The international shipping sector could help meet its climate goals by embracing ‘green’ steel. Other sectors being urged to clean up their act are construction and shipbuilding.
New data from Lloyd’s Register Maritime Decarbonisation Hub reveals that the global shipping industry stands to save 776 million tonnes of CO₂ emissions between 2024 and 2050 by switching to more sustainable hot rolled steel – which represents over 80% of the tonnage used in shipbuilding.
Total steel demand for new vessels is forecast to hit 17.5 million tonnes this year and is expected to reach 20 million tonnes by 2031 and 22 million tonnes by 2035. Demand is projected to exceed 30 million tonnes by 2040.
Calls for low carbon steel
The global steel sector is responsible for roughly 10% of global GHG emissions. A growing portion of the material it uses comes from scrap. The US is leading the way, being the country using the most scrap in steelmaking and with 70% of its steel produced in electric arc furnaces.
Moreover, leading producers and ship owners have outlined a long-term vision for ‘green’ steel. For example, A.P. Møller-Mærsk and CIMC TCREA, the steel buying division of a major container manufacturer, recently committed to using 50% ‘low carbon’ steel by 2030. They joined the global initiative SteelZero to call attention to the issue.
By harnessing their collective purchasing power and influence, supporters hope to send a strong signal and shift global markets and policies towards responsible steel production. Those advocating for SteelZero aim to buy and use 100% ‘net zero’ steel by 2050.
World crude steel production for the 71 countries reporting to the World Steel Association was 145.5 million tonnes in November 2023, a 3.3% increase compared to the same month a year before.
The organisation says that every tonne of scrap steel used for production avoids 1.5 tonnes of CO2 emissions. It believes current scrap steel availability is roughly 400 million tonnes and this is expected to grow to 900 million tonnes by 2050, falling significantly short of the current demand of 1 800 million tonnes.
Even with increased scrap steel availability, approximately 60% of global demand will still be met by blast furnace-basic oxygen furnace production in 2050. That is, unless there are major material or circularity breakthroughs.
Closing the loop hinges on joining the two worlds of production and recycling more in China, Japan and South Korea. The last accounted for almost 20% of total steel demand in 2021. Ship recycling mostly takes place in Bangladesh, India, Pakistan and Turkey which represents a disconnect between scrap availability and demand.
One positive development is that Japanese shipping company Kawasaki Kisen Kaisha is building the world’s largest vessel relying exclusively on low carbon steel. It has commissioned JFE Steel Corporation to construct the ultramax bulker using its JGreeX green steel.
What does the future hold?
CO₂ emissions and direct CO₂ emission intensity from the steel sector need to fall by around 25% by 2030 to hit net zero by 2050. This represents a 3% decrease per year during the current decade, according to the 2023 Breakthrough Agenda, a report recently published by the International Energy Agency, the International Renewable Energy Agency and the UN Climate Change High-Level Champions.
Transformation is feasible only if the industry sets ambitious standards, for example by switching from making iron ore in EAFs instead of coal-powered blast furnaces. The former generates only about 30% of the world’s steel.
Certain regions, notably parts Asia, Latin America, and Africa, are struggling to turn to urban mining for their steel needs.
‘These markets are responsible for most of the global steel production, with demand increasing as societies grow wealthier,’ SteelZero points out. ‘If we are serious about decarbonising our economies, we need to take urgent action on steel, now.’