New Delhi, 28 June 2021: The EY India a report titled, “Towards Greener Steel - Steering the Transition”, suggests that there has been a consistent improvement over the last few years in metrics of sustainability for the steel industry. However, the intensity of environmental impact of this industry needs the execution of a compelling and a well thought out action plan. The report highlights that reducing carbon emissions and the energy consumed in steel production can boost long-term commercial and societal value of steel which is one of the world’s most sustainable materials.
For steelmakers, an accelerating decarbonization agenda and the growing importance of environmental, social and governance (ESG) performance represent both a challenge and an opportunity. Certainly, reducing the energy intensity and environmental impact of the industry will require a significant effort across the lifecycle of steel. Players will need to commit to deploying energy-efficient measures, adopting and investing in circular economy principles, improving material efficiency and waste management and investing in low-carbon emission technologies for steel production. To improve on these parameters, the usage of high-quality iron ore and coal should increase to achieve higher efficiency.
Saurabh Bhatnagar, Partner and National Leader, Metals & Mining, EY India, said, “Steelmakers have long prioritized energy efficiency and more recently have made a concerted effort to adopt circular economy principles. The major challenge that remains in the face of more stringent emissions targets is to significantly reduce emissions in the steelmaking process.
As a first step, a well-planned, stage gated roadmap/pathways will be critical for a successful set up. All such pathways will represent an informed choice of clean technologies while balancing business risks, quality of end products and capital cost while improving sustainability metrics across the steel value chain.”
He further added, “Stakeholders like governments, the United Nations, academia, communities and steel associations are likely to play an important role in supporting the implementation strategies of steelmakers. Other than carbon pricing mechanisms, governments will need to provide support for R&D and finances to encourage and catalyse change.”
EY analysis of the key metrics of the top global steelmakers reflects that while some companies are continuously improving, others are still at the early stages of development. This analysis was based by dividing steel companies into three ranges of emissions and energy intensity: low, medium and high. In the best-case scenario (low), production facilities may attain energy needs 0.1x of global average and emissions may be 0.2x of the global average. Companies in the high range were the ones largely using Blast Furnaces (BF). As most BF processes are already technologically mature, CO2 abatement is not possible without significant investments in radical technologies such as carbon capture and top gas recycling.
Chaitanya Kalia, Partner and Climate Change and Sustainability Services (CCaSS) Leader, EY India, said, “Steelmakers that move now on a journey to improve the sustainability of operations can get ahead of developing carbon regulations and capitalize on ESG metrics to gain a competitive edge. Many investors are seeking more sustainable portfolios, demanding greater ESG compliance and performance from potential investment targets. Improving ESG metrics will reap benefits for steelmakers beyond compliance with regulations and stakeholder expectations. Companies with a better ESG performance will have access to better and larger pool of financing, reduce operational risk and be more resilient against economic shocks.”
Achieving sustainability will require steelmakers to roll out strategies across the entire value chain, with five steps critical to success as identified by EY: (a) strategically evaluate a continuous upgrade vs retrofit vs adopt clean technologies strategy, (b) increase production of sustainable steel, (c) improve ESG performance, (d) embrace digitalization of business operations, and (e) collaborate with all stakeholders.
The report further highlights that all the BRIC countries are committed to significantly reducing the carbon emissions of their steelmaking industries, but a credible roadmap is urgently needed to make it a reality through more consolidation, a greater move to electric-arc furnace (EAF) production and investment in a robust recycled steel supply for steelmaking. As demand for green steel increases, countries with more sustainable steelmaking industries are likely to reap a competitive advantage. As origin of steel becomes a bigger part of trade negotiations between steel producers and Original Equipment Manufacturers (OEMs), it’s likely that BRIC nations will accelerate their adoption of sustainable alternatives to retain competitiveness in the long run.
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