Decarbonising the Steel Industry

Through coalitions and partnerships, hard-to-abate industries can decarbonise by reducing their Scope 3 emissions.

Decarbonising the steel sector is critical to achieving climate targets.

Progress towards a net-zero future requires major transition in energy production and consumption, and in the sourcing and use of raw materials.

Steel has one of the highest emission footprints, accounting for around 10% of global carbon dioxide (CO2) emissions.
Steel production assets鈥� long lifespan, high replacement costs and high decarbonised energy requirements provide significant challenges to reducing it鈥檚 emissions profile.

Traditional steel making processes rely heavily on coal.

Steel is a critical material used in our modern world, from bridges and buildings to windmills and electric cars. But the industry is also at a turning point. To meet the demands of a changing world, it must evolve, reducing its carbon footprint while remaining economically viable. Steel producers are under immense pressure to adapt, and the path forward is complex.

Currently, traditional steel-making processes like Blast Furnaces and Basic Oxygen Furnaces rely heavily on coal, which constitutes 89% of the fuel mix, with only 3% coming from natural gas.

As older blast furnaces are retiring, some companies are choosing to replace them with Electric Arc Furnaces and Direct Reduced Iron technology. This could create a major shift in usage towards more electricity and natural gas. In DRI-EAF processes, approximately 85% of the energy comes from gas, and 15% from electricity, eliminating coal use.

Looking for someone that understands the whole journey to decarbonisation?

Shell Energy is uniquely positioned to support steel producers on this journey. Offering integrated solutions designed to reduce greenhouse gas emissions without sacrificing quality or operational performance. Our approach combines renewable energy, natural gas, and in the future the ability to provide other solutions such as carbon capture and hydrogen.

Today, Shell has around 3.3 gigawatts of renewable capacity in operation and additional gigawatts under development. We are growing our world-leading liquified natural gas (LNG) business so that we can continue to provide a critical fuel in the energy transition. In 2023, we blended 9.7 billion litres of biofuels, fulfilling 6% of global demand.

By the end of 2023, Shell鈥檚 Quest facility in Canada had stored over 8.8 million tonnes of CO2, setting a benchmark for large-scale carbon reduction projects globally. And with two renewable hydrogen projects under construction, Holland Hydrogen I and RefHyne2, Shell is a leader in the EU鈥檚 emerging hydrogen economy.

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Steel is the world鈥檚 most important engineering material. But according to the IEA 鈥� from mining to the manufacture of end products - the industry generates around 10% of global carbon emissions. In this report, Shell and Deloitte hear from the industry on the key barriers to decarbonising the industry and benefits of a value chain approach.

How to cut carbon from steel

The iron and steel industry accounts for around 7% of carbon dioxide (CO2) emissions globally*. Finding ways to cut carbon emissions from its production is vital to tackling climate change. In Oman, Mr Ali and Mr Lobo are using solar power technology to help produce ferrochrome 鈥� which makes steel stainless and shiny 鈥� with fewer emissions. Watch how.

* This includes energy-related and industrial process CO2 emissions (i.e., does not include land use CO2 emissions), source International Energy Agency.

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