How to Decarbonize Steel

This fall, the world’s biggest steel company ArcelorMittal announced a goal to reach carbon neutrality, a historic move that signals a sea change for heavy industry companies around the world. 

Arcelor, and its peer industrial companies - which produce not just steel but cement, paper, and chemicals - are responsible for a staggering 40 percent of global emissions when the full scope is considered. Given this outsized impact, heavy industrial firms like ArcelorMittal have come under fire from environmental groups like Mighty Earth for failing to put forward climate pollution reduction plans in the middle of a global climate crisis. ArcelorMittal’s announcement indicates that the steel sector is beginning to realign its priorities in response to this pressure, and, crucially, comes at a ripe moment as governments around the world are undertaking dramatic Covid-19 recovery efforts that could double down on solutions to the climate crisis or, should heavy industry and governments fail to grasp this opportunity - lock in the path to climate disaster. 

In addition to corporate action, public investment in collaborative, public-private solutions will be needed to transition heavy industrial companies like Arcelor to a zero-emission pathway, facilitate the emergence of breakthrough technologies, and drive near-term material and energy efficiency. But the private sector must not wait and should take aggressive steps to make progress on decarbonization now.

Heavy industry is a tough nut to crack when it comes to climate, but it’s a surmountable challenge. It’s also one that must be addressed with fierce urgency by business and political leaders alike – because we are out of time. 

 If left untamed, heavy industrial emissions will make up the bulk of emissions by 2030.

And within the broader industry, the iron and steel sector has an outsized carbon footprint – producing around 7 percent of global emissions. To put it into perspective, this amount of CO2 surpasses all vehicles and airplanes combined. As a multinational steel and mining giant, ArcelorMittal is likewise a global behemoth of carbon emissions. Producing 97.31 tons, or 5.2 percent, of all steel, the company single-handedly accounts for almost 1 percent of global carbon emissions.

As the backbone of our modern infrastructure – building our cars, securing our buildings, paving our roads – heavy industrial sectors like steel and cement are not going away anytime soon, but the answer to our economic challenges cannot be unbridled emissions from new steel and cement. Material efficiency and dramatic supply chain innovation across heavy industry and manufacturing are essential to preventing our much-needed economic recovery from blowing the remaining global carbon budget. 

Dirty Coal, Dirty Steel

One of the biggest sources of ArcelorMittal’s outsized carbon footprint is the company’s strategy of buying retired, coal-burning blast furnaces. These facilities are the dirtiest possible way to produce steel, in contrast to cleaner technologies like electric arc furnaces that can source renewable energy. Since the 2000s, ArcelorMittal has a track record of buying old blast furnace facilities everywhere from Italy to South Africa, suggesting a very coal-dependent business model that may take years to phase out.

These retired furnaces put not just the climate, but human lives at risk. Among both its workers and the communities near its operation sites, ArcelorMittal has a well-earned a reputation for damaging the environment and human health. In June 2020, ArcelorMittal South Africa paid fines for criminal charges for three breaches of its atmospheric emissions license, following a deluge of resident complaints over terrible smoke, toxic air pollution, and asthma attacks. ArcelorMittal has also bulldozed over graves and has been sued multiple times for toxic spills in waterways.

Coal lies at the heart of ArcelorMittal’s current steelmaking strategy. But this must change. 

The phasing out of coal will be the number-one indicator of success. For a company like ArcelorMittal that has such a high proportion of blast furnaces, this process will require bold, innovative, collaborative work, that touches all realms of sourcing, production and transport. Achieving a 1.5C scenario may require restructuring the business model. But this dramatic transition is necessary to achieve the decarbonization the company has promised and which the climate so desperately needs, and we expect to see it fully detailed in their implementation plan.

We stand at a pivotal moment. With the climate crisis devastating lives across the globe and on the precipice of no return, the timeline for action is shrinking. As the largest steel company, ArcelorMittal is well-positioned to lead. But they must decarbonize in the right way, ensuring that they lead the industry in a race to the top instead of promoting half-measures as the world burns.