SPECIAL REPORT: The built environment has developed a taste for sustainable, low emissions steel — but in Australia, the cupboards are relatively bare
In response to rising demand for greener steel, the local steel-making industry is hurrying to clean up its products. The major players are taking steps in the right direction, with big announcements from the likes of Andrew “Twiggy” Forrest and Sanjeev Gupta attracting attention.
Trouble is, on emissions reduction, the steel supply chain faces an expensive, technically challenging low carbon transition and a tight deadline. Steel manufacturing is responsible for around 7 per cent of global emissions and like concrete, its emissions intensity is not just from energy use but also a chemical process in its manufacture.
Low emissions steel technologies have been invented but scaling them from the lab to commercial viability will be extremely expensive. Government funding will likely play a role in the risky early stages, some say, with the transitioning industry a prime candidate for the next wave of green finance.
Even with the necessary cash flows, the steel industry’s transition will take time that some argue the climate emergency doesn’t have. There are low hanging fruit options to reduce the emissions profile of the material, however, such as reusing existing steel frames and stripping superfluous material out of the design.
What’s clear is that Australia has a golden opportunity to capture a portion of the fast-emerging global market for sustainable steel, creating much needed green manufacturing jobs and improving the resilience of supply chains.
There are two main technologies used for commercial steel making: a basic oxygen furnace (blast furnace) and an electric arc furnace.
The basic oxygen furnace technique involves putting iron ore and coking coal (a type of coal with a large carbon content) in a furnace. In the furnace, the carbon monoxide combines with oxygen from the iron oxide contained in the ore. What’s left behind is carbon dioxide and close to pure iron, which is then purified further in other industrial processes and combined with carbon and other elements, such as manganese and nickel, to obtain the desired properties.
The other method uses an electric arc furnace. The electric arc furnace (EAF) process typically uses scrap steel as input and has comparatively lower emissions than the blast furnace method. However, the steel making process doesn’t end in the furnace: it then needs shaping and forming into a final product. Edge Environment sustainability consultant Dr Vaibhav Gaikwad says that electricity is only one of the fuels used in the EAF process. However, using renewable electricity can offer significant reduction in the carbon footprint of the resultant steel.
While the EAF method (with renewables) falls short of zero carbon, it’s less resource and energy intensive than melting iron ore in a blast furnace and importantly, already commercially viable. The Footprint Company’s founder and chief executive officer Caroline Noller says that the electric arc method with recycled steel is roughly 50 per cent less carbon intensive than making steel in a traditional blast furnace with raw materials.
It’s a technology widely used in other parts of the world, including Europe, but Australian steel manufacturers tend to rely on the blast furnace route. While electric arc steelmaking is lower in emissions, ramping up this method is not necessarily the only solution as a high percentage of steel is already recycled and demand for scrap is currently outstripping supply.
Sustainable steel-making tech on the horizon
A promising technology is directly reducing iron ore using green hydrogen – substituting coal or natural gas used in the typical furnace process – and then processing that in an electric arc furnace also powered by green electricity. This “hydrogen direct reduced iron” technology is currently being trialled in Sweden, Japan and Germany.
The other option, which is being developed in the US, is called “direct electrolysis” and involves zapping the iron ore directly with clean electricity.
Both manufacturing pathways are very low in emissions but also incredibly energy hungry, so the economic case for these technologies largely hinges on the availability of low cost renewable energy.
Can we wait for these technologies to come online?
Embodied carbon expert Caroline Noller believes “everything should be up for grabs” to decarbonise the steel supply chain, including the expensive green hydrogen route. She’s worried about the protracted timeframe to commercialise these technologies.
“In terms of timeframe, we sort of lose it. We could run past the point of no return.”
In the short term, Noller says there’s plenty of low hanging fruit to reduce the emissions generated by the material. These options sit further up the waste hierarchy and include stripping unnecessary material out of the design and salvaging steel from existing buildings.
There’s some compelling examples of reusing steel, including Lendlease reusing steel from other sites for the main stadium at the London Olympics. There’s also examples of projects that opted to keep the steel frame of the existing building, such as the ANZ building in Sydney’s Martin Place.
One barrier to this, according to Edge Environment’s Dr Vaibhav Gaikwad is that at the end-of-life of an asset, the properties and type of steel are often unknown. However, some companies are looking at notation systems where all steel items are marked with their different attributes to allow for easier reuse. Digital technologies such as digital twins will also make tracking steel properties easier.
The way to prompt the industry to innovate with reuse and less material-intensive designs is by giving them a reduction target to work to, Noller says.
Embodied carbon targets in action
Matt Williams, principal at LCI Consultants, has first-hand experience with an ambitious embodied carbon target. His engineering firm, alongside Stantec, is delivering engineering services on the high profile Atlassian headquarters project near Sydney’s central station.
Made out of timber and a steel frame, the 40-storey tower is aiming for 50 per cent less embodied carbon than a standard build.
Williams says that steel framing will allow the building to go higher than mass timber’s usual 12 storey maximum.
“That is exciting, using timber and steel together like this.”
He says that in the absence of low emissions steel on the market, the use of timber won’t be an automatic reduction. “What you save in the timber you lose in the steel.”
Another challenge facing a project like this is that Australia’s building and construction industry isn’t well set up to do steel construction, largely due to a lasting historic attachment to concrete and brick. Where steel is preferred over concrete is in tighter sites or when adding extra storeys atop an existing building because it’s lighter per kilogram.
There’s few local contractors proficient in steel construction, he adds, and they are often smaller businesses that might struggle delivering larger projects on their own.
Where the emissions counting begins and ends
When the only readily available steel in Australia is emissions intensive blast iron furnace steel, companies working to embodied carbon reduction targets are exploring their overseas options made from recycled content.
However, this avenue is complicated by the emissions associated with transporting the material from overseas.
The transport emissions won’t necessarily counteract the emissions savings from a greener product, Noller says, and that there’s a lingering misconception about the emissions per ship kilometre. While shipping does create emissions – the global shipping industry is responsible for about three per cent of global emissions – sea freight has a much lower carbon intensity than land freight. She says trucking heavy materials such as steel and concrete is emissions intensive and distance will have a meaningful impact.
Noller says a rigorous life cycle assessment will clear up these numbers and it will become clear whether it is worth shipping the material or not.
She says that the Environmental Product Declarations (EPDs) used to measure the environmental impact, including emissions intensity, of most building materials tend to stop counting at “the door of the last major factory.”
Steel is also highly recyclable and on track to close the loop entirely
A benefit of steel is it is highly recyclable. It’s already the most recycled material on the planet by weight and, given its durability, has long lifespans between each recycle.
The material is also already on the journey towards a completely closed loop lifecycle. Professor Veena Sahajwalla’s Centre for Sustainable Materials Research & Technology (SMaRT) at University of New South Wales has invented a technology that uses old rubber tyres, which contain carbon and other useful materials for steelmaking, as a replacement for coke and coal in an electric arc furnace (EAF). The Polymer Injection Technology (PIT) sees recycled polymers from tyres used as alternate carbon injectants to produce the foaming slag that acts as a blanket over the molten steel during the steelmaking process.
The PIT process reduces reliance on non-renewable materials, and finds a solution for the growing problem of waste rubber tyres, with the ultimate aim of eliminating the need for coal and coke in EAF steel production entirely. It also improves the performance of the slag and the energy efficiency of the EAF steel making process. She says that most resource recovery, depending on the material being recycled, presents an opportunity to reduce the overall carbon footprint of manufacturing because it makes use of the embodied energy in the existing product.
Sahajwalla says that the PIT technology, which is easily retrofittable and inexpensive because it doesn’t involve the complete replacement of existing steelmaking kit, is a sensible starting point to reduce emissions and raw resource consumption in steel manufacturing.
The technology is illustrative of Sahajwalla’s broader resource recovery philosophy that seeks to break down complex and problematic “waste” items – mostly not subject to any recycling – into their raw molecular structure to be reformed into new items, without product sacrificing quality or performance.
Sahajwalla’s confident that there’s enough scrap and waste material available to close the loop entirely on steelmaking. While the focus is currently on large volumes of scrap steel, such as old cars and demolished buildings, she says there’s “more than enough good quality metal in our homes that can be harnessed.”
Anne-Claire Howard, the chief executive officer of ResponsibleSteel, a global organisation that sets sustainable steel standards and certifications, also says there’s no reason steel couldn’t “ultimately be a fully circular product”.
She says that while there’s currently a global shortage of scrap steel, steel production is expected to peak around 2050, according to some estimates.
Michael Parker is Australasia president at MolyCop, a Newcastle-based steel manufacturer that is teaming up with the UNSW researchers to roll the technology out across its global operations.
Parker says that MolyCop is able to offer steel products with a quarter of the emissions of traditional integrated steel makers because it only makes steel in an electric arc furnace and has a renewable power purchase agreement, which covers more than half of its electricity consumption in NSW.
Reducing raw resource use is also a priority for the company. Sahajwalla’s PIT technology, once installed, will help the company kick its reliance on imported alloys and carbon that goes into the EAF and consume up to 75,000 waste tyres a year. The company also remelts the steel cord from these tyres and recycles it.
Parker says the company saw an opportunity to grow its presence in the circular economy and decided to acquire family-owned waste management business JLW Services that specialises in problematic waste streams, including old tyres and mattresses. The company plans to keep expanding the use of waste in its steel manufacturing, and is currently working with Sahajwalla’s team on a new pilot project that involves extracting iron from printer cartridges.
He’d like to see a larger emphasis on upcycling recovered materials locally rather than importing them overseas. Despite the apparent steel shortage in NSW, Parker says scrap is still being exported from the country (but also, in some instances, imported, though why exactly he’s uncertain).
Parker says the company is pursuing a circular business model because it makes good business sense and because it’s also “fundamentally the right thing to do,” with customers and communities expecting companies to improve their practices.
He says the response from customers to the sustainability credentials is positive, “but it’s still got to be cost competitive.”
Let’s try not to fall into the steel-versus-other-materials trap
When it comes to reducing embodied carbon in building and infrastructure, Noller stresses the importance of using the best material for the job that will also get the desired sustainability and embodied carbon outcome.
Steel, for example, has a high tensile capability so “you can get a lot of building for not much material.”
Noller wants to avoid “backing a winner” when it comes to material sustainability.
“It’s a trillion-dollar industry that comes with all these materials, so it’s like beef versus lamb.
“The secret is for everybody to reduce the intensity per unit of all these products. It’s crucial.”
The reality is that if Australia wants to maintain or improve global competitiveness in carbon intensive industries such as steel, it needs to move fast.
“We are rapidly losing out globally and something radical has to be done otherwise all those people who said ‘climate change took our jobs’ will be right because our manufacturing will not be preferred in a global supply chain.”
What other Australian steel manufacturers are up to
The notion of Australia providing low emissions steel to the world has attracted a lot of “positive attention”, says the Grattan Institute’s Tony Wood, director of the think tank’s energy program, with research conducted by Grattan last year noting that Australia has an abundance of wind and solar energy resources to make green hydrogen much cheaper than countries such as Japan, Korea, and Indonesia that don’t have the same renewables resources.
Advocates of the idea include high profile industry figures such as Andrew “Twiggy” Forrest, chairman and founder of iron ore miner Fortescue Metals Group, and steel and aluminium magnate Sanjeev Gupta.
The former used his first of three ABC Boyer Lectures to outline FMG’s foray into green electricity, green hydrogen and green ammonia projects under the banner of a subsidiary, Fortescue Future Industries.
The move, which represents a departure from the company’s core business of mining iron ore and seeks to decarbonise other emissions-intensive industries such as fertiliser and steel, includes building a pilot plant this year in the Pilbara to trial different ways of making low emissions steel. A commercial plant is expected to follow successful trials.
When contacted for this article, the company advised that at this early stage there wasn’t any more information of consequence available about its low carbon steel ambitions that wasn’t already in the public domain.
Sanjeev Gupta is another vocal supporter of a low emissions steel, aluminium and other heavy industries in Australia and abroad, with his company GFG Alliance investing in major renewable projects, including a $1 billion investment in solar power and pumped hydro storage at its Whyalla steelworks in South Australia, to realise his vision of decarbonising his global assortment of steel and aluminium manufacturing assets.
Recently, he signalled interest in installing 3000 megawatts of renewables to power a new green hydrogen steel plant at Whyalla, which has a better chance of going ahead now new financing for the steelworks has been secured following the collapse of major financial backer, Greensill Capital, which threatened the future of the plant and other Australian assets.
InfraBuild, also part of the GFG Alliance, is an integrated steelmaking business with manufacturing plants in Sydney, Melbourne and Newcastle. The company recycles scrap steel in its two electric arc furnaces, with plans to power its operations with renewable energy – substantially lowering the carbon intensity of its recycled steel products – as part of the Alliance’s broader commitment to net zero by 2030.
While the likes of Forrest and Gupta inject some welcome energy into the low emissions steel movement, they aren’t the only ones assessing their decarbonisation options.
In 2018, steel giant BlueScope signed what was then the biggest power purchase agreement in country.
On the not-yet-commercialised low emissions steel technologies, BlueScope chief executive Mark Vassella told The AFR that the company would be a “fast follower”. The company attracted some criticism for the decision. It’s since hired a dedicated climate change chief executive, Gretta Stephens, to drive its decarbonisation agenda.
The Fifth Estate requested an interview with Stephens but was told she was too new in her role. InfraBuild also did not respond to a request to interview a spokesperson for this feature.
An industry trying to “ride the wave”
The Grattan Institute’s Tony Wood says the Australian steelmaking industry is carefully negotiating the incoming transition towards greener supply chains. He’s observing an industry trying to “ride the wave” and not get too far ahead nor behind because both extremes will cost them a lot of money.
“You need to stay on the wave otherwise you drown, I think that’s what they are all doing.”
Wood says that a combination of demand and supply will drive the uptake of low carbon technologies.
On the supply side, the question of technology has been solved and the challenge now is to make it cheaper. He notes that steel manufacturing equipment is bulky, capital intensive and has long lifespans so transitioning the industry isn’t going to happen overnight.
With such a cavernous gap between the laboratory and commercial reality where early movers are hit with a steep penalty because the costs come down rapidly with each pilot project, Wood will be looking at the government to cover the difference.
“That’s where we are now.”
With the fate of low emissions steel somewhat intertwined with the nascent green hydrogen industry, its promising that both state and federal governments are showing interest – the federal government is aiming for clean “H2 under $2’” – in what remains a tough nut to crack. Requiring mammoth amounts of renewable energy to make and being difficult and expensive to store and transport, green hydrogen remains out of reach. (But beware of blue hydrogen – made from gas and therefore not low in emissions – that’s lurking beneath the hydrogen rhetoric).
Beyond releasing roadmaps and appointing ministers, Wood says what’s really needed is financial support from governments. The Australian Renewable Energy Agency (ARENA), which provides grants for fledgling renewable energy projects, has been backing early stage clean hydrogen projects since 2016 and recently allocated $103 million (with conditions attached) towards three pilot green hydrogen projects, one in Victoria and two in WA.
The Fifth Estate understands that green hydrogen is also on the Clean Energy Finance Corporation’s (CEFC) radar but will need to be in the commercial phase to fall within its finance remit.
Monica Richter, who heads up WWF’s Low Carbon Futures Program, says green steel and other hard-to-decarbonise industrial processes are also prime candidates for the next wave of green bonds and sustainability-linked loans
ResponsibleSteel’s Anne-Claire Howard agrees but is concerned that the finance sector will actually abandon steel in a bid to shed carbon intensive assets.
“The danger is if the finance sector steps away when what we want is to inject significant amounts of money to allow the sector to decarbonise quicker.”
She says her organisation is trying to engage the finance sector to use the ResponsibleSteel standard to help derisk steel manufacturing assets.
The demand side
There’s also movement afoot on the demand side to drive uptake of low emission steel and other materials.
There’s a lot of noise coming from the automotive sector and the built environment is also showing interest. The Green Building Council of Australia will incentivise the property industry’s engagement be rewarding embodied carbon reductions in the latest update to the Green Star rating tool. Individual companies are also doing their bit, such as Lendlease when it signed up as a member of ResponsibleSteel in 2019.
The NSW government is also looking to remove unnecessary steel and concrete to achieve the emission reduction targets set for large infrastructure projects.
The big demand side challenge is stomaching the premium, although as Wood points out, in the case of steel its often only a small component of a car or a building so the additional costs are often minimal.
Richter says steel faces many of the same hurdles as other building materials in the race to reduce embodied carbon, such as a low appetite for risk across the industry. She says sustainability in general is often value-engineered out or not specified in the tender documents to start with.
ResponsibleSteel and the global challenge to decarbonise steel
Howard says that the ResponsibleSteel standard purposefully does not provide a prescriptive path to decarbonisation. At the level of an individual steelmaking site, certified companies must present a science based target, interim targets and a plan of action to meet them.
These requirements intentionally do not exclude companies that aren’t already performing well, she says, because of the huge disparities each company faces on the decarbonisation journey (some use a blast furnace, others have an electric arc furnace but are in a country with a dirty grid, and so on).
“Our strategy is about promoting different pathways to decarbonise.”
The ResponsibleSteel label is also about promoting steel that is holistically sustainable.
“Everyone is making their own definition of what is ‘green steel’, some are using the label for steel produced the same way as the day before but with offsets.”
Similarly, steel that is super low in emissions won’t be certified if it was made using labour that didn’t abide by basic human rights.
While reducing emissions and reliance on raw materials are the some of the material’s top sustainability challenges, Howard says they aren’t the only ones.
Other sustainability challenges for steel, she says, are often found further up the supply chain in the mining of iron ore. She says this industry struggles with water stewardship and safety issues, although it’s improved a lot over the course of a century.
Australia has a lot to gain
The local steel industry has an uphill battle to decarbonise but as Richter points out, the industry and Australia at large has a lot to gain.
“I think one of the important stories out of Covid is we need to be onshoring and rethinking our supply chains, we can no longer rely on just intime manufacturing.
“And it’s not just Covid, there’s also geopolitics to consider.
“We do need to have steel manufacturing industry here in Australia, how do we work on that demand side and supply side to make that happen.”
While she recognises it’s not as simply as “ripping out existing tech” in the steel mills and re-piping them, she’s also cognizant that we need decarbonisation urgently and says we need to start scaling the new technologies immediately.
“I don’t think the climate has the time to wait for the 2030s for that tech to be proven.”