Five in 5: Metals decarbonization technologies

1. Why is decarbonization of the metals sector important?

Kelsey Carvell: A recent Deloitte report put a dollar value to what unchecked climate change could cost the global economy: $178 trillion in net present value terms from 2021–2070.¹ As we all know, we’re not on track to cut our emissions. The metals sector, and in particular steel and aluminum, plays an integral part of our society’s green energy transformation: They, among other metals, are the backbone for sustainable construction, electric vehicle production, and renewable energy infrastructure, to name just a few. However, in order to create true green energy, the metals sector itself must become carbon neutral.

Brad Johnson: There are two additional reasons why decarbonization of the metals sector is important. First, according to the International Resource Panel, metal production makes up approximately 10% of global greenhouse gas emissions annually.² Without any action, this is only expected to grow—iron and steel manufacturing in the United States, for instance, is expected to see an annual revenue growth of 3.6% (CAGR 2022–2028), according to IBISWorld.³ Second, the metal industry is within the “hard-to-abate” group—along with road freight, cement, chemicals, shipping, and aviation, among others. For companies in this sector, technological, innovation, and business model gaps make it challenging to find cost-effective solutions to address greenhouse gas reductions and achieve decarbonization. If we can address decarbonization for the metals industry, it creates possibilities to apply those findings to other hard-to-abate groups.

2. What are some of the technological solutions available to drive decarbonization?

Brad Johnson: We’ve seen quite a few technology levers that companies within the metals industry can use on their journey to decarbonization. These include adopting renewable power and electric infrastructure; novel metal-making processes such as replacing carbon anodes with inert anodes; hydrogen and alternative feedstocks; carbon capture sequestration/utilization; recycled material (e.g., aluminum scrap) instead of primary sources; and carbon offsets, hopefully as an interim solution.

Kelsey Carvell: However, it is important to remember that technology is just one part of the story—an engineering fix isn’t enough to drive change. Other considerations include introduction of new processes (e.g., new maintenance protocols, adjustments to manufacturing steps) and what this means for employee upskilling; adjustments to data management platforms to track carbon-reduction improvements; and of course, costs and savings of implemented technologies to make the business case for the investment. We will cover these critical considerations in a separate discussion.

3. Focusing in on steel—what are we seeing as the key technology drivers for decarbonization?

Brad Johnson: I’m glad this question is focused on one metal—steel—as opposed to metals collectively. As our research and work with clients show, there are key differences in materials used and production processes that make each metal’s journey toward decarbonization slightly different. For instance, the majority (95%) of emissions in steel are in ironmaking and steelmaking and finishing and distribution.⁴ Approximately 70% of steel is produced using the basic furnace and basic oxygen furnace (BF-BOF).⁵ There are a few technological advancements we are seeing in the market to help reduce this carbon-emission heavy process. First, we’re seeing companies replace fossil fuels with clean hydrogen or biomass in the blast furnace. Often in these scenarios, coal coke is still used to reduce the iron ore—so emissions still exist here. In other situations, we’re seeing a reimagining of the traditional BF-BOF process. For instance, companies are smelting scrap steel in electric arc furnaces (EAFs), which are powered by renewable energy. Or, if scrap steel is not available, we’re seeing technologies that replace the coal coke reduction process (and adjoining material of coal coke) with clean hydrogen (H₂ DRI-EAF). Others use an entirely new process called electrolysis to produce molten iron using clean energy.

4. And what about aluminum—what are we seeing as the key technology drivers?

Kelsey Carvell: Compared to steel, aluminum production does not require the same heat intensity due to differences in properties. As a result, there are pathways to process primary aluminum or scrap directly through electric furnaces if renewable energy is used. On the materials side, the smelting of primary aluminum relies on the consumption of carbon anodes, which (similar to the consumption of coal coke) produces emissions. Efforts exist, therefore, to replace carbon anodes with inert anodes that do not release emissions. Another important material is recycled aluminum or scrap. Compared to steel, large amounts of aluminum are recovered from waste streams. As a result, recycled scrap ends up being critical to decarbonization. Reusing scrap aluminum from all waste streams could reduce both the demand for new aluminum (by as much as 39% by 2050) and the emissions resulting from new aluminum production, according to the Center for Strategic & International Studies (CSIS).⁶

5. Some of these decarbonization technologies might just be emerging and therefore might be five or more years down the line before commercial readiness. Are there things companies can do now to drive reductions?

Kelsey Carvell: Absolutely! A lot of the examples we described are large capex investments; however, adjustments to processes can also help reduce emissions. We’ve worked with many clients to understand emission hot spots and identify quick-win abatement levers to reduce emissions. Implementing digital twin technologies of manufacturing plants can help identify emission hot spots or energy leakage or identify methods to optimize movement of material throughout the plant. However, what we have found is that companies often don’t have the right data to begin to identify these hot spots. Companies should implement data management systems and develop the right governance structures to ensure effective tracking and ongoing monitoring.

Brad Johnson: Some of the above levers, such as renewable power and scrap recycling are quite mature; however, others, such as carbon anodes and the use of hydrogen, still need some more investment and innovation. To accelerate change, companies can work with other key stakeholders throughout their value chain—whether that’s investing or co-developing with startups or partnering with research organizations to identify technologies that don’t exist yet!

Endnotes

¹ Pradeep Philip, Claire Ibrahim, and Cedric Hodges, The turning point: A global summary, Deloitte, May 2022.
² Bruno Oberle et al., Global resources outlook 2019: Natural resources for the future we want, International Resource Panel (IRP) and United Nations Environment Programme, 2019.
³ Alexia Moreno Zambrano, Iron & steel manufacturing in the US, IBISWorld, January 11, 2023.
⁴ Andrew Zoryk and Ian Sanders, “Steel: Pathways to decarbonization,” Deloitte, 2023.
⁵ ibid.
⁶ William Alan Reinsch and Emily Benson, “Decarbonizing aluminum: Rolling out a more sustainable sector,” Center for Strategic & International Studies (CSIS), February 25, 2022.