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Renewable energy offers steel sector a way to decarbonise


6 min read

Orange sparks flying out from an electric arc furnace Photo: M J Richardson
Electric arc furnace in Rotherham, UK

Photo: M J Richardson

Companies from around the world are exploring renewable energy and recycling to decarbonise steel production. As a fundamental component of a broad range of renewable technologies, Stephenie Overman examines how the circular economy this is creating is beneficial for both businesses and the environment.

The international steel sector is working to reduce its climate change impact through closer links to the renewable energy sector, along with steel making innovation and more recycling. The industry is responsible for between 7% and 9% of human-generated CO2, according to the World Steel Institute.


But integration with the renewable energy industry is boosting steel’s sustainability profile. A good example is how green energy is bringing steel production back to Sparrow’s Point, in Baltimore, Maryland, US, the former home of historic Bethlehem Steel, which was founded as the Saucona Iron Company in 1857.


Steel production in Maryland

Bethlehem Steel was once the world’s largest producer of steel and its Sparrow’s Point mill was a major producer of steel for assembling ships during the First and Second World Wars. However, in 2002, Bethlehem Steel went bankrupt and the steel mill at Sparrow’s Point closed permanently in 2012 after its new owner, RG Steel, also filed for bankruptcy. 


The site has since been transformed into Tradepoint Atlantic, a 3,300-acre global logistics centre. Now, US Wind, a major American renewable energy company and a subsidiary of Italy-based Renexia, has plans to build a steel-fabrication and welding facility at Tradepoint Atlantic. The plant will produce steel monopiles for the company’s offshore wind turbine farms, including off the Maryland coast. 


That means the steel plant will operate on a grid that will have an increasing portion of renewable energy because of the steel products created in Baltimore.


Renewable energy and steel 

US Wind holds the lease rights to an area 1227 miles off the Atlantic coast of Maryland. The company says the approximately 80,000-acre area has the capacity to generate 1,500 MW of offshore wind energy, enough clean electricity to power more than half a million homes.


The first phase of US Wind’s lease area, called ‘MarWin’, is a facility that will deliver approximately 270 MW of renewable electricity by constructing about two dozen turbines 17 miles from shore. The company claims that this much energy could power nearly 80,000 homes for a year.


US Wind has plans for pre-construction work on the Sparrow’s Point site throughout 2022 and 2023. The actual construction process is expected to begin in 2024 and will involve both refurbishing existing buildings on the old Bethlehem Steel site, as well as constructing new ones. The company intends to begin producing monopiles at the site in 2025. It is estimated that, overall, more than $75mn will be invested in the industrial Maryland waterfront, off Chesapeake Bay, and over 3,000 jobs created.


While the US manufacturing base has shrunk in the past 15 years, it should not be too big a surprise to learn that some of that steel production will come back to Sparrows Point, says Brandie Sebastian, Senior Director, Sustainability, Energy and Environment at the American Iron and Steel Institute (AISI), Washington DC.


It is a common misperception that ‘they’re not making steel in the US anymore, but we’re the fourth largest steel-producing nation in the world,’ she notes. 


Indeed, steel remains a booming business opportunity worldwide, with demand from the renewable energy sector growing, partially due to the Russian invasion of Ukraine disrupting global oil and gas markets. Total world crude steel production was 1.95bn tonnes in 2021, a 3.7% increase compared to 2020, according to the World Steel Association, which tracks production for 64 countries.


Renewables’ demand for steel

Renewable energy is a good customer for the US steel industry. The National Renewable Energy Laboratory reports that wind turbines are 6679% steel (of total turbine mass). According to the United States Wind Turbine Database (USWTDB), which provides the locations of land-based and offshore US wind turbines, more than 70,800 turbines have been constructed so far, in approximately 1,500 US wind power projects.


This number continues to expand. One of the newest farms is American Electric Power’s (AEP) Traverse Wind Energy Center, the largest single wind farm built at one time in North America and one of the largest wind facilities worldwide. Traverse went online to customers in the states of Arkansas, Louisiana and Oklahoma in late March 2022 and is expected to generate 3.8mn MWh/y. 


The 356-turbine facility is the third and final AEP wind project to comprise its North Central Energy Facilities. All three are in Oklahoma and together they provide 1,484 MW of energy.


AEP says it plans to invest $8.2bn in regulated renewables and nearly $25bn in transmission and distribution systems by 2030. Including its North Central project, the company expects to add approximately 16,000 MW of wind and solar as a result.


The steel industry will be a major supplier to these renewable energy projects, making, for instance, solar thermal panels, heat exchangers, tanks and pumps, according to Brett Smith, the AISI’s Senior Director, Government Relations.


Steel’s demand for renewable energy

Steel has become a very good customer for the renewable energy industry.


‘We’re using a great deal more renewable energy, electricity in particular,’ Smith says. ‘We come from two perspectives  as an energy consumer and as an energy producer.’


For instance, the North Carolina-based Nucor Corporation is the largest steel producer in the US. It uses electric arc furnaces (rather than coke furnaces), which utilise electricity to heat iron and help transform it into steel, allowing 100% of scrap to be used. Such systems are a major consumer of renewable energy.


Steel remains a booming business opportunity worldwide, with demand from the renewable energy sector growing, partially due to the Russian invasion of Ukraine disrupting global oil and gas markets.


That does not necessarily mean wind farms are built next to steel plants. Instead, steel companies can use virtual power purchase agreements (VPPAs) where they pay a green energy producer a fixed price for a set amount of renewable energy power. That electricity is sold to regional grids where the price is higher than the contracted amount. The steel company (or other contractor) pockets the profits; but if it is lower, then it funds the loss.


Last year, Nucor signed a 10-year VPPA with Denmark-based Ørsted Onshore North America for 100 MW to be supplied from Ørsted’s Western Trail wind farm (WTW) in Texas. In 2020, the company signed a VPPA with EDFR Renewables North America to be the sole off-taker for EDFR’s 250 MW Brazos Fork solar project, which is also located in Texas.


The VPPA with Ørsted’s WTW project complements the company’s participation in Brazos Fork, according to Nucor, and together these two projects have the potential to supply renewable power to the regional electric grid 24 hours a day. Nucor says the WTW project is designed to continue generating power even during particularly severe weather, to which Texas can be prone.


Greener steel

Using wind energy is only one way steel can polish its image as an environmentally sustainable industry. Indeed, a 2021 BloombergNEF report has argued that steel production could be made with almost no carbon emissions, with a $278bn extra investment by 2050. This would require the additional use of hydrogen as an energy source and more recycling.


According to the report, green hydrogen could be the cheapest production method for steel, capturing 31% of the market by 2050. It also suggests that, in theory, 45% of steel could be sourced from recycled material, and the rest from ‘a combination of older, coal-fired plants fitted with carbon capture systems and innovative processes using electricity to refine iron ore into iron and steel’.


To achieve this transformation, according to the report, the industry needs to boost the amount of steel that is recycled; procure clean energy for electric furnaces; design all new capacity to be hydrogen or carbon capture-ready; begin blending hydrogen in existing plants to lower the cost of green hydrogen; and retrofit or close any remaining coal-fired capacity.


Hellen Christodoulou, National Director, Steel Market and Industry Development for the Canadian Institute of Steel Construction (CISC), notes: ‘97% of steel content is recyclable. And when recycled it does not lose its metalogical properties. We take the life cycle approach. It’s not just thrown away. It’s circular.’


Big green projects

Seven out of the 10 biggest steel producing countries have initiated at least one green steel project, according to the Green Steel Tracker. One example is Swedish joint venture Hydrogen Breakthrough Ironmaking Technology (HYBRIT), which has manufactured what it claims to be the first fossil-free steel in the world.


HYBRIT comprises Sweden-based steel maker SSAB, Swedish iron ore miner LKAB and energy major Vattenfall. Last year, the three companies showcased a hydrogen-reduced sponge iron produced at HYBRIT’s pilot plant in Luleå. This system has since been used to produce steel, with SSAB’s Oxelösund mill rolling its first green steel using HYBRIT technology. The first customer for the new product was the Volvo Group, another Swedish industrial major.


‘It’s a crucial milestone and an important step towards creating a completely fossil-free value chain from mine to finished steel,’ reports Jan Moström, LKAB President and CEO. He says the joint venture could produce sponge iron on an industrial scale, making the technology a viable option for the steel industry by 2026.


Back in the US, Boston Metal has developed an electrolysis process known as molten oxide electrolysis technology for making cleaner steel. This electro-chemical system uses direct electric current to separate chemical compounds into their constituent parts. It converts low- and mid-grade iron ore fines directly into high purity molten iron and, according to the company, uses ‘clean energy to decarbonise one of the most carbon intensive industries in the world’.


Such environmental innovation, including links with renewable energy producers, will offer the steel sector the means to remove its reputation as a major carbon polluter. Scaling this technology across the entire sector will be crucial for meeting net zero targets.