, Bremen, Dunkirk, Eisenhuttenstadt and Quebec.
The company also plans to increase its use of scrap metal in both electric arc furnaces (EAFs) and in coal-powered blast furnace-basic oxygen furnace (BF-BOF) steelmaking, it said.
Other elements integral to the company’s decarbonization plans include the use of carbon capture storage and utilization (CCUS), sourcing more green electricity and offsetting residual emissions where no “feasible technological solution” exists to reach net zero.
Highlighting how much reliance there is in the steel industry for further innovation and investment across industry and the public sector, Arcelor Mittal said its new targets were based on a number of assumptions about how the global economy will change in the years ahead.
It plans to develop a new 2.3 million metric ton hydrogen-powered iron reduction system alongside a hybrid-electric arc furnace powered by renewable energy in order to replace fossil fuels at the site.
These include a fall in the cost of green hydrogen over the next decade alongside government support to help the steel industry transition. The company also said it required CCUS infrastructure to be built at scale, with significant potential earmarked in Europe, the U.S. and Canada.
“These targets reflect the uneven pace of change that is the reality of the world’s decarbonization journey,” Mittal said of the company’s fresh climate goals. “In regions of the world like Europe, where we are observing an ‘Accelerate’ policy scenario, we can be more ambitious — with plans to reduce emissions by 35 percent within the next decade. In other markets we face a situation where being a first mover will result in us being uncompetitive in that market.”
“ArcelorMittal intends to step up our advocacy for policies that support the acceleration of this transition, addressing the fact that both Capex and Opex costs will be significantly higher, at least in the short to medium term,” Mittal added. “Ultimately the goal is to ensure that the technologies that will decarbonize the steel-making process are competitive.”
He also compared the challenges on technologies and costs facing the steelmaking sector today to that which faced renewable energy a decade ago, pointing out that “targeted, reliable and thoughtful policies” has since turned wind, solar and other sources into among the cheapest new sources of electricity today.
“We are optimistic that the same will happen in steel,” Mittal said. “It is too critical a material on so many levels for that not to be the case.”