Inside Clean Energy: From Sweden, a Potential Breakthrough for Clean Steel

In the deluge of breathless announcements of emissions-cutting technologies, I often ask myself some variation on the same question: “Is this a big deal?”

Today, I’m going to tell you about one that looks like a big deal, providing hope that the world can find ways to reduce the carbon footprint of heavy industry.

In Sweden on Monday, the partnership of a steel company, a mining company and an electricity producer announced that it had succeeded in producing a form of iron using a nearly emissions-free process.

The companies have been working for five years on a joint venture called HYBRIT, with the goal of using renewable energy to produce hydrogen, and then using the hydrogen, along with iron ore pellets, to make “sponge iron,” which can be used to make steel. Now, the companies report that they are the first to have used this process to produce sponge iron on a pilot scale, which is a step up from laboratory scale and a sign of progress toward being able to do it on a commercial scale.

“This technological breakthrough is a critical step on the road to fossil-free steel,” said Martin Lindqvist, President and CEO of SSAB, a global steel company based in Sweden and one of the partners behind HYBRIT, in a statement. “The potential cannot be underestimated. It means that we can reach climate goals in Sweden and Finland and contribute to reducing emissions across Europe.”

This follows the opening of the HYBRIT plant last year in Luleå, Sweden, a small city near the Arctic Circle.

Corporations throw out words like “breakthrough” way too often, but this time it may be warranted. The steel industry is responsible for 7 percent of global carbon dioxide emissions, with most of the world’s steel produced by burning coal or natural gas in blast furnaces.

The industry has been able to use electric arc furnaces to make “secondary steel,” which comes from melting down and repurposing scrap steel. But the demand for steel exceeds what can be met using scrap, so companies need to find cleaner ways to make “primary steel” from iron ore. HYBRIT is developing one of the most promising options.

I asked Jeffrey Rissman, industry program director and head of modeling at the think tank Energy Innovation, what he thinks of HYBRIT’s announcement.

“The short answer is, ‘Yes, this is important,’” he said.

But he had some caveats: The process being used by HYBRIT is not the only way to make zero-carbon steel, and there is promising research being done on other approaches, he said. Also, HYBRIT is far from alone in working on a process to use hydrogen to make sponge iron.

Another prominent example is ArcelorMittal of Luxembourg, which ranked No. 2 in global steel production in 2020, and has said that it is aiming to reach net-zero emissions by 2050. The company has a plant in Hamburg, Germany, that is working on a process similar to what HYBRIT has done in Sweden.

For some perspective, SSAB was No. 52 in global steel production last year, according to the World Steel Association, so it is a big player, but not one of the biggest.

SSAB’s partners in the clean steel project are LKAB, a mining company, and Vattenfall, an electricity company. The latter two companies are owned by the Swedish government, while SSAB’s major shareholders include the government of Finland.

Government ownership of the companies means that the push to reduce emissions has some different economic and political dimensions than if we were talking about some other multinational company that happened to operate in the two countries.

The governments of Sweden and Finland, along with the European Union, helped to set the emissions rules that are forcing the steel industry to transform itself. At the same time, the governments have a financial interest in the companies’ long-term success, along with a desire to retain industry jobs.

Last year, at the opening of the HYBRIT plant, Swedesh Prime Minister Stefan Löfven said the factory is part of “a historic opportunity to do things that provide jobs here and now” that will also “hasten the climate transition that everyone realizes is necessary.”

HYBRIT’s partners view their successful pilot project as a step toward getting to commercial scale by 2026 and becoming a leading seller of fossil-free steel. The companies didn’t say how much the steel will cost, but it will come at a premium.

So who will buy it? Some of the customers will be other companies in the EU that are looking to cut the emissions of their supply chains. One example is Volvo, the automaker that is based in Sweden and owned by a Chinese holding company. Days before this week’s HYBRIT announcement, SSAB said it was forming a partnership with Volvo to explore ways to use fossil-free steel in the auto industry.

The move toward a cleaner process for making steel is important because heavy industry is one of the most difficult parts of the global economy to get to net-zero emissions. This is in contrast to the electricity and transportation sectors, where we have a pretty good idea of the path to cutting emissions, even if that path is a difficult one.

Considering the scale of the challenge in the steel industry, the progress announced this week is cause for optimism, said Rissman.

“This is, I think, the real thing,” he said, adding, “It’s a good thing that they’re doing this and investing in this.”

Other stories about the energy transition to take note of this week.

Biden Administration Considers a Ban on Polysilicon from China: The solar market would need to make some big adjustments if the Biden Administration decides to ban imports of polysilicon, which is a key component in solar panels. The administration is considering the ban on imports from China’s Xinjiang region in response to reports of human rights abuses in the production of polysilicon, according to Kelsey Tamborrino and Gavin Bade of Politico. The region is the world’s leading source of the material, but companies in the solar industry have been aware of the possibility of a disruption of the supply and are securing other sources.

Ossoff Proposes Tax Credit for U.S. Solar Manufacturers: U.S. Sen. John Ossoff (D-Ga.), has introduced a bill that would give tax credits to manufacturers of solar power components. He said the United States needs to provide more support to manufacturers within the country to counter China’s dominance of the industry, as Zack Budryk reports for The Hill. Georgia has several large plants that make solar panels and other components for the industry. “This legislation will bring more clean energy jobs to Georgia while creating tens of thousands of clean energy jobs across the country,” Ossoff said.

Gas Station Owners Are Slow to Install EV Chargers: One potential challenge in making the switch to electric vehicles is that gas station owners are reluctant to install charging systems. Station owners worry that there are not yet enough EVs to make the chargers profitable, and they have concerns that charging technology is changing so quickly that investments in the near future could be in systems that are quickly outdated, as Cara Korte reports for CBS News. Hani Hamadi, the owner of seven gas stations in Michigan, is installing one charging station that will cost up to $150,000, which he said is “no comparison” to the $20,000 it costs to install a double-sided gas pump.

North Carolina Works on Major Energy Legislation: Legislative leaders are working to rewrite an energy proposal in North Carolina after Gov. Roy Cooper, a Democrat, said he opposes a version written by Republican leaders. The initial version of the bill called for a timetable for closing coal-fired power plants, but environmental advocates and legislative Democrats opposed provisions that would encourage the construction of natural gas plants to replace coal and take authority away from state utility regulators, as Catherine Morehouse reports for Utility Dive. Opponents have said the bill is a giveaway to the state’s largest utility, Duke Energy, a company that was part of drafting the bill.

Thanks for reading! Note that Inside Clean Energy will be taking a break next week. I’ll be back online and in your inbox on July 8.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].