Earlier this month, during New York Climate Week, steel consuming companies including Microsoft, Volvo, and real estate company Trammel Crow, formed a North American green steel buyers’ club to stimulate domestic production and slash CO2 emissions, according to S&P Global Commodity Insights.
The group will undertake a competitive procurement process in 2024, using a platform built by RMI, an energy transition nonprofit in the US. The search for suppliers to support the initiative will be headed by the First Movers Coalition, a group of companies using their buying power to drive low-emission technologies. The broadly defined category of “near- zero emissions” can include steel that’s produced using renewable electricity, clean hydrogen, or carbon-capture technology.
Due to its renewable energy requirement, green steel is more expensive and more challenging to produce than traditional steel, which is made using blast furnaces powered by fossil fuels.
Due to the limited supply of green steel, producers will state how much they can deliver before the buyers’ club finalizes its purchase plans towards the end of this year. The intent is to create enough demand through purchase contracts and offtake agreements to encourage investment by steelmakers in North America.
The buyer’s club will recruit enough members to request around 2M short tons (US tons) of green steel. Trammell, the largest steel consumer in the group, could account for up to 150,000 short tons per year after a gradual ramp-up period as the industry gets on its feet, James Murray-Coleman, director of sustainability with the real-estate developer, told S&P Global.
“We can really collaborate and accelerate the market because the supply isn’t there,” Brandon Middaugh, senior director of Microsoft’s Climate Innovation Fund programme, said during a panel at the New York event. “So far, we have a number of demonstrations and technologies [for green steel], but we want to invest in scaling that up both as a buyer and as investors.”
Steel production is to blame for around 8% of CO2 emissions from the energy sector. To meet climate goals, emissions must halve by 2030, according to the International Energy Agency, yet there are no green steel plants in the US, and Europe’s first green steel plant, owned by Swedish start-up H2GS AB, will not come online until late 2025.
During a Climate Week panel, James Streater, head of sustainable development at ArcelorMittal SA, said the company is likely to announce more green steel projects following its first operating North American project.
Streater went on to say, “We need to focus on the high-value-added sectors to start with for green steel. For the less important grades, we can use more scrap metal.”
