The Future of Net-Zero Steel in Construction Industry

To facilitate the shift to a more sustainable tomorrow and fulfil the need for sustainable methods, the construction industry must grab the opportunity for steel decarbonization, implement new perspectives, and develop guidelines. 

The construction industry’s steel consumption is insatiable, making up more than half of the world’s total steel demand, which explains why this sector has a significant impact on the environment. The steel manufacturing process requires excessive energy, making it a carbon-intensive industry. The manufacturing process accounts for around 25% of the total emissions generated during the construction of building infrastructures. The construction industry needs to switch to low-carbon dioxide (CO2) steel from high-CO2 steel to comply with the Paris Agreement on the mitigation of climate change. Energy-efficient furnace technologies, such as natural gas-fueled sponge iron or hot briquettes, which generate less carbon emissions than coke-powered furnaces, make steel decarbonization a conceivable option in addressing sustainability initiatives. Remodelling blast furnaces for the collection, storage and utilisation of carbon is another approach to producing steel with decreased CO2 emissions. Similarly, the expansion of hydrogen-reduced furnaces fuelled by green power will enable manufacturers to obtain steel with an emission intensity of below 0.2 tCO2/metric ton of steel.

That said, the construction industry faces substantial challenges, including the following:

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Given these factors, it is crucial that both private and public players contribute towards ensuring the switch to no-carbon steel and the decarbonization of the construction industry. To support the industry in these areas, a leading global management consulting organization has postulated five vital approaches through which the construction industry can take steps towards greater adoption of sustainable steel in the sector.

Improve transparency and established terminology for sustainable steel:

The absence of consensus on what constitutes “sustainable steel” has been a key deterrent to the initiative, with business corporations, steel manufacturers and consumers frequently using different terminologies for sustainable steel. In view of this, the industry is advised to:

  • Strive for industrial agreement on a consistent definition along the scale of the sustainability continuum,
  • Design a method for measuring greenhouse gas (GHG) emissions for industry players, and
  • Develop standardized GHG emission intensity labelling or rating of steel to aid in decision-making.

 

Address the lack of transparency in Scope 3 emissions:

This gap in the industry’s value chain may hinder required investments in sustainable steel. To mitigate this, the industry participants are required to:

  • Create a standard tracking system for emissions associated with building manufacturing and use,
  • Integrate associated emissions accreditations and standards of excellence for sector corporations,
  • Set Scope 3 emission goals at the investment, initiative, and resource levels of the supply chain, and
  • Convert goals into management strategies.

 

Increase the appetite for sustainable steel:

Green steel will not be able to contend with proven technologies if based only on cost comparison. Industry stakeholders are required to also consider the options below:

  • Create a customer association for green steel, to connect all the stakeholders in the construction value chain,
  • Increase financial assistance for green steel manufacturing facilities by gathering interested financiers or turning infrastructure developers into equity holders,
  • Encourage construction organizations to include sustainable steel in purchase agreements when procuring steel from a direct steel manufacturer, and
  • Focus on increasing the steelmakers’ emphasis on facilities that use innovative technologies and scaling future purchasers of sustainable steel and capital investors interested in green steel funding.

 

Increase capital investments into green steel:

Financial institutions are required to consider embedded emissions in their financing options. This can be made possible through the following efforts:

  • Measure and disclose lending and financing operations related to green steel manufacturing-associated emissions,
  • Monitor and disclose the associated emission’s evolution risk such as taxes and carbon regulations, and
  • Align financial resources towards no-carbon steel by developing sustainable investments such as green bonds and loan instruments like green credits.

 

Promote consciousness of the embodied emissions:

  • Many players in the industry’s supply chain are unaware of the emissions inherent to building construction and the use of certain resources, and the short-term solutions for minimizing embodied carbon. Industry stakeholders would have to promote awareness of GHG emissions within the sector and in steel production along with know-how on possible decarbonization strategies. Panel discussions, workshops, and seminars can be useful to make knowledge sharing possible.

 

The global building sector is at a turning point. Businesses and other stakeholders are under pressure to quicken the industry’s transition to a more sustainable state due to the growing demand for innovative ideas and the appearance of workable, albeit expensive, options. The industry is expected to see a notable decrease in its overall emissions by 2030 (vs 2020) and a total elimination of carbon by mid-century on the back of the implementation of environmentally friendly technologies. Coordination among all the stakeholders involved in the industry’s value chain is critical for the industry’s sustainable growth. Therefore, it is important that the sector grasp all the opportunities, embrace an innovative outlook and ready itself for a structural shift towards a more sustainable future.

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