“Green steel production fails to keep up with demand”
According to several authoritative sources - the latest being research provider BloombergNEF - market demand for sustainably produced steel is growing more than production can cover.
That is due to several key factors. First and foremost, as a matter of course, there is a growing global emphasis on sustainability and decarbonization. Industries, including automakers, consumer goods manufacturers, and equipment providers, are setting ambitious targets to reduce their carbon footprint and transition to more environmentally friendly practices.
As a result, these industries are putting pressure on their material suppliers to provide them with low-carbon, recycled, or sustainable materials, with steel being a primary focus. The demand for green steel is particularly high in sectors such as the automotive and transportation industry, where automakers are preparing to face stringent regulations and are keen to showcase their environmental credentials.
The main challenge lies in the fact that several technologies capable of producing green steel at scale are not yet fully commercialized. Despite significant advancements and a growing number of green steel supply agreements announced, green steel production still needs to catch up with the rising demand.
Green steel production typically incurs higher costs when compared to traditional steel production methods: BNEF estimates that, on average, green steel costs 40% more today than “traditional” production technologies. That is partly due to the additional expenses connected with implementing novel production routes, such as hydrogen-based direct reduction or carbon capture and storage. McKinsey speaks of about $4.4 trillion in capital spending needed to decarbonize production over the next 30 years. What’s important, development timelines for new green steel plants are notably long, contributing to the slower ramp-up in production.
According to various sources, the size of the global green steel market was valued between $182.7 and $196.84 million in 2022 and is expected to grow at a CAGR of 123.94%-125.1% between 2023 and 2030.
To meet the rising demand for green steel, the industry must focus on developing and scaling up new technologies, lowering production costs, and establishing long-term agreements with buyers. As private sector demand continues to push for sustainable materials, collaborative efforts are crucial to accelerate production and make green steel more accessible, effectively meeting the increasing global demand for eco-friendly products.
In the picture by Andreas Poznanski: the Duisburg-Nord Landscape Park in Germany, formerly a coal and steel production plant, home to the Thyssen Meiderich Ironworks, now a large public park and cultural center.
