How Japan can clean up steelmaking

Steelmaking is in urgent need of a green up: it's manufacturing's biggest CO2 emitter.

The blast furnace–basic oxygen steelmaking (BF–BOF) process* used to produce just over 70 percent of Japan's crude steel necessitates the use of fossil fuels, such as coal and gas, to generate the massive amount of heat required throughout the process, as well as the use of coke to remove oxygen during ore smelting.

For this reason, more and more steelmakers, especially in Europe, are turning to processes that entail lower CO2 emissions—ones using scrap as feedstock or hydrogen in direct reduction (DR)^† .

There is no easy way for Japan to transition to direct hydrogen reduction as the country is ill-positioned for the procurement of green hydrogen^‡ and the capture and sequestration of CO2 (CSS)^§ required in blue hydrogen production^¶. Japan's steelmaking industry is therefore taking a gradual approach to greening itself designed to ultimately achieve carbon neutrality through multiple routes.

Green steel, the first route, achieves low carbon status via mass-balance methodology, where company-wide CO2 reductions are converged on specific products to enable them to be considered carbon neutral. Products are already available under Kobe Steel's Kobenable Steel- and Nippon Steel's NSCarbolex Neutral-brands.

The second route is to use steel produced through the COURSE50 method, which foresees deploying hydrogen in BF–BOF processes. It has high potential for implementation because it uses by-product hydrogen generated within steelworks. The Super COURSE50 concept takes this further by adding hydrogen from external sources for use in blast furnaces to reduce CO2 emissions in the BF–BOF process.

The third route—a promising option for Japan—is the manufacture of high-grade steels using scrap-based methods and hydrogen-based direct reduction (H2 DRI) methods. Deployment of H2 DRI, though, entails two major hurdles. The first is that, if the reduction of oxygenated iron is to be done entirely with hydrogen, it will require even more than Super COURSE50 would offer, which would heavily impact procurement costs. The second is that currently, the principal feedstock, DR-grade pellets*, are not readily available in Japan and even if supplies could be found, securing stable flows is uncertain given that the principal sources are in Russia and South America. This situation makes greater use of domestic scrap the more realistic route for Japan to pursue.

Aluminum leads the way when it comes to using scrap to green an industry. Aluminum makers have commercialized low CO2 recycled aluminum realized by increasing the volume of scrap used in manufacturing, and it is being used in products from cars to cans for the same price as traditional aluminum.

To advance uptake of carbon neutral products, those that really contribute to achieving carbon neutrality, they ought to have an appropriate premium built into their pricing. And some sort of transitional measure will be necessary until the market attaches a premium to them with the implementation of carbon pricing*. When beverage makers began using recycled plastic bottles procured at a premium price, some of them booked the higher bottle costs as advertising or marketing-and-promotion expenses.

Attaching a premium to green steel would give a needed fillip to the industry's greening, prompting greater use of scrap and uptake of H2 DRI processes, helping ultimately achieve carbon neutrality.