By Charlie Martin, Policy Advisor

After concrete and cement, steel is one of the most commonly used materials in the world. With applications from construction and infrastructure to transportation and manufacturing, its necessity in modern society is unmistakable. We need it to reinforce roads, highways, and buildings. We build our cars with it and then drive them over steelmade bridges. Steel is just as critical for building mechanized tanks for national defense as it is for cooking with stainless steel appliances in our kitchens.

Steel is all around us!

BUT—there’s always a but—making steel is energy and carbon intensive. A report from Global Efficiency Intelligence (GEI) found that the steel industry accounts for around 7% of global greenhouse gas emissions (GHG) and around 11% of global carbon dioxide emissions. Beyond GHGs, the steel industry is a source of air pollution, which impacts workers and the communities where steel mills are located.

Without action, emissions from steelmaking are going to be a bigger problem. According to the International Energy Agency (IEA), steel demand is projected to increase by more than a third from 2020 to 2050. The increase in consumption and production from steel will further drive up emissions unless the industry takes substantial steps to decarbonize.

To better understand this, here’s a quick primer on how steel is made.

Let’s Get into the Weeds on Steel-making Processes

Steelmaking generally comes in two forms: 1. Primary steelmaking, which converts raw iron ore into steel, and 2. Secondary steelmaking, which depends heavily on recycled steel. Primary steel is typically produced in an integrated blast furnace (BF)/basic oxygen furnace (BOF) process, while secondary steel is often made via the electric arc furnace (EAF) process.

Primary steel – BF/BOF steelmaking starts with heating coke (although this is increasingly being replaced with natural gas), iron ore, and limestone in a blast furnace to create pig iron. Pig iron is then fed into a basic oxygen furnace where recycled steel or direct reduced iron (DRI) may be added with the pig iron and injected with oxygen to reduce the carbon content and impurities. This process is the main source of primary steel production globally and accounts for nearly 70 percent of the world’s steel production.

Secondary steel – EAF production generally uses recycled steel scrap as the primary input. However, this feedstock can vary by country and can be a key source of carbon emissions. In the U.S., the EAF process accounts for nearly two-thirds of steel production, and has a lower emissions intensity primarily because of the lower energy intensity needed to process the scrap. Because the EAF process is dependent on electricity, the energy source for the electrical grid plays a key role. When energy and emissions intensities are calculated for EAF steel, the embodied energy and carbon in recycled steel scrap and some other inputs are usually not included.

The Need for Both

Both primary and secondary steelmaking processes will be needed to meet future demand. According to the World Steel Association, steel demand is growing faster than scrap can be made available. This is in part because the average lifespan of a steel product is 40 years, with the upper range for buildings and infrastructure steel to be around 100 years. A 2015 study in the Journal of Cleaner Production found that because of the demand for steel and scarcity of scrap, more than half of the steel produced in 2050 will still have to come from virgin materials like iron ore. Even in a more circular economy than we have now, primary steel production will remain a major part of meeting the global demand for steel.

Additionally, secondary steelmaking from EAF mills in North America is typically used to manufacture certain products like hot rolled shapes such as angles, channel shapes and rebar. Hollow structural shapes used in buildings or steel deck used to reinforce concrete tend to come from primary steel.

Lowering Steel GHGs

Part of the problem was that—until recently—no mechanism existed to incentivize or reward U.S. manufacturers for producing some of the cleanest steel in the world.

Knowing we need both primary and secondary steelmaking, we need both processes to lower their GHG emissions (and other pollutants) if we want to meet the administration’s goal of net-zero emissions economy-wide by no later than 2050. We need more innovation of technologies and business models to scale up the reuse of materials and support circular economies within manufacturing. Recycling is already an integral part of steel production, but we need to do more to reduce contaminants in steel products to further increase the recyclability of scrap steel.

Thankfully, the U.S. is already leading the charge on making cleaner steel—in fact, among the six largest steel producing nations—China, India, Japan, the U.S., Russia and South Korea—which account for 75% of global steel production, American steel has the lowest carbon dioxide intensity. And steelmaking in the U.S. is likely to get even cleaner.

For instance, one innovative approach to reduce emissions is by switching a facility’s fuel source with clean hydrogen. This would directly benefit primary steelmaking as it could be produced through the direct reduction of iron ore with clean hydrogen as a fuel and feedstock instead of coal. Between the Inflation Reduction Act’s creation of a new $6 billion program at the U.S. Department of Energy (DOE) to achieve transformative emissions reductions in the manufacture of steel and other emissions-intensive materials; and the Bipartisan Infrastructure Law’s creation of a new $8 billion program also at the DOE to create regional clean hydrogen hubs that would further develop the production, processing, delivery, storage, and end-use of clean hydrogen; domestic primary steelmaking with clean hydrogen-based direct reduced iron on an industrial scale is closer than ever.

And yet, despite already making some of the lowest carbon steel in the world and committing investments to clean up even further, the U.S. also imports more than any other country and most of that steel comes from places with significantly higher carbon intensities. Part of the problem was that—until recently—no mechanism existed to incentivize or reward U.S. manufacturers for producing some of the cleanest steel in the world.

Enter BUY CLEAN!

Buy Clean

Buying cleaner means better quality, fewer emissions, and supporting good manufacturing jobs at businesses doing right by our environment.

Buy Clean policies are helping to transform industrial manufacturing and the materials we need to grow the clean economy. These guidelines prioritize government purchasing of cleaner construction and infrastructure materials such as steel, but also concrete, asphalt, glass, and more. Think about the construction of a bridge, where massive amounts of steel and concrete are used. The U.S. federal and state governments can either buy cheap, low-quality materials made overseas with high emissions, or they can purchase materials made by U.S. workers with lower emitting processes and support domestic manufacturers doing their part to fight climate change. The choice is pretty simple in our view. Buying cleaner means better quality, fewer emissions, and supporting good manufacturing jobs at businesses doing right by our environment.

And Buy Clean has the potential for outsized impact, given that the U.S. government is the largest purchaser on Earth. With Buy Clean, we can leverage the government’s vast purchasing power to stimulate demand for cleaner materials. This helps to overcome a barrier we have faced up until now: manufacturers have had little incentive to invest money in cleaner production processes without an established market for cleaner materials. By creating that market, Buy Clean offers a powerful incentive for cleaner manufacturing. 

The policy depends on reliable data from manufacturers on the estimated GHG emissions for a construction material. If governments are to make procurement decisions based on standards for environmental performance, they need to know what they’re buying and how clean it is. This is achievable through the use of Environmental Product Declarations (EPDs). EPDs are standardized reporting tools for disclosing the emissions impacts of construction materials.

Using EPDs, the government can identify the materials with the lowest “embodied carbon”—the total carbon emissions created by a material’s production from when it started as a raw material in the ground to when it became a key component of a bridge, for example—and use the less polluting one. Buy Clean is a relatively new policy though, and just now starting to ramp up at the federal level thanks to President Biden’s executive order, “Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability,” and implementation of the critical investments in the Inflation Reduction Act. These investments include more than $4 billion for the Department of Transportation (DOT) and the General Services Administration (GSA) to support the purchase of low-carbon materials for public buildings and highways (guided by the Environmental Protection Agency).

Comparing Apples with Apples 

A policy that too strongly favors purchases of secondary steel may have unintended adverse impacts on climate and jobs by driving domestic primary producers out of business, displacing production—and therefore leaking emissions—to countries with weaker climate policies.

In the case of steel, these Inflation Reduction Act programs and Buy Clean writ-large should factor in the type of steelmaking process being used and adjust standards for environmental performance and procurement accordingly. This will ensure an apples-to-apples comparison and incentivize both kinds of steel producers, primary and secondary, to reduce their environmental impact.

Given the current state of the steel industry, separate standards for primary and secondary steel is critical at this point for ensuring Buy Clean meaningfully reduces climate pollution. To see why, consider what would happen under a single Buy Clean standard that lumps primary and secondary steel together. Given that primary steelmaking is considerably more emissions-intensive than secondary steelmaking, primary steelmakers would have no chance of qualifying for government purchases, and thus, no incentive to reduce emissions. Meanwhile, EAF mills making secondary steel would automatically qualify as cleaner than all primary producers, reducing their incentive to cut EAF emissions. By comparing apples with oranges, this approach would significantly limit Buy Clean’s climate impact. Instead, the logical solution is to use separate standards to push primary producers to compete with each other to lower emissions, while fostering similar competition among secondary steel mills.

This apples-to-apples approach also will help to support U.S. manufacturing jobs. A policy that too strongly favors purchases of secondary steel may have unintended adverse impacts on climate and jobs by driving domestic primary producers out of business, displacing production—and therefore leaking emissions—to countries with weaker climate policies.

As the federal Buy Clean programs develop, it will require the federal government to be responsive to evolutions in the steel industry. Agencies should monitor whether forthcoming technologies enable significant emissions reductions in primary steelmaking, allowing a convergence in emissions intensity between primary and secondary production. Ongoing evaluation will be required to determine whether separate standards for different steel production pathways remain desirable or if, at some point, a single standard should be implemented.

Data and Labeling Challenges

Federal funds should go to the purchasing of cleaner steel, steel that is more often than not made right here in the United States. But just as the U.S. produces cleaner steel than its competitors, it doesn’t necessarily make it “clean.” We can and must do better.

One challenge for developing Buy Clean policies for steel is the scarcity of available EPDs. While many EPDs exist for certain sectors—like concrete—there are comparatively few available for steel, even when accounting for relevant product categories. This is a problem.

For Buy Clean policies to succeed, more data and therefore more EPDs are needed from both processes, but especially primary steelmaking. Purchasers need to know how clean their materials are if they want to make informed decisions that help to address climate change. And for the government to responsibly invest in cleaner manufacturing processes, it needs manufacturers to produce EPDs showing that those investments actually translate into lower emissions. That is why the U.S. Department of Transportation and U.S. General Services Administration may only allocate their Inflation Reduction Act funding to manufacturers that produce EPDs.

Finally, just because the United States produces cleaner steel compared to the vast majority of its international competitors, doesn’t necessarily make it “clean” steel. If you browse around searching for terms like “clean steel” or “green steel” you will see a lot of pretty words, but nothing that’s fully agreed-upon or standardized. Thankfully, the U.S. Environmental Protection Agency just wrapped an open comment period on low-carbon product labeling. The responses from stakeholders will help the federal government develop a clearer definition for what “low-carbon” or “clean” materials (including steel) are—or far more importantly—what they are not.

Federal funds should go to the purchasing of cleaner steel, steel that is more often than not made right here in the United States. But just as the U.S. produces cleaner steel than its competitors, it doesn’t necessarily make it “clean.” We can and must do better.

With the significant investments of the Bipartisan Infrastructure Law and the Inflation Reduction Act providing a supply-side push to develop new technologies and improve processes, with the demand-side pull of Buy Clean and the related pilot programs at the U.S. Department of Transportation and U.S. General Services Administration to guarantee a market for those cleaner goods, the United States is poised to lead the world in building a clean economy. This is no more obvious than in our domestic steel sector. By boosting emissions data for critical products, low-carbon labeling will improve and environmental performance standards can be more targeted and accurate, giving us the opportunity to make cleaner steel here in support of not only a healthy climate, but also good jobs and our manufacturing goals.