8 facts about steel

1. Steel is all around us

You probably haven’t thought about it but steel is present everywhere in our daily lives. If you’re inside a building, some steel has been used in building it. Most likely you used steel utensils when you last ate something. You’ve probably traveled by car, train or bicycle, they also contain steel. Steel is widely used in buildings, infrastructure, factories and home appliances. An immense amount of steel is used in Finland in construction alone: around 300,000–400,000 tonnes per year.¹

2. The emissions from steel production are huge

Seven percent of the world’s greenhouse gas emissions are produced by the iron and steel industry.² If steel industry was a country, its emissions would be in the top three, right after the USA and China.³ The emissions come from the massive use of coal: the steel industry is the biggest industrial consumer of coal in the world. Today an estimated 75 percent of its energy requirement is produced using coal.⁴

The steel industry is a huge polluter also in Finland. SSAB’s steel plant in Raahe alone produces close to nine percent of Finland’s total carbon emissions. This makes it the biggest single source of carbon emissions in Finland.⁵

Steel production has other environmental impacts as well. The production process creates air pollution and the mining of iron ore and other raw materials causes deforestation and water pollution.⁶ The mining industry is also responsible for human rights violations and has violated the rights of indigenous peoples around the world. ⁷

3. Steel demand is estimated to grow rapidly – this must be limited

In 2022, the worldwide demand for steel was 1885 million tonnes.⁸ The International Energy Agency estimates that the demand for steel will increase by more than a third through to 2050. We cannot let this estimation come true. In order for the steel industry to stay in line with the Paris Agreement, the demand for steel needs to be reduced. ⁹

Fortunately solutions exist. Circular economy can reduce the demand for new steel. Materials and products could be designed to be more durable, easier to recycle and repairable. The reduction of steel demand needs to be prioritized at product development and manufacturing processes.⁴ Europe’s steel demand can be reduced by 28 percent by the year 2050, if all of these methods are effectively utilized. ¹⁰

4. The solutions to reducing emissions already exist – what is needed now are investments and wide utilization of fossil-free alternatives

Different solutions to reduce the greenhouse gas emissions of steel production have been developed and are still being developed further. These include: replacing coal blast furnaces with electric arc furnaces, reducing iron ore to iron using hydrogen gas instead of coal and coke, and increasing the use of recycled steel in production. The solutions exist but implementing them as fast as necessary requires stringent policies and massive investments. Technological solutions alone will not be enough if steel demand is not reduced. ^{2, 3,}¹¹^,¹²

5. The time for a fossil-free steel revolution is now

Many of the old steel factories are reaching the end of their life cycle. The majority of the current coal and coke blast furnaces will reach the end of their service life in the current decade.¹³ Huge developments are on the horizon for the steel industry in Finland: SSAB is preparing a big renovation at their factory in an attempt to shift it to fossil-free steel production. ¹⁴ In addition, the Norwegian company Blastr Green Steel is planning on building a factory in Finland.¹⁵ NThis means now is the perfect time to invest in climate friendly options in steel production, and shift financing away from the old and polluting production methods.

6. More clarity required on “green steel” branding

Steel producers have become interested in more environmentally friendly methods of steel production, if you are to believe the branding they use for their products. However, “green steel” brands have no universally agreed requirements and the companies are able to decide on their own criteria and content. ¹⁶ Finnish steel producers and customers must agree on a shared, science based certificate or agreement.

7. Institutional investors should steer the steel industry towards a green transition

Finnish banks and pension funds have pledged to reduce their investment portfolios’ emissions. To achieve this, these institutional investors can no longer finance new polluting steel plants or new metallurgical coal mines. They need to update their policies to exclude the most polluting companies from their investing and financing schemes. As shareholders of steel companies, they can make sure that the companies have science based emissions reduction plans and that the companies invest in fossil-free steel production technologies.

8. Buyers should create a market for fossil-free steel

Shifting to low emission technologies requires significant investments from steel producers. When companies that use steel and steel products commit to procuring fossil free steel, they increase the demand for fossil-free steel. This makes the investments more profitable and less risky for the producers. A strong demand signal will encourage producers to develop and scale up their fossil-free steel production.¹⁷