By Katherine Buso
Afonso G. Zucarato
Augusto Gomes
Tiago Matroni
DISCOVER HOW THE STEEL INDUSTRY CAN BOOST ITS FINANCIAL SUCCESS THROUGH SUSTAINABILITY.
The steel industry faces significant challenges in terms of environmental and social sustainability. However, these challenges also present commercial and financial opportunities for companies in the sector.
One key opportunity lies in the development of low-carbon emission processes and the use of renewable energy sources. By investing in these technologies, companies can not only reduce their environmental impact but also benefit financially by optimizing their operations and complying with stricter regulations.
Steel recycling also offers a significant opportunity to improve the sustainability of the industry.
By reusing scrap steel instead of relying exclusively on iron ore, companies can reduce their consumption of natural resources and minimize their carbon footprint.
This is not only environmentally beneficial but can also result in significant production cost savings.
In addition to environmental benefits, adopting responsible social practices can also positively impact the reputation and profitability of companies in the steel sector.
Promoting sustainability in the steel industry is not just an environmental necessity but also a lucrative business opportunity.
By adopting more sustainable practices, companies can reduce costs, mitigate risks, and improve their market reputation.
DISCOVER HOW THE STEEL INDUSTRY CAN BOOST ITS FINANCIAL SUCCESS THROUGH SUSTAINABILITY
CHALLENGES AND OPPORTUNITIES IN THE SUSTAINABLE STEEL INDUSTRY
Currently, the steel industry contributes approximately 8% of the world’s total carbon emissions, making decarbonization a global priority.
Technological advancements have helped reduce emissions, but five actions can accelerate a sustainable transition. A collaborative approach involving industry, government, and consumers can build a commercially viable green steel market.
For steelmakers, reducing these emissions is crucial as the global decarbonization agenda accelerates. Steelmakers who act now to improve operational sustainability can anticipate evolving carbon regulations and capitalize on environmental, social, and governance (ESG) metrics to gain a competitive edge.
Balancing short-term commercial imperatives with long-term value creation requires managing risks, costs, quality, and decarbonization.
Aligning investments with cyclical benefits can mitigate financial risks, as higher initial capital costs are likely to be offset by the long-term benefits of more sustainable operations and better ESG performance.
IMPROVING ESG PERFORMANCE
Investors are seeking more sustainable portfolios, demanding greater ESG compliance and performance from potential investment targets. At the same time, government pressure to decarbonize is increasing, with countries implementing carbon tax regimes and emissions trading systems (ETS).
Improving ESG metrics will bring benefits to steel producers beyond regulatory compliance and stakeholder expectations. Companies with better ESG performance can secure project financing at a lower cost and improve brand perception, which can enhance shareholder value.
HOW SHOULD STEEL PRODUCERS DRIVE THE TRANSITION?
Over the last 50 years, advances in technology and the shift from traditional blast furnaces (BFs) to electric arc furnaces (EAFs) have reduced energy use in steel production by 60%.
"Continuing the shift to EAFs will further reduce emissions, but creating a genuinely sustainable industry will require broader and bolder measures from all participants across the steel value chain," said Bob Stall, EY US Mining & Metals Leader.
For steel producers, five key actions can help guide the sustainable transition:
Evaluate and adopt clean technologies.
Promote a balance between risk, capital cost, and quality.
Increase sustainable steel production to capitalize on growing demand.
Improve ESG performance to meet shareholder expectations.
Adopt digitalization to unlock value.
HYDROGEN
The use of green hydrogen (generated by renewable energies) with direct reduced iron (DRI) and EAF is likely to be the cleanest alternative for steelmakers in the future, though it will take some time for hydrogen to become economically viable and scalable.
DIGITALIZATION OF TRACEABILITY
Digital and analytical tools can improve operational efficiency and reduce emissions across the steel value chain. Emerging technologies, such as machine learning and the Internet of Things, can enhance productivity, reduce resource waste, and improve supply chain management.
Digitalization can also support traceability, enabling steel producers to track and verify sustainable raw material supplies, such as iron ore and coke.
Additionally, monitoring competitors' strategies and performance is essential to identify strengths and weaknesses, as well as opportunities for differentiation.
CARBON CAPTURE
Recycling exhaust gases from BFs can recycle up to 90% of the exhaust gases, reusing it for combustion with the remaining highly concentrated 10% CO2 capable of being stored or used.
INNOVATIONS IN PRODUCT MIX
Switching to EAF-based scrap production will reduce emissions, but each steelmaker will need to decide if and how to make the transition based on scrap accessibility and availability and the desired quality of the final product.
ALTERNATIVE REDUCTION SMELTING PROCESSES
Some more recent commercialized emission reduction processes may offer better emission control compared to integrated plants, but their economic viability depends on overall energy consumption and the use of export gases.
INNOVATION
By tracking the promotion of sustainable practices, such as the use of renewable energy and the operational efficiency of water and waste, a platform drives the adoption of responsible measures across business operations.
Through a variety of resources and functionalities, the Net Zero Cloud solution from Blue BI Solution in association with Quasar Connect and Zucarato Consultancy supports companies in the sector with KPIs such as avoided carbon emissions, energy efficiency, water consumption reduction, waste management, as well as carbon emission forecasting and inventory for international certification.
With advanced tracking and analysis tools, companies can easily identify their main sources of emissions and take steps to reduce them. From real-time monitoring to future emission forecasting, this tool provides companies with the information they need to make informed decisions and reduce their environmental impact.
One of the most notable features is its ability to prepare companies for the carbon credit market. The platform helps companies identify opportunities to generate and purchase carbon credits, thus maximizing their positive environmental impact. Additionally, it simplifies the decarbonization reporting process, allowing companies to generate automated reports that comply with environmental regulations and standards.
Investing in sustainable steel production is essential to address the environmental and social challenges we face today. Steel is a critical component in countless industrial sectors, from construction to automobile and appliance manufacturing.
By adopting sustainable practices in its production, we can significantly reduce carbon emissions, minimize the environmental impact of mining and raw material extraction, and promote safe and fair working conditions for workers throughout the supply chain. Investing in sustainable steel not only drives technological innovation and operational efficiency but also contributes to creating a more prosperous and equitable future for generations to come.
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