This Swedish Company Wants to Fix Steel’s Steep Climate Cost

A steel plant at Lulea in Sweden. workers make the world’s most essential construction material the old fashioned way: piling iron ore and coke, a kind of coal-derived fuel, in a huge blast furnace, heating the mixture to enormous temperatures, and then “tapping” the cauldron of molten metal, which sends a stream of white-hot pig iron—and showers of sparks—spilling out along a sluiceway.

But less than a mile away, the plant’s owner, SSAB, is piloting a less dramatic steelmaking process at a new facility. “It doesn’t look that spectacular,” says Martin Pei, executive vice president and chief technology officer at the Swedish steelmaker. “You don’t see very much either, because it’s all automatically-controlled.”

It’s spectacular in a different way, though. Traditional blast furnaces release huge amounts CO2. But SSAB’s HYBRIT pilot plant—built in collaboration with Swedish state-owned mining company LKAB and state-owned power company Vattenfall—emits nothing but water vapor when it refines iron ore. Last summer, the facility produced iron for the world’s first fossil-fuel-free steel, blazing a trail towards decarbonizing one of the world’s most heavily-polluting industries.

The most valuable material in modern society is steel. Steel can be found everywhere, from bridges and buildings to automobiles and bikes. It’s also critical to building renewable energy infrastructure like wind turbines, which the world needs in order to eliminate fossil fuels. But making it is an incredibly polluting process, with the industry responsible for 8% of the world’s CO2 emissions. These emissions are one of the biggest and most difficult issues of the global energy transformation.

With the success of the HYBRIT project, SSAB CEO Martin Lindqvist has set the company on perhaps the most aggressive decarbonization plan in the industry, ramping up green steel production and switching over to electric steel furnaces in order to cut most of the company’s emissions from its operations in Sweden and Finland by around 2030. It was a dream that seemed impossible just a few short years ago. “Our colleagues in the industry, they were just [shaking] their heads, and thought that we were, at best, naive,” says SSAB CEO Martin Lindqvist. “Now everyone seems to think that this is the right way to go.”

Some 75% of the world’s steel is made using blast furnaces like the traditional one in Lulea, which use huge amounts of fossil fuels to refine iron ore. Making that process work without fossil fuels, specifically coke, is a serious metallurgical challenge. Iron is one of the most common elements on the surface of the Earth, but it’s almost entirely found in the form of iron ore, where iron atoms are bonded tightly with oxygen. To turn that ore into steel and iron, you must first remove the oxygen atoms. By burning coke, carbon monoxide, which can be generated in blast furnaces, is used to remove oxygen from the iron ore. This carbon dioxide is then released into our atmosphere. SSAB’s HYBRIT plant accomplishes the same task using hydrogen separated from water using renewable energy. For this hydrogen-based reduction to work, hydrogen is heated to about 1,600°F with renewably generated electricity and then injected into a furnace containing iron ore pellets. The hydrogen combines with oxygen in the iron ore to form water vapor, leaving behind what’s known as sponge iron which can then be melted down with recycled scrap to make steel.

SSAB, its PartnersIn 2016, the first work began on this project. Lindqvist explains that back then most steelmakers were trying to be green and talked about diverting carbon dioxide from steelmaking and placing it underground. This process is known as carbon capture & storage (CCS). “CCS for us was giving a Band-Aid to a patient with a broken leg,” says Lindqvist. “If we have the chance to really solve the root cause of the real problem, why not do that?”

SSAB and LKAB spent approximately $2 million on hydrogen steel technology research, with Vattenfall having one of the first success stories in 2017. “I still remember when I held that first piece of fossil-free steel made in a laboratory in Stockholm,” Lindqvist says. “I thought, ‘This might actually work.’” Lindqvist and other executives then went to their companies’ boards and asked for $160 million to build a pilot plant to develop the technology further. After the trial proved successful, it was time to start building a fully-scale production plant.

SSAB used the plant as a pilot to create its first carbon-free steel last August. The workers involved made video documentation of the entire process. “When I saw that video … I almost had tears in my eyes because they were so proud,” says Lindqvist. “They felt that we were doing something very important, and that we were part of a solution.”

With HYBRIT’s success, SSAB is moving ahead with plans to scale up its green steel process to a million tons a year by 2026. However, there are many obstacles that will prevent other steelmakers from experiencing a similar increase. According to RMI (a think tank on climate change), green steel is more expensive to produce than conventional steel. Some steel buyers, like automakers, have been eager to purchase slightly more expensive “green steel” in an effort to cut emissions from their products’ value chain—Volvo, for instance, made the world’s first vehicle using entirely fossil-fuel-free steel from SSAB last October. Some analysts doubt that the larger steel market will pay more.

Another problem is that the green hydrogen steelmaking method only works with a kind of very high quality iron ore, which not everyone uses —though companies pursuing the technology say they are developing ways to use lower-grade ores as well. There’s also an international dimension: even if policies in Europe and the U.S. help facilitate a transition to zero-carbon steel, the biggest player is still China, which produces half the world’s steel, largely in coal-fired blast furnaces. “China is always a bit of a mystery box,” says Thomas Koch Blank, a principal at RMI. “China has very high top-down aspirations [to decarbonize steel], and it’s a little unclear how fast they trickle down to real market policy.”

There’s also the simple fact of how much needs to change in such a short time span. By 2021, nearly 2 million tons of steel were produced worldwide. Even if SSAB decarbonizes all its furnaces, it’ll only amount to just under half a percent of the world’s annual production. “Things are going very fast,” says Domien Vangenechten, a policy advisor at European climate think tank E3G. “But it’s way too early to say that we are on the right trajectory towards net-zero emissions in the steel industry.”

Still, Vangenechten says, the past three years have been “remarkable” compared to where things were before. SSAB isn’t the only company leading that change—Swedish startup H2 Green Steel, for instance, is also aiming to commercialize hydrogen-based steel production in coming years. What’s unique about SSAB is that they’ve been in the steelmaking business for more than 140 years, an anomaly in a world where many legacy companies tend to do all they can to delay climate action. While the traditional climate narrative holds that polluting industries only transform when external disruptors like Elon Musk, or Engine No. 1, this is not true. Lindqvist is the CEO of SSAB, and has been with the company since 2011.

Perhaps these facts are an exception, which could prove to be a rule for polluting industry. Or perhaps it’s a signal that those companies actually have more capacity to change than their executives assume, if they decide to step up to the moment. Lindqvist believes that radical decarbonization was partly an impulsive business move and partly the right decision. “Everyone has a responsibility to reduce emissions,” he says. “But as the CEO of a big emitter of carbon dioxide, I have a big responsibility.”

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