At the “Channeling market forces towards steel decarbonization” panel session of the OECD COP29 Virtual Pavilion held online on 4-22 November, the panelists talked about the trends in the availability of scrap and hydrogen needed for steel decarbonization and the market conditions that affect the advancements of companies in decarbonization.
Presenting the Organisation for Economic Co-operation and Development (OECD) steel committee’s study, Michele Rimini, head of the OECD’s steel decarbonization unit, said he believes that steel decarbonization will play a key role in existing industrial structures and trade patterns. Addressing the issues regarding the steel industry’s decarbonization, Mr. Rimini stated that steel companies’ ambitious decarbonization strategies could be more comprehensive in terms of being detailed around implementation, while, on the other hand, availability of scrap and hydrogen is unevenly distributed and affected by export restrictions.
Mentioning that scrap and hydrogen availability is limited, Hiroyuki Tezuka, representative of Japan’s JFE Steel Corporation, stated, “Using more scrap in company A means reducing the scrap availability for company B”, while adding that hydrogen is very critical resource not only for hydrogen-based DRI production, but also for hydrogen injection into blast furnaces. He also noted that the availability of high-quality iron ore, which is only just around 10 percent of the global iron ore supply capacity, is an issue, going on to state, “So once everyone’s chased after the hydrogen DRI route, high-quality iron ore is going to be a very scarce and precious supply material.”
Meanwhile, Piljin Moon, head of the Carbon Neutral Strategy Team at South Korean steelmaker POSCO, noted that decarbonization requires a balanced approach with a consideration of the environmental, economic and social impacts. Stating that for rapid decarbonization, the major blockers are the high initial cost of the green technology and uncertainty in regulatory policies, Mr. Moon said that governments should facilitate the transition in the initial period by providing clear regulatory frameworks and financial incentives. Mr. Moon stated that, although the breakthrough technology offers significant long-term gains and deeper carbon reduction, it comes with a higher risk and cost uncertainty in business feasibility. On the other hand, he said, incremental steps are less risky and more immediately applicable, but they may not achieve the substantial carbon reduction for long-term climate goals. “Since the development of the breakthrough technology doesn't happen overnight, companies should adopt a dual approach. That means steelmakers should implement a gradual carbon reduction strategy while simultaneously investing in innovative technology development,” he added.