Decarbonising

Steel:
FORGING
NEW PATHS
TOGETHER

[Link]
marketingandtrading

In c ollabora t ion w it h
CONTENTS
Decarbonising Steel: Forging New Paths Together

1 Introduction 2

1.1 Foreword 3

1.2 Report objectives 4

1.3 Research summary 5

2 Moving towards a low-carbon 6

world: the route for steel

2.1 Decarbonising steel is crucial to achieving 7

climate targets

2.2 Companies across the value chain depend on 11

each other to decarbonise
Pathways to decarbonising steel 12

Pathways to decarbonising iron ore mining 14

3 Overcoming the barriers to 16

decarbonising steel

3.1 The six key barriers to steel decarbonisation 17

3.2 There is a need for abundant low-cost 20

green energy

3.3 Public policy and incentives can make the 24

transition less risky

3.4 Low-carbon solutions are needed for both 27

high- and low-quality iron ore

4 Building coalitions to accelerate 28

change

4.1 Working together to overcome barriers 29

4.2 Commercial coalitions accelerate 30

decarbonisation of the steel value chain

4.3 A minimal viable coalition is needed to 31

decarbonise the industry

4.4 Setting up a coalition for success 34

5 Shell Perspectives 35
1.1 FOREWORD
Steel is the world’s most important engineering and construction
material. Used in buildings, cars, ships, trains and tools, it appears
in every area of modern life. Unsurprisingly, the world has
developed a considerable appetite for it. Over the past 50 years,
annual demand has tripled and is expected to reach a total of
1,840 million tonnes in 2022.1

While steel offers excellent formability the entire steel value chain. Its purpose
and durability, there is a downside: is to set out the major barriers to
the industry, from mining to production, decarbonising steel and identify how to Steve Hill
Executive Vice President,
has one of the highest carbon emission move forward with solutions. I would like
Energy Marketing, Shell
footprints. It generates more than three to thank them all for their participation,
times the emissions of the aviation enthusiasm and willingness in sharing
There are several potential solutions
industry, over 45% more than the cement their expertise and their views on
to decarbonising steel, but to succeed
industry and 25% more than road freight.2 how change can best be delivered.
one approach is crystal clear: if the
So how can such an energy- and Shell too is working hard to change. industry is to cut carbon emissions at
carbon-intensive industry take the In 2021, we announced our goal to the speed and scale needed, all the
steps needed to reduce emissions, be a net-zero emissions energy business elements within it must work together
to help society make progress towards by 2050 or sooner and we want to to deliver change. As we have seen in
the goals of the Paris Agreement on help others reduce emissions too, other industries, commercial coalitions
tackling climate change? and to that end we are working with with achievable goals are crucial to
Given the nature of steel processes, customers across all industries including making the right progress. And for this,
the vast range of steel products and aviation, shipping, road freight and all stakeholders along the value chain
their uses, and the complexity and heavy industry. have an important role to play.
fragmentation of the steel value chain, Other companies and organisations This is the fourth report we have
there is no simple or single solution have launched individual or joint published with the help of Deloitte on
to decarbonise the industry. projects aimed at reducing the carbon sectors where decarbonisation is harder
This report is the result of comprehensive intensity of the steel industry and, as to abate. It shows how much potential
interviews with experts from a wide this report reflects, there are some there is for change if we act without
variety of organisations involved in promising technologies and processes delay and chart a new path for the steel
that can enable the transformation. industry.

1 [Link]

3
1.2 REPORT OBJECTIVES
The research presented in this report was gathered in interviews with more
than 100 executives and experts, representing 57 organisations involved
in all aspects of the steel industry and its wider ecosystem. The report’s
goals are straightforward: they aim to reflect the views of the industry
on how to accelerate decarbonisation and achieve net-zero emissions.
Taking a value chain view
The interdependence of organisations in any value (procurement of materials, assets, services, etc.)
chain, and especially harder-to-abate industries such and downstream (including transport, waste
as steel, needs to be taken into account to frame disposal and processing). To tackle Scope 3
a comprehensive understanding of the challenges emissions, companies across the steel value
to decarbonisation. For sectoral decarbonisation chain are mutually dependent on one another to
to be achieved, a significant impact is made when set firm emission reduction targets (see Figure 1).
companies commit to reducing their Scope 3 A value chain assessment, like this report,
emissions, the indirect emissions associated with reveals the key barriers to making progress, the
their value chain. This applies both to upstream. solutions available and the crucial importance
of cross-collaboration.

FIGURE 1: OVERLAPPING DECARBONISATION

NEEDS OF THE VALUE CHAIN
Raw Finishing
End-market Use by
FIGURE 2: RESEARCH PARTICIPANTS3,4,5
Mining Logistics material Iron making Steel making and
application end-user
preperation distribution

Miner Scope 1+2 Scope 3 (downstream) We interviewed 57 organisations...

Steel
Maker
Scope 3 (upstream) Scope 1+2 Scope 3 (downstream) 5 Miners 3 Shippers 14 Steel producers 6 Consumer Goods

End
Scope 3 (upstream) Scope 1+2
Scope 3 3 Infrastructure 4 OEMs 7 Construction 2 DRI asset suppliers
Market (downstream)

4 Financiers/traders 3 Cert. /Regulators 4 Industry Assoc./Alliances 2 Others

Motivating sector interaction Activating the value chain
Decarbonisation initiatives succeed best when One of the main objectives of a cross value chain across multiple regions...
collective momentum for change is achieved. approach to a coalition is to enable a group of
For that to happen, it is essential to understand core participants to collectively map out a
the unique motivations and challenges of different successful pathway that tackles the main barriers 38 Europe 5 Asia 14 Rest of World
actors in the wider steel value chain and how to decarbonisation and identifies the key solutions.
these differ around the world. Collective action
This report explores the insights participants shared
can then be taken that will accelerate in speed
with us in interviews and working sessions
and grow in magnitude.
(see Figure 2). All engagements with interviewees
were conducted in a manner that respects
competition law boundaries.
4
1.3 RESEARCH SUMMARY

1. The steel industry is considered harder- 4. This report highlights six key barriers 5. To overcome these barriers, feedstock
to-abate. It currently generates around to decarbonisation: and production processes will have to
10% of global emissions, which could change, driving transformations in the
increase as demand is expected to rise Lack of abundant and affordable steel value chain. This could lead to a
by 10-35% by 2050 compared to 2019.6 green electricity 10 and green geographical separation of iron and
Iron and steel manufacturing is responsible hydrogen;11 steel making, with iron making moving
for 95% of the emissions of the whole to locations with low-cost green hydrogen
value chain, from ore mining to steel making. Absence of policy and regulatory availability.
incentives to promote global green
steel standards enable fairer competition;
2. The steel market is relatively concentrated, 6. Successful commercial coalitions are
which offers opportunities for Limited availability of high-grade needed to help derisk investments by
decarbonisation. If the 20 largest steel iron ore suitable for the direct reduced miners (to generate the right iron-ore
companies decarbonise their plants, iron-electric arc furnace (DRI-EAF) grade), steel producers (to progress
the potential total emissions of the steel decarbonisation route; green steel production), end markets
industry could be reduced by up to a third.7 (to guarantee the purchase of green
Shortage of a skilled workforce to steel), energy providers (to ensure a
support the decarbonisation transition growing supply of green electricity and
3. To derisk decarbonisation investments, across the value chain; hydrogen) and encourage policymakers
steel companies would need guarantees, to include low-carbon requirements in
in the form of low-carbon iron ore feedstock8 Limited capital available to invest in government tenders.
and customer orders for green steel.9 decarbonisation solutions;

Uncertainty of sufficient and

long-term demand for green steel
with green premiums.

5
2 MOVING
TOWARDS A
CLEANER FUTURE:
THE ROUTE
FOR STEEL
Steel is a vital resource in society today. It is used by all industries and
is crucial to the development of the global economy. However, its
environmental impact is high, which occurs mainly through its production.
But with increasing societal pressure to decarbonise, how can the
industry meet the world’s demand for steel while reducing the carbon
intensity of its production to meet global climate change targets?

6
2.1 DECARBONISING
STEEL IS CRITICAL
TO ACHIEVING
FIGURE 3: GLOBAL CO2
EMISSIONS BY SECTOR (2019)12,13,14,15

CLIMATE TARGETS
Iron and steel-indirect
emissions (1.1 Gt CO2)
Iron and steel-direct
emissions (2.5 Gt CO2)

3%
7%

Progress towards the goals of the around 10% of global carbon dioxide
Road
2015 Paris Agreement on climate (CO2) emissions. The long lifespan
change requires major transitions in the of steel production assets, combined 17%
key areas of energy production and with high asset replacement costs and
consumption, food production and high decarbonised energy requirements,
consumption, and materials sourcing make steel one of six harder-to-abate Σ = 36.0 GT
and use. Steel has one of the highest industries alongside road, cement, 2%
emission footprints, accounting for chemicals, aviation and shipping (see Shipping
3%
Figure 3).
42% Aviation
7%
Energy
industry 3%
Cement
8% 8%

Chemicals

Buildings Other
industry

7
In the steel value chain,16 steel oxygen furnace (BF–BOF) iron and steel iron ore is omitted, but there is insufficient
production alone represents around making process to produce primary scrap material to meet today’s global
95% of total greenhouse gas emissions steel. Secondary steel production in demand for steel. By 2050, the
(see Figure 4), with the remaining scrap-based electric arc furnace (EAF) International Energy Agency models
proportion of emissions originating processes generates around 90% that 46% of steel could be produced
from mining (4%) and logistics (1%). fewer greenhouse gas emissions than from scrap feedstock, compared to
Most of these emissions originate from BF–BOF 17, as the iron-making step from 32% in 2020, as more products reach
the conventional blast furnace–basic their end‐of‐life.18

FIGURE 4: CO2 EMISSIONS SPLIT BY VALUE CHAIN ACTOR19

TYPICALLY INTEGRATED FOR PRIMARY STEEL PRODUCERS

14
Figure 4
DISTRIBUTION
RAW
IRON STEEL AND END- SCRAP
MINING LOGISTICS MATERIAL FINISHING
MAKING MAKING MARKET RECYCLING
PREPARATION
APPLICATION

4% 1% 10% 45% 30% 10% N/A N/A

TOTAL 95%
SCRAP-BASED EAF: 5% / NG DRI-EAF: 5% / BF-BOF: 90%

8
 Figure 5

In geographical terms, global steel FIGURE 5: STEEL PRODUCTION FORECAST (MT) 2021 OUTLOOK22,23,24
production is relatively concentrated.
For instance, some 20 companies
account for around 37% of production,
12 of which are located in China.20
In European steel-producing countries,
the industry is consistently among the
10 largest emitters. As for China, it is not 2,540 IEA STEPS
only the world’s largest producer but 0.9%

also the largest consumer. This offers an 1,951 2,050 IEA SDS
opportunity: decarbonisation progress 32%
0.2% OTHER
by a handful of major producers will
26%
have a far-reaching impact on reducing
global emissions of the industry.
6% EU
4.3% 8%
Steel production is expected to
6%
continue to grow to 2050 and beyond, 848 4%
17% INDIA
although at a slower pace compared
to the past two decades (see Figure 5). 4% USA
According to the International Energy 45% 4% MIDDLE EAST
Agency, average annual projected
growth ranges from 0.2% to 0.9% due
22% 53%
to demand from developing countries.21
To a lesser degree, demand is also 37% CHINA
driven by the need for steel in building 11%
clean energy infrastructure such as wind 18%
and solar farms, power transmission
networks and the electrification of plants
2001 2021 2050
and machinery.

9
 FIGURE 6: REQUIRED RENEWABLE
ENERGY AND INFRASTRUCTURE
Take the emissions associated with developing
an offshore wind plant, 71% of which originate
from materials used.25 According to the
International Renewable Energy Agency
(IRENA), the world will need an additional 775
gigawatts of offshore wind capacity from 2030
to 2050. This would require a significant growth
in demand of about 140 million tonnes of steel,
equivalent to 1% of total annual steel production,
even when factoring in efficiency gains in wind Wind power Electrolysers
technology.26 Offshore wind farms Large scale production
facilities

Solar power Global H2 infrastructure

New panels Import/export
terminals, storage

H2

Power grid upgrades Local H2 infrastructure

Storage, new connections Backbone refurbishment,
pipeline extensions

10
2.2 COMPANIES ACROSS THE EXAMPLE – AUTOMOTIVE OEM

VALUE CHAIN DEPEND ON EACH “2021 saw a big rise in demand [for low-
carbon steel]. Before this, it was sporadic

OTHER TO DECARBONISE
requests, but now, we are bombarded with
questions such as ‘What is the CO2 footprint
of your steel? What plans do you have?’–
especially from the automotive sector”.
Most companies embark on their to be achieved, the greatest impact is dependent on the steel producers to European steel producer

decarbonisation journey by setting made when companies collaborate reduce their greenhouse gas emissions.
targets for Scope 1 and 2 emissions across the value chain. As one construction company stated: The mainstream emergence of electrical vehicles
which cover their own greenhouse gas “85% of our company’s total on roads across Europe, North America and China
emissions, from their use or assembly This is especially the case for companies is reducing the Scope 3 emissions of automotive
emissions are Scope 3 emissions,
of products, vehicles, buildings or at the beginning of the steel value chain, manufacturers because more of their cars are being
of which the bulk originates from powered by electricity instead of petrol or diesel. Electric
machinery.27 By increasing energy such as iron ore miners, or at the end,
steel production”. vehicle manufacturers are now broadening their focus to
efficiency, electrifying processes and including automotive and construction
include Scope 3 upstream emissions – those generated
using low-carbon or zero-carbon end users due to the concentration Hence, if steel producers take action from the production of materials used in their cars,
alternatives, companies can directly of emissions associated with iron and to decarbonise, it will enable all also referred to as embodied carbon (see Figure 7).28
reduce their Scope 1 and 2 emissions. steel making. To lower their Scope 3 companies across the value chain to Steel typically makes up 54% of a vehicle (around
However, for sectoral decarbonisation emissions, these companies are heavily reach their climate targets and help to 900 kg on average29 and is therefore a priority material
to decarbonise, to address Scope 3 emissions. This
meet customer demand.
is especially the case in the high-end electric vehicle
market, where manufacturers are actively trying to
FIGURE 7: SCOPE EMISSIONS OF AN AUTOMOTIVE PRODUCER secure production of green steel from steel producers
to use in their cars and where customers are willing
to pay a green premium for more sustainable products.
This, combined with the relatively small proportion
SCOPE 3 EMISSIONS SCOPE 1 & 2 EMISSIONS SCOPE 3 EMISSIONS of steel in the total cost of producing an electric
vehicle, makes it economically viable for automotive
manufacturers. For instance, according to the Mission
Possible Partnership, using green steel30 in a passenger
car would add less than 1% to its showroom price,
while also reducing material-related carbon emissions
DESIGN PRODUCTION by up to 34%.31
RAW PROCESS MARKETING MAINTENANCE
AND PARTS (OEM
MATERIALS ENGINEERING AND SALES AND SERVICE
DEVELOPMENT ASSEMBLY)

UPSTREAM DOWNSTREAM

11
 ROUTES TO
PATHWAYS TO FIGURE 8: PRIMARY STEEL PRODUCTION PROCESS 33,34,35,36,37
LOW-CARBON
STEEL
DECARBONISING 1.

STEEL 1 BF-BOF Conventional iron- and

BLAST BASIC OXYGEN
steelmaking process
COAL COKE OVEN FURNACE FURNACE CCS
(BF) (BOF) including CCS.
HIGHER TRL

Those interviewed in the research for this report SINTER

2.
identified four main pathways to develop low- IRON ORE AND PELLET
PLANT
SCRAP

Alternative route to create

carbon primary steel production, which are set out
steel using (natural gas
on the right (see Figure 8). If successfully deployed, or) H2 as fuel, requiring
these pathway solutions could result in a minimum 2 DRI-EAF 1,000 ºC 1,700 ºC high-grade iron ore.
total emissions reduction of around 60%. Many
factors determine the most suitable decarbonisation HIGH-GRADE PELLET
H2 DIRECT
ELECTRIC ARC
IRON ORE PLANT
REDUCED IRON 3.
solution for a specific plant, but the most common FURNACE (EAF)

LOW - C A R BO N C RU D E S T E E L
(DRI) PLANT
Alternative route that allows
are the size, age, type and geographic location
ongoing use of BOF
of the plant. Retrofitting newer plants in particular SCRAP
plant, but with a DRI
with carbon capture and storage, rather than and melting unit plant,
replacing the blast furnace, will likely be used as 3 DRI-MELT-BOF
SUBMERGED ARC FURNACE
REDUCED ELECTRIC FURNACE
not requiring higher-grade
a short to mid-term solution to prevent them from OPEN SLAG FURNACE iron ore.
being stranded. BASIC OXYGEN
IRON ORE PELLET H2 DRI MELTING
PLANT PLANT UNIT
FURNACE
4.
(BOF)
What all steel decarbonisation pathways have in Innovative technology
common is that large capital investments are only using electricity
SCRAP
needed, especially to replace the blast furnaces. to create iron/
Globally, around $800 billion in capital investment steel directly from
is required by 2050 to decarbonise production, 4 IRON ORE ELECTROLYSIS (non-premium) iron ore.

mainly for BF-BOF efficiency gains and MOE: 1,550 ºC

ELECTROWINNING: 110 ºC
1,700 ºC

carbon capture and storage, secondary steel

INDUCTION BF-BOF
production and hydrogen-based DRI-EAF.32 IRON ORE ELECTROLYSIS FURNACE / ELECTRIC

To derisk investments, steel companies are largely

ARC FURNACE Blast Furnace -
Basic Oxygen Furnace
dependent on their customers agreeing to purchase
green steel. As one Chinese steel producer said: LOWER TRL
SCRAP
DRI-EAF
Direct Reduced Iron -
“Furnaces are relatively new in Electric Arc Furnace
China, so this is a problem. The cost
of replacing them will be a challenge”. DRI-Melt-BOF
CONVENTIONAL ROUTE
Direct Reduced Iron -
ALTERNATIVE ROUTE
Melt - Basic Oxygen
Furnace
12
1 2 3 4
CARBON CAPTURE AND DRI–EAF WITH REPLACING THE BLAST HARNESSING EXISTING
STORAGE FOR EXISTING 100% GREEN ENERGY FURNACE WITH A TECHNOLOGIES FROM
BF–BOF PLANTS LOW-CARBON ALTERNATIVE, OTHER METALS
Currently, a hydrogen-powered DRI WHILE KEEPING THE
plant combined with an EAF powered by
Carbon capture and storage (CCS) is
renewable electricity is considered one of
BASIC OXYGEN FURNACE New green steel production technologies
considered a short-term decarbonisation can potentially be developed through
pathway – especially for newer BF–BOF the most promising decarbonisation routes OPERATIONAL processes used to produce other metals.
plants. Within a typical plant lifetime of for steel. The DRI–EAF route is already For example, a new technology is iron
40 years, the age of the existing global operational at scale with natural gas in Just a third of the world’s iron ore supply ore electrolysis – a process inspired by
production capacity varies widely. India and the United Arab Emirates. In the is of high-grade quality.44 aluminium production – which is powered
In China for instance, the BF–BOF asset transition to green steel production, steel by renewable energy. For instance,
base is relatively new, so efficiency producers could use this proven technology DRI–EAF production plants require higher- Boston Metal45 aims to use molten
improvements and CCS measures are the to replace the blast furnace with a DRI plant grade iron ore than BF–BOF production oxide electrolysis technology to run a
most likely short-term transitional pathways. fuelled by gas, and the BOF with an EAF. methods, because insufficiently dense zero-carbon facility at lower cost than a
iron ore can create acidic slag which conventional BF–BOF plant. The company
CCS offers around 65-80% emissions can corrode the EAF assets and, in the claims that the process can use a wider
“We aim to have our DRI operational
reduction potential38 and creates longer term, lead to decreasing yields. range of iron ore qualities than DRI–EAF
by 2025 at 30% total capacity –
opportunities for other industries. it will first start with natural plants, which removes the requirement for
For example, the captured can be To mitigate this challenge, some European high-quality iron ore plants.
gas then increasingly hydrogen”.
used as a feedstock for green methanol steel producers are also looking into
European steel producer DRI investments that use open slag bath
production39, a low-carbon fuel that can
be used in shipping. However, the potential furnaces (or reduced electric furnaces)
for CCS is limited to locations with sufficient with BOF, known as DRI–Melt–BOF. The
DRI technology using hydrogen instead
storage potential, such as depleted open slag bath furnace acts as a melting
of natural gas has not yet been proven
North Sea gas fields, or with nearby unit before putting the iron into the BOF,
on a commercial scale. The Swedish
petrochemical sites so that the CO2 can which allows lower-grade iron ore to
HYBRIT consortium40 has shown that this
be used as feedstock. be used. At the same time, existing BOF
approach to producing fossil-free steel
assets can still be used. This pathway is less
is possible, but currently only on a smaller
technologically mature than gas-powered
scale. Meanwhile, other companies,
DRI–EAF; however, once proven, DRI–
including ArcelorMittal,41 Salzgitter42 and
Melt–BOF has the potential to be adopted
Tata Steel,43 are studying the potential
quickly as it can partly use existing assets
of DRI using direct-injected hydrogen. A
and would require less up-front investment.
short-term, transitional approach is to blend
hydrogen with natural gas in the DRI plant.

13
PATHWAYS TO
Iron ore mining accounts for about 4% which includes location, (underground
of the emissions in the steel value chain, or open pit), the distance of loading and
generating around 154 million tonnes of hauling materials, the properties of the

DECARBONISING
CO2 in 2019.46 Although considerably mined product (ore grade, mineralogical
lower than emissions generated from properties) and the corresponding

IRON ORE MINING

steel making, the operational emissions intensity of processing required. In general,
and their abatement remain complex 40–50% of emissions at site level are
and varied for mining companies. generated by mobile equipment running
Mining’s Scope 1 and 2 emissions are on diesel (see Figure 9). These emissions
largely attributed to the mine design, can vary up to twentyfold across mines,
depending on the mine design.
FIGURE 9: ILLUSTRATION OF
AUSTRALIAN OPEN PIT IRON ORE MINE 47

EMISSION INTENSITY: 0.01KT CO2 E/KT

Figure 9

2 5 % %
50%
14 %
20 %
5 %

BLASTING OTHER EQUIPMENT BENEFICIATION

DRILLING LOADING AND HAULING CRUSHING AND GRINDING

DRILLING MINING PROCESSING

14
TO DECARBONISE IRON ORE MINING,
VARIOUS VIABLE PATHWAYS EXIST
1 2 3 4
INCREASING ENERGY REDUCING ENERGY TRANSITION TO CARBON-MANAGEMENT
EFFICIENCY WASTAGE LOW-CARBON ENERGIES STRATEGIES

For both mining and ore processing, energy To help decarbonise, mining operations Using diesel to power mobile equipment Where they cannot be avoided or
efficiency remains the starting point to should also focus on avoiding energy accounts for the most emissions generated reduced, the remaining emissions in the
achieve short-term emission reductions. wastage. Some companies interviewed by iron ore mining. To reduce the use of transition towards low-carbon mining could
Energy efficiencies can be realised are exploring ways to do this by looking diesel, operators could look at low-carbon be tackled through carbon management
through blast or haulage optimisation, outside the industry for solutions, fuels – such as sustainable aviation strategies - such as carbon capture and
asset upgrades and autonomous (highly such as mechanical dewatering 48 or fuel, biodiesel, bioethanol and renewable storage, carbon sequestration or by using
automated) mining. optimising the recovery of waste heat.49 compressed natural gas – or at fully carbon offsets - until more solutions to avoid
electrifying their fleet of equipment and reduce emissions are developed.
(see Figure 10). Changes in infrastructure
FIGURE 10: TECHNOLOGY would be necessary to enable a
DEVELOPMENTS NECESSARY large-scale transition to low-carbon HVO
FOR FLEET ELECTRIFICATION 51,52,53 BEV energy sources through intelligent grid E-DIESEL

2-3 1-2
integration,50 by reducing peak demand
and generating renewable energy on-site.
ELECTRIC TROLLEY +
BEV

2
TROLLEY +
ALTERNATIVE FUELS
DIESEL

1
H2
ELECTRIFICATION WILL REQUIRE E-METHANE

2
TECHNOLOGY DEVELOPMENT
GOING FORWARD

Time Horizon 1: Commercially Available Today

Time Horizon 2: Commercially Available 2025-2030
Time Horizon 3: Commercially Available 2030+

15
3 OVERCOMING
THE BARRIERS TO
DECARBONISING
STEEL
As the previous chapter describes, the steel industry is a major generator
of greenhouse gas emissions. Decarbonising steel involves overcoming
several challenges. In return, it offers far-reaching potential to progress
the energy transition, mitigate the impact of greenhouse gas emissions
and stimulate a lower-carbon economy.

16
3.1 THE SIX KEY
BARRIERS TO STEEL
DECARBONISATION
Through our interviews with To understand the barriers to
companies and organisations across decarbonisation and their significance,
the steel industry we have identified our research team spoke to people
key barriers to decarbonisation. in 45 companies across the steel
The most significant are the lack value chain, from miners to end users.
of affordable green energy supply, We also spoke to representatives
underdeveloped environmental of 12 organisations that impact
policies and the need for the industry, including financiers,
technological innovation to technology providers and government
process varying iron ore quality. and industry bodies. We then
refined their responses in workshops
with industry executives and senior
management. Based on all responses,
we have arrived at six barriers,
which comprise the greatest
challenges to decarbonising steel.

17
1 2 3 4
RENEWABLE REGULATIONS, INCENTIVES HIGH-GRADE ASSETS AND
ENERGY SUPPLY AND STANDARDS IRON ORE SKILLED LABOUR

An abundant, affordable renewable Policy and regulation, including incentives, DRI–EAF steel production requires A shortage of skilled labour (especially
energy supply is needed to decarbonise is a powerful tool government bodies high-grade iron ore as feedstock. Multiple in Europe), and a limited number of
the industry, whether green hydrogen to can use to accelerate decarbonisation. interviewees reported that they expect manufacturers of DRI and EAF plants, poses
power DRI plants or renewable electricity However, existing policies (as outlined in only a third of global iron ore to be another challenge to scaling up green
to power EAF plants, iron ore production 3.3) are only expected to lead to a slight suitable for current DRI–EAF processes. steel production. Replacing iron and steel
and transport operations. At present, the decline in emissions across the industry, As one miner said: production plants, as well as upgrading
global green hydrogen economy is in which means greater global regulation “Estimations are that 66% of the the distribution infrastructure for hydrogen
the early stages of scaling up supply and across the industry is required to meet global iron ore supply is not suitable and electricity, involves large multi-year
infrastructure. In addition, existing mines net-zero targets. In addition, many global for DRI–EAF operations”. projects. This requires skill sets that are in
and steel plants are often connected to and national standards for green steel demand across other sustainable initiatives,
electricity grids with limited capacity and and hydrogen have been developed Therefore, large-scale DRI–EAF production such as solar and wind farms, leading
are therefore not capable of supporting or are emerging, but this proliferation can will require high-grade iron ore production to greater competition for skilled people
large-scale plant electrification without be confusing for end users as it inhibits or upgrading, and the development within regions.
significant grid upgrades (see 3.2). transparency and comparability of green of low-carbon technologies that can use
steel (see 3.3). lower-grade iron ore (see 3.4).

The above three barriers were recognised

by all interviewees and are expanded on
in the following chapters. The following
three barriers were mentioned by a
smaller group of interviewees and were
considered regional and locally specific.
Because of this, we do not analyse them in
greater detail.

18
5 6
Figure 11

FINANCING END-MARKET DEMAND FIGURE 11: MINING AND STEEL VOLUMES (MT, 2019)54

Large-scale funding is required to Demand for green steel was ranked

decarbonise the iron ore and steel value by interviewees as the least-pressing
chain, notably to replace existing steel barrier because some niche markets are
production assets with newer and cleaner already keen to decarbonise their supply END PRODUCTS Vehicles
technologies. The steel sector is not known chains, particularly in Europe. Demand
for high margins and hence, financing for affordable, green steel is expected to
was identified as a barrier. However, the outpace supply until 2030, but is largely Buildings 14%
industry consensus is that financing could limited to specific business-to-consumer
materialise if investments are derisked. For markets, such as automotive manufacturing,
instance, financing would likely be more or those driven by green procurement 31% Consumer
available if miners provide guarantees
for high-quality iron ore supply, if energy
policies, such as construction in the
Netherlands. One banker responsible for
10% goods

suppliers commit to the supply of green metal and mining investments said:
energy, or if end users secure off-take
“Demand for green steel is already
agreements for green steel and regulators
higher than people believe. Players
introduce viable policies and incentives.
who get in first will be the big winners”.
21%
“We are working with suppliers For large-scale decarbonisation of steel
Mechanical and
for low-carbon cement/steel.
The problem is that we need
to be viable, the demand for green steel
needs to grow beyond niche markets.
24% electrical equipment
so much, it is impossible to To derisk investment decisions, miners,
buy it all green/low-carbon”. steel producers and hydrogen suppliers
Infrastructure
Infrastructure construction company will need order guarantees from large
steel purchasers, especially infrastructure
developers and construction companies,
as they comprise more than half of the
steel end market (see Figure 11). As a
global consumer goods executive said:
“Transition can be financed if you
get off-take guarantees. That is
how you can get scale, and potentially
lower the green premium".

19
3.2 THERE IS A NEED
FOR ABUNDANT LOW-
COST GREEN ENERGY
For green steel produced by All interviewees mentioned that the limited For DRI–EAF plants, regardless steel produced with green hydrogen
hydrogen-powered DRI, the cost availability of low-cost green energy, both of whether they are running on could fall below conventional steel
green hydrogen and renewable electricity, natural gas or hydrogen, there are by 2050, as the carbon price
of renewable energy represents is the key barrier to decarbonising steel. increased costs due to the high capital increases and green hydrogen prices
50 - 70% of total production costs. When modelling the cost of producing expenditure of building the core decrease. However, this ultimately
This low-carbon process will only steel (excluding iron ore procurement), assets. In addition, gas-powered depends on other factors, namely
carbon price and energy emerge DRI production is also expected developments in gas and coal
scale up if the cost of renewable
as the main cost-drivers (see Figure 12): to generate some carbon costs, due prices. It is also important to note that
energy drops sufficiently. to emissions from burning natural gas. iron ore costs are not included in
For conventional BF–BOF, by 2050 these three scenarios, and sourcing
the carbon price is expected to For hydrogen-powered DRI plants, high-quality iron ore for DRI–EAF
represent almost 70% of costs, green hydrogen will likely be a major could further increase costs.
based on an estimated carbon cost. Producing 1 tonne of green
price of €300 per tonne.55 steel with hydrogen-powered Overall, steel production costs are
DRI–EAF is estimated to require expected to more than double by 2050,
For BF–BOF with carbon capture around 80 kg of green hydrogen and with energy supply and carbon prices
and storage, carbon capture costs 0.6 megawatt-hours of electricity.56 representing 53-74% of costs (see Figure
are expected to result in higher costs Based on 2021 green hydrogen 12). Abundant low-cost green hydrogen
in the short to mid-term compared prices, this could mean that the cost and renewable electricity are therefore
to conventional BF–BOF. Even with of producing green steel with this crucial factors in making the business
carbon capture and storage, BF-BOF method could be two to three times case for green steel. As a DRI equipment
will likely face some carbon costs, higher than conventionally produced provider said:
but not as much, tipping the balance steel.57 The cost of green hydrogen “Nowadays, the availability of natural
in favour of carbon capture capacity is expected to decrease over the gas and hydrogen has a cost that
over the longer term. coming decades, but the rate of is not viable for a single producer“.
decline is difficult to predict given the
infancy of green hydrogen production.
According to one of the scenarios
outlined in Figure 12, the cost of green

20
The projections do not take into account European steel producers relied on Ukraine resulted in price increases due to uncertainty per tonne (around $1,314) in May.58
current geopolitical developments. In for raw materials, such as metallurgical of supply. In parts of Europe, hot-rolled coil In September, prices fell back further to
February 2022, Russia launched an invasion (coking) coal and iron ore. According to the jumped from around €950 per tonne (around around €800 a tonne due to rapidly-
of Ukraine. Before the war, Russia and London Metal Exchange, between February $1,040) before the invasion to more than rising energy prices and lower consumer
Ukraine together accounted for about 20% 23 and March 8, 2022, UK steel prices €1,400 per tonne (around $1,533) in April, but purchases.59
of EU imports of finished steel products. Many soared. The repercussions of the war have fell back to trade at slightly more than €1,200

FIGURE 12: TOTAL COST OF OWNERSHIP STEEL 60,61,62,63,64,65,66,67 Scenario when H 2 cost remains
at $5.5/kg in 2030 and 2050
Scenario when H 2 cost remains
at $4.7/kg in 2030 and $4/kg in 2050
Scenario when H 2 cost remains
at $3.3/kg in 2030 and $2/kg in 2050

BF-BOF BF-BOF + CCUS1 NG DRI-EAF H2 DRI-EAF

555 558
552
Feedstock and 483
427
180
energy cost 108 115 126 139 158 133 149
357
252
($/t)
2020 2030 2050 2020 2030 2050 2020 2030 2050 2020 2030 2050

Production cost 143 131

170 170 170
191 191 191

($/t) 49 49 49

2020 2030 2050 2020 2030 2050 2020 2030 2050 2020 2030 2050

506

215
Carbon cost 60 103
262
225
95 48
($/t) 27 6 20

2020 2030 2050 2020 2030 2050 2020 2030 2050 2020 2030 2050

749
682 574
552 568
Cost of end 385 414
491
378 329
product 218

($/t)
2020 2030 2050 2020 2030 2050 2020 2030 2050 2020 2030 2050

Carbon emission 0.9t CO2/t steel (52% reduction) 0.9t CO2/t steel (56% reduction) 1.5t CO2/t steel (91% reduction)
reduction vs BF-BOF

Cost delta
100% 80% 150% 110% 80% 340% 140% 70%
vs BF-BOF

BF-BOF Blast Furnace - Basic Oxygen Furnace

DRI-EAF Direct Reduced Iron - Electric Arc Furnace

DRI-Melt-BOF Direct Reduced Iron -

Melt - Basic Oxygen Furnace
21
COULD THE GEO-SPLIT
The barrier of insufficient to both types of production plant. As
low-cost green energy in steel energy demand shifts to green hydrogen
production could be mitigated

MODEL BE A SOLUTION?
and renewable electricity, these location
by the emergence of green patterns potentially make less sense and
hydrogen production hubs. are likely to change.

The availability of affordable energy has Iron ore mines are often located in areas
FIGURE 13: CRITICAL REGIONAL CONDITIONS always been a key determinant of the that offer renewable energy potential.
THAT IMPACT STEEL DECARBONISATION geographical location of steel plants. This creates an opportunity to review and
Historically, BF–BOF plants were built near optimise the iron and steel making process,
HISTORICAL CONDITIONS coal mines or coal supply routes, and gas- potentially splitting the process across
powered DRI plants near gas fields. The iron several different geographies to achieve
Coal Deep sea access ore, on the other hand, is shipped worldwide cost efficiency (see Figure 14).

Iron and steel

production

FIGURE 14: POTENTIAL IRON (ORE) SHIPPING

STEEL VALUE CHAIN 2050 | SIMPLIFIED
Factor conditions
Ore Hydro Solar Wind
Solar Solar
Iron demand

Strength of factor conditions

High
Low
End markets

Mining/Hydro DRI/EAF

FUTURE CONDITIONS Mining/Hydro DRI/EAF

Green H2 / High -grade Scrap/Hydro, solar, wind EAF

Scrap/Wind EAF
renewable power iron ore
Scrap/Hydro DRI/EAF
HBI
HBI
Iron Wind EAF
Solar DRI
production
HBI
Solar DRI/EAF
Mining/Hydro, solar DRI HBI
Mining/Hydro DRI
Mining/Solar DRI
Iron HBI
Steel Ore
production

End markets

Proximity to an abundance of low-cost renewable power and green H2 and Brazil, Middle East, and Australia, regions with potential abundance of low-cost renewable power, © [Link]
high-grade iron ore will be future critical conditions for iron and steel production could partially change the value chain by starting to produce HBI (premium DRI) and ship it globally

22
EAF steelmaking needs to remain close business. Prioritising investment in
to finishing and end markets to meet EAF over DRI seems a low-risk choice
customer demand for a wide variety for steelmakers located in areas
of steel quality across thousands of without existing or planned large-scale
stock-keeping units.68 However, the hydrogen production, as it offers them
DRI process could potentially move to future options for secondary – scrap-
locations that are well served by both based – steel production, as well as the
high-quality iron ore and abundant possibility to import hot briquetted iron.
low-cost renewable energy. In such With the International Energy Agency
a geo-split model, instead of shipping predicting secondary steel use to
low-carbon iron ore, producers could increase in Europe, to make up 59% of
ship low-carbon iron - in the form of European production by 2050, countries
hot briquetted iron (or sponge iron) - such as Austria, Germany and Slovakia
ready for EAF steel making. A banking might be better positioned to focus
executive active in the metals and on EAF steel making only. This presents
mining industry said: an opportunity for well-located iron
“I strongly believe in the splitting of ore miners to move downstream in the
iron and steel making, as the cost of value chain towards the production of
energy is the most important driver”. iron using DRI.

And a leading DRI equipment supplier, “Don’t focus on the steel making, but
who modelled the cost of steel making on getting the hydrogen. We need to
in a geo-split model, said: put the DRI next to the energy source”.
“One could produce the hot briquetted Steel producer
iron at a DRI megahub in a low-cost
green electricity region, and export
it to Europe. We believe this is the most For big steel customers, choosing
cost-efficient way of producing steel”. between the geo-split model and the
co-located model – where a steel plant
Despite the strong commercial and its energy resource are nearby one
arguments for separate iron and steel another – seems less of a concern than
making locations, it is likely that national the availability, traceability and price
politics and resource security will drive of internationally recognised green
some countries to maintain current steel. For instance, original equipment
processing locations. For miners and manufacturers are expected to support
steelmakers, the shift in factors could a geo-split model if it can speed
potentially disrupt part or all of their up supply and allow them to become
front-runners in using green steel.

23
3.3 PUBLIC POLICY
AND INCENTIVES CAN
FIGURE 15: STEEL PRODUCTION
CO2 EMISSIONS, SCENARIOS (MT) 73,74,75,76

MAKE THE TRANSITION IEA scenarios forecast stable to growing global steel demand

LESS RISKY 2020-2050 resulting in smaller total CO2 emission declines.

4,000 Historic IEA scenarios

+5% demand growth +36% demand growth
Government policy and and storage, hydrogen-powered
DRI plants and EAF production using 3,500
regulatory incentives are crucial -15%
renewable electricity (see Figure 15).69
to decarbonise steel. The Progressive policies in some European 3,000
unification of green steel countries have accelerated steel
2,500
standards on a global basis is decarbonisation by putting a price on -60%
carbon emissions of both European and
needed to reach net-zero 2,000
non-European70 production and subsidy
emission targets. schemes for important decarbonisation
1,500
initiatives.71 In other regions and countries, +0% demand growth +5% demand growth
According to the International Energy such as South Korea, carbon pricing has
Agency’s Stated Policies Scenario, a 15% 1,000
been implemented as well to achieve
decrease in CO2 intensity and absolute their 2050 carbon-neutral strategies.72
emissions from global steel production However, although expressing their 500
is possible by 2050 if current efficiency ambitions to be carbon neutral by 2050,
policies worldwide are fully implemented. concrete policies are absent in many 0
However, the agency goes further in other geographies.
its ambitious Sustainable Development 2010 2020 2030 2040 2050
Scenario, which predicts a 60% decrease To further increase progress, interviewees
could be possible with the widespread singled out the following three initiatives
adoption of carbon capture, utilisation from government organisations to stimulate HISTORICAL DATA
the transition.
IEA SUSTAINABLE
DEVELOPMENT
SCENARIO (SDS)

IEA STATED POLICIES

SCENARIO (STEPS)

24
1 2
STEEL-SPECIFIC GREEN PROCUREMENT
INNOVATION FUNDING POLICIES

On the supply side, increasing innovation Alongside carbon pricing policies,

funding for steel production could close governments can accelerate the transition
the investment gap for steel companies to a lower-carbon energy system by
looking to decarbonise. In Europe, implementing green procurement policies
for instance, the cost of replacing a to support demand, particularly for
7 million tonne BF–BOF plant with a new construction and infrastructure projects.
hydrogen-powered DRI–EAF production Sustainable practices in this sector
facility is estimated to cost around are rarely low-cost in the short term.
€6-7 billion, excluding the cost Implementing green procurement criteria
of infrastructure for hydrogen, natural can help counterbalance the impact
gas or renewable electricity supply.77 of lowest-cost tendering processes.
While European governments have not For instance, in the Netherlands,
yet made commitments, various European construction and infrastructure businesses
steelmakers indicated that they were report that green procurement processes
expecting incentives to emerge in the have helped them deliver low-carbon
coming years. projects using materials with a
lower-carbon footprint while remaining
competitive. A construction company
involved in large European projects said:
“Governments are an end user of a
large proportion of steel in the EU.
They have to be willing to pay a premium
and request it in their tenders and
specifications for the construction sector
to support the decarbonisation of steel.
We are completely customer-driven,
so if they are not putting it in the tender
specification, we are not doing it”.

25
3
GREEN STEEL STANDARDS

There is currently no clear standard for For standards to be as relevant Be technology-agnostic and base Across the value chain, companies
low-carbon or green steel. Existing green as possible, they should: standards on carbon intensity. For indicate that they expect governments
steel standards are based on emissions or instance, transitional methods such as and industry alliances to become active
production processes, and the qualifying Compare primary and secondary natural gas and hydrogen-blending in narrowing down and aligning
thresholds for emissions intensity can steel production. Secondary or carbon capture can help reach standards, definitions and certifications.
vary from 2.5 tonnes CO2 per tonne of production is nearly carbon-free when climate targets in the short term. However, until global standards have
crude steel to almost zero (see Figure 16). using renewable electricity, but there Standards could, therefore, benefit been set, objective comparisons between
A certification company confirmed the is insufficient scrap metal to meet by taking transitional decarbonisation company ambitions and achievements
widespread interest in steel standards: demand. This important factor drives into account. will continue to make it difficult for buyers
“Green steel certification inquiries have the need for standards that take into to make informed decisions.
really skyrocketed in the past two years”. account the percentage of scrap used.
ResponsibleSteel™ is developing a Figure 16

Government policy can reduce the standard that includes both primary
number of low-carbon standards, steel and secondary steel.78
FIGURE 16: LOW-CARBON PRIMARY STEEL CERTIFICATION 79
definitions and certifications, and guide
buyers in their decision-making. A global
consumer goods company expressed
the need for independent standards: CERTIFICATE TERMINOLOGY DEFINITION INVOLVED COMPANIES
"We need transparency across the ResponsibleSteel™ Responsible steel A standard based on emission intensity ArcelorMittal, U. S. Steel,
value chain, to know where our production and (0.5t CO2/t crude steel) for primary and Tata Steel, BHP, Mercedes-Benz
steel comes from and how green it is”. sourcing standard secondary steel production and sourcing, Group AG, Volvo, etc.
validated through third-party audits

XCarb™ Green steel certificates Aggregated and verified carbon ArcelorMittal, DNV
emission savings from a BF, converted
into certificates based on mass-balance
approach

bluemint® Climate-friendly Two products with lower CO2 emission thyssenkrupp, DNV, TÜV
steel certificates intensity through use of HBI1 in BF (0.6 t
CO2/t, lower when using H2 in long-run)
and scrap (0.75 t CO2/t)

ENVIRONMENTAL Fossil free steel Internationally comparable standard with SSAB coalition, EPD
PRODUCT emission intensity per tonne of steel
DECLARATION
26
3.4 LOW-CARBON SOLUTIONS
ARE NEEDED FOR BOTH HIGH
AND LOW-QUALITY IRON ORE
With less than a third of global iron ore supply suitable as DRI–EAF production plants require Alternatively, on the steel production
feedstock for DRI–EAF steel production, iron ore mining will play higher-quality iron ore than BF–BOF side, another solution is to develop
a key role in decarbonising the industry. Green steel production plants, because insufficiently dense iron ways to use lower-grade iron ore in
solutions using low-quality iron ore therefore need to be developed. ore can create acidic slag which can low-carbon processes, such as large
corrode the electric arc furnace and, melting units, resulting in a DRI–Melt–
in the longer term, lead to decreasing BOF production process (See figure
yields. 8). Both types of technologies are still
under development.
The consensus among interviewees
is that just 30% of global iron ore In its 2020 Iron and Steel Technology
supply is currently suitable for DRI–EAF Roadmap, the International Energy
plants. Therefore, both miners and steel Agency models that by 2050 around
producers will need to invest in research 20% of the world’s steel production
and development and deliver new could be DRI–EAF based. This indicates
technologies to address this. A global that supply of high-quality iron ore
mining executive said: is not expected to become the main
limiting factor in decarbonising the steel
“Two-thirds of the world’s iron ore
industry in the short term.80 In the longer
supply doesn’t love DRI–EAF. This
term, availability may indeed become
is a value chain problem to solve”.
a limiting factor, but it will depend
One potential solution on the mining on the development of the processes
side is turning lower-grade iron ore into mentioned above. And, the ability
higher-grade iron ore – through grinding of refining lower grades of iron ore to
and purification processes – to reduce suit DRI-EAF plants could provide a
the silica content. The resulting iron ore competitive advantage for some mining
would be of higher quality and suitable companies.
for DRI–EAF production.

27
4 BUILDING
COALITIONS
TO ACCELERATE
CHANGE
Finding solutions to overcome the barriers set out in Chapter 3 is a
complex challenge, one that requires companies and organisations
in the steel industry and wider ecosystem to work together. This is
best achieved through creating coalitions to lead progress in specific
areas, accelerating the goal of decarbonisation in the process.
The vast majority of individuals interviewed for this report recognised
this need for collaboration.

28
4.1 WORKING TOGETHER
TO OVERCOME BARRIERS
Several coalitions have already to innovation. Innovation coalitions All three types of coalitions have gained decarbonisation because they focus
been set up to drive the often consist of a small number of momentum since 2019 (see Figure 17), on how to deliver more low-carbon iron
companies and organisations with although commercial coalitions seem ore and steel and how to deploy new
decarbonisation of the steel complementary knowledge and best-suited to accelerate steel technologies.
industry. They can be categorised capability. As one global industry
by their objective: commercial, association said:
innovation or advocacy. “The next frontier is really forming FIGURE 17: PARTNERSHIPS BY ANNOUNCEMENT
Each has an important role partnerships that support YEAR AND FOCUS AREA | NON-EXHAUSTIVE 81
technology transfer”.
to play in overcoming specific
decarbonisation barriers. Advocacy coalitions promote the
development and implementation
Commercial coalitions focus of policies to accelerate change and 52

on commercialising specific raise awareness of its importance.

decarbonisation pathways, as well Typically, these alliances comprise ADVOCACY 6

as designing practices that can be a large membership that focuses on

a specific topic. To decarbonise the INNOVATION
replicated and scaled. One steel 6.5x

company researching multiple steel industry, such alliances would 19

COMMERCIALISATION
decarbonisation pathways said: concentrate on subsidies, green
procurement policies, green steel
“Companies that cannot produce
certification or standards, or raising 22
DRI locally, due to limited availability
market demand in general. The more 4
of cheap and abundant green
stakeholders involved, the greater
energy, will be looking for
the credibility of the alliance. One 27
other partnership constructs”. 8
automotive original equipment 2
18

manufacturer said: 1 1 2

Innovation coalitions work jointly to 4

develop new solutions and prove the “When we create this sort of [broad]
alliance, the voice we have in front
effectiveness of new technologies. 2016 2017 2018 2019 2020 2021
Often, this is achieved by providing of end customers and institutions is
funding for low-carbon solutions to much higher”.
remove or lower the financial barrier

29
4.2 COMMERCIAL COALITIONS
ACCELERATE DECARBONISATION
OF THE STEEL VALUE CHAIN
Three factors are critical One senior industry executive said:
for commercial cross-industry “A great collaboration utilises the
partnerships to succeed. strengths of each of the players to
mitigate the challenges within the
sector”.
The partnership should consist of a
few members to ensure speed and
maintain agility. In the words of one Two other characteristics are
construction company executive: important for coalitions working
“The demand and green premium to decarbonise the steel industry.
are there, but it is about making that
transition [to decarbonised steel] The coalition should be guided by an
with a small number of players. independent transition broker or
That is where the focus needs to be”. orchestrator to facilitate the progress
Members should agree on a clear of members towards their joint vision and
vision with intermediate goals as the to interact with outside stakeholders
purpose of the coalition and to guide including policymakers.82 This was
decision-making. As a member of underpinned by a US-based construction
the International Council on Mining company executive interviewed who
and Metals said said it was:
“If you have clarity on what your “Disappointing to see that in
challenge is, you can then assess decarbonisation initiatives, everyone
whether [potential coalition just wants to do their own part. We need
candidates] are also desperate to a player that coordinates everything”.
drive that change”.
The coalition should be repeatable
The makeup of the coalition should and scalable to build momentum in the
offer complementary capabilities transition to green steel.
to deliver maximum breadth of
knowledge.

30
4.3 A MINIMAL VIABLE
COALITION IS NEEDED
TO DECARBONISE THE
Executives in the steel value chain identified lift the barriers. In the wider ecosystem,
four core stakeholders as the minimum four additional entities – financiers,
number required to build a coalition to technology providers, certification partners

INDUSTRY decarbonise steel successfully. As Figure 18

shows, each role – miners, steel producers,
steel buyers, green energy producers and
and governments – are regarded as
enablers for success, but the consensus
among interviewees was that they do
carbon, capture and storage companies not necessarily need to participate in a
– has several focus areas to work on to coalition.

FIGURE 18: VALUE CHAIN VIEW WITH KEY BARRIERS

Value chain 4 %
1 %
95
%
N/A
interaction
to lift barrier

Out of scope IRON AND STEEL FINISHING AND END-MARKET

MINING LOGISTICS
due to limited role MAKING DISTRIBUTING APPLICATION
in value chain

Align on type of ore needed, and End-markets provide

• Shortage of renewable jointly investigate technologies that • Shortage of renewable • Limited low-carbon
low-carbon steel
electricity and green H2 can process a wider range of iron ore electricity and green H2 steel supply
off-take guarantees
• Technology readiness for • Bespoke policies • Unclear, non-transparent
EV/H2 transport on • DRI asset supply and labour and non-comparable
mining sites and supply • High-grade iron ore low-carbon steel standards
of assets Assurance for sufficient • Financing options Scrap buyback
• Shortage of high-quality high-grade iron ore and/or HBI • End-market demand programme from
iron ore for H2 DRI decommissioned
assets
Testing low-carbon Assurance for sufficient Financiers support Assurance for sufficient renewable DRI asset suppliers Certification players
mining technologies renewable electricity and producers in securing electricity, green H2 or transition fuels give assurance for support in reliability of
green H2/transition fuels sufficient funding (e.g. LNG) and off-take low-carbon steel timely asset deliveries low-carbon steel certificates

ENERGY/CC(U)S TECHNOLOGY CERTIFICATION

FINANCIER
SUPPLIER SUPPLIER PARTNER

31
Miners would be tasked with providing The main role of end markets in steel
sustainably sourced, high-quality raw decarbonisation coalitions is to
materials for green steel production. guarantee sufficient demand for green
They could lower their emissions by steel to derisk investments upstream.
shifting to low-carbon mining practices, These order guarantees, along with
such as electric or hydrogen-powered green premiums, would need to be
machines and equipment. Miners are established in larger markets. Supply
essential to providing sufficient and demand need to be aligned;
high-grade iron ore for DRI-EAF plants. at the moment demand is outpacing
However, they might also move supply, as exemplified by a progressive
downstream in the value chain and European construction company:
invest in DRI technology to provide “We are working with suppliers for
low-carbon hot briquetted iron for EAF low-carbon cement and steel. The
processes. As one mining executive said: problem is that we need so much and
“We want to step into [green] it is impossible to buy it all low carbon”.
sponge iron (production) to be Besides guaranteeing demand, end
in the value chain of fossil-free steel”. market representatives can be
crucial in giving the coalition a voice
Steel producers are at the heart of in local and regional policymaking.
steel decarbonisation. Their role is to
advance the production of green steel The role of energy providers and
by identifying, funding and implementing carbon, capture and storage
the best decarbonisation pathway companies is to develop ways to
for their plants. Setting up agreements provide sufficient affordable renewable
with miners and energy providers energy and green hydrogen to power
to secure supply of the feedstock, green steel production processes.
and with end markets to ensure off-take, In addition, they need to work with
will help to derisk their investments. As governments to build the associated
a European steel producer spelled out: infrastructure or carbon capture,
“The largest challenges are around utilisation and storage capability.
energy consumption for steel Their trading divisions can help to
production, and partly around raw reduce the long-term price risk across
materials”. the value chain by developing bespoke
bundled energy deals. And finally,
Alongside investing in new assets to they can support miners and steelmakers
drive the transition, steel producers in the transition from fossil fuels to
can secure agreements with customers renewable energy.
to buy their scrap steel to increase
production of secondary steel.

32
ADDITIONAL ENTITIES
THAT CAN SUPPORT
COALITIONS
Technology providers can support Clear standards for green steel are
coalitions by bringing expertise in often mentioned as an accelerator
design, engineering, procurement for commercialisation. A global
and construction, customising the classification company said:
decarbonisation pathway for a plant “It is crucial that companies get
or mine. to a consensus on the standards
of low-carbon steel”.
Financiers are needed to fund
investments across the value chain. Support and clarity from governments
One banker said: is widely recognised as a key ingredient
for making progress on decarbonisation.
“Decarbonising steel is the single Especially in capital-intensive industries,
biggest thing we are focusing a long-term government policy is
on – it can only be done through essential for making investment
collaboration”. decisions. With no clear policy from
All the banks we interviewed agreed governments on decarbonisation in
on the importance of coalitions which heavy industry, many participants remain
can, over time, help to derisk their hesitant to take action. Public-private
investment decisions. Next to providing partnerships offer a way to achieve
funding, banks can contribute as clarity, derisk and speed up investments,
they report on carbon emissions from and set standards for the wider
investments and investments in greener ecosystem. This is also recognised
practices help with their lower-carbon by a Dutch regulatory body:
ambitions. “For these large-scale projects,
collaboration between companies
Independent certification bodies and governments is needed. This
can enable end markets to charge concerns not just one government
green premiums by verifying and department, but several (infrastructure,
guaranteeing that green steel standards permits, etc.)”.
are met throughout the value chain.

33
4.4 SETTING UP A
COALITION FOR SUCCESS
The executives and senior managers we interviewed said that A coalition road map will help to set Agreeing on the purpose and short-term
defining a long-term shared vision on creating possible coalition clear targets and actions for the next 10 goals of the coalition – along with the
parties was relatively straightforward. However, translating years, including the use of transitional corresponding actions for each coalition
this into a road map with short-term goals and actions – technologies. Decarbonising a steel partner – depends largely on the
such as progressing discussions on investment and sharing plant involves high capital expenditure, participants and their mandates. Partners
commitment among the coalition participants – was more complex. so it is logical that investors are cautious would benefit from deciding the framework
These are the challenges coalitions need to overcome to succeed. about committing to a specific emerging on how to work together, how to derisk
technology without being certain that it decarbonisation investments and how
will become the industry’s technology of to create transparency into the coalition’s
choice in the future – particularly if barriers decision-making processes.
or market conditions might change.
It is important to recognise that
Definitions are an important aspect of opportunities, commitments and
the road map and help to ensure that responsibilities will vary and reflect each
all parties are referring to comparable coalition member’s influence and impact
decarbonisation goals – especially when on the value chain. The bigger the
they involve transitional technologies. impact of a partner’s actions, the higher
One purchasing company said that the commitment needed from it.
making steel into a circular economy is an One Europe-based decarbonisation
important sustainability target, although manager said:
this was not part of the other purchasing “We need to act on the principle
companies’ road map. that the biggest shoulders should
carry the largest weight”.

It takes time to build a successful

coalition, and individuals tasked with
this important job need to bring trust,
leadership and commitment, as well
as patience and perseverance to
the table.

34
5 SHELL
PERSPECTIVES
Shell’s target is to become a net-zero emissions energy
business by 2050 or sooner. We have set out this ambition
in our Powering Progress strategy which is aimed at
contributing to a net-zero world, where society stops
adding to the total amount of greenhouse gases in the
atmosphere. It supports the ambitious goal to tackle
climate change laid out in the Paris Agreement: to limit
the rise in average global temperature to 1.5°Celsius.

35
Becoming a net-zero emissions business movement towards transitioning to
requires us to reduce emissions from our net-zero emissions steel production and
operations and from the fuels and other completely removing embodied carbon
energy products we sell. A key part of across all end uses of this material.
this transformation involves the way
we work with our customers. They come Echoing some of the messages in this
from many different sectors and several report, steel producers have highlighted
have announced targets to achieve to us their need to better understand
net-zero emissions. the demand for green steel and
the standards that automotive and
We believe that each sector will need construction end users are willing to
to find its own way to achieve net-zero accept. To ease the burden of investing
emissions – sectoral decarbonisation - in decarbonisation, they have expressed
and in each sector broad coalitions the need for financial support from
of businesses, governments and governments.
other parties are needed to identify
and enable decarbonisation pathways Automotive and construction companies
towards a net-zero emissions future. see embodied emissions from steel as
a large part of their overall emissions.
We have created a business – Sectors They are looking for stronger
& Decarbonisation – that allows us to reassurance from the steel value chain
work more closely with our customers that a sufficient and timely supply of
as they approach the decarbonisation green steel will be available to meet
barriers and opportunities ahead. their needs.
Working with companies in each sector
and with policy makers we hope to In mining, since most emissions are
be able to increase ambition around Scope 3, mining companies have
reducing emissions, better enable emphasised that the decarbonisation
infrastructure changes, and provide of steel is crucial to their own
the low-carbon products and services decarbonisation.
to help our customers decarbonise.
For energy providers such as Shell,
Across the steel value chain, possible long-term commitments from end
decarbonisation pathways in the various consumers for low-carbon energy are
segments, from mines to end-markets, necessary to underpin investments in
are becoming more technically and new infrastructure, such as electrolysers,
economically feasible. There is a strong offshore wind farms, carbon sinks
and pipelines.

36
A CALL TO ACTION
To enact change, one thing is certain: A coalition with partners across the We believe that such a coalition can Seeking support from governments
no one company can decarbonise value chain, in addition to support from help to enable actions and investments and authorities to accelerate
alone. To successfully decarbonise, financial institutions and governments, by key companies and organisations. permitting and gain financial aid to
core stakeholders in the mining and will be required to trigger collective These include: derisk the infrastructure needed for
steel production value chain must work action, spark global and local the decarbonisation value chain.
together with end markets such as the conversations, drive increased public Working towards a common As shown in Chapter 3, replacing
automotive and construction industries. and private investment, and deliver approach to carbon accounting a 7 million tonne BF-BOF plant
The companies and organisations tangible results. and standards in the value chain by with a new DRI–EAF plant in
interviewed for this report, as well the developing standards that define Europe is estimated to cost around
conversations that Shell has had with Together with partners, customers what qualifies as “green”. €6 to 7 billion. Financial aid in the
customers and partners, all highlighted and governments, we are focused on form of innovation funding could
one key element to ensure change: the developing renewable energy hubs Creating a demand market for close the investment gap for steel
importance of a collaborative strategy to help decarbonise industry, starting green products such as tenders companies.
to make significant decarbonisation with Northwest Europe. Many industrial specifying or qualifying the use of
progress. locations around the globe offer similar green materials. For instance, a Advocating a level playing field in
collaboration opportunities to develop tender to build a wind farm would steel decarbonisation by adopting
clean energy hubs in other regions. score more points if it specifies the carbon border adjustment
using green steel and green cement. mechanism (CBAM) in Europe.
We now call on other committed CBAM will help reduce the risk of
organisations to join us and accelerate carbon leakage by encouraging
green steel production practices producers in non-EU countries
and demonstrate how these can be to decarbonise their production
replicated around the world. We are processes.83
ready to facilitate setting up a steel
value chain coalition of first movers.

37
FORGING
DECARBONISATION
SOLUTIONS FOR
STEEL CUSTOMERS
In the mining sector, Shell was chosen between manufacturing processes,
as one of eight winners (from an initial energy use and the associated
global response of 350 vendors) emissions. These are developed from
to develop a large-scale haul truck Shell’s own experience in analysing
electrification system that could help data from its plants and using those
decrease mining’s reliance on diesel data to make operations more efficient.
fuel and reduce carbon emissions. We are also partnering with AVEVA
We are discussing piloting the and Schneider Electric to create a
integrated solution with eight mining commercial service which combines
companies in three different countries. this capability with their integrated
digital engineering, operational process,
In steel making, we have a wide-ranging and energy optimisation technologies.
memorandum of understanding
with Baosteel in China to purchase In parallel, we are collaborating
carbon-compensated steel84 and green with several automotive manufacturers
steel. The collaboration includes in Europe and North America on the
Shell electric vehicle charging points implementation of their decarbonisation
across Baosteel’s facilities, as well as plans, by supplying biomethane
low-carbon solutions such as hydrogen and renewable power, among other
and carbon capture and storage. solutions.

To deliver low-carbon pathways with

steel producers, we have developed
capabilities to model the complex
relationships and interactions that occur

38
ENERGY SOLUTIONS FOR
THE STEEL VALUE CHAIN
Natural gas Shell is investing in both solar power projects and We have already started to produce green
wind farms to diversify its energy offerings. For hydrogen at the Shell Energy and Chemicals
The first major step in the path towards green steel instance, as part of the CrossWind joint venture Park Rheinland in Germany and, subject to a final
making is to move to gas-based combustion. (Shell interest 79.9%) off the Netherlands coast, we investment decision, plans are now under way
Shell is present throughout the natural gas value are building a 760 megawatt (MW) offshore wind to expand capacity tenfold, supported by a
chain, from upstream production to trading and farm, Hollandse Kust (noord), that will start producing grant from the European Climate, Infrastructure
wholesale supply. As the leading liquified natural power in 2023. When operational, around a third and Environment Executive Agency (CINEA).
gas supplier in the world, Shell is working of the power generated will be taken by an anchor
hard to make gas available to steel producers to customer to help deliver its decarbonisation plans. In China, Shell has started operation of the 20 MW
support their decarbonisation plans. Some of the power will be for Shell’s own use and for power-to-hydrogen electrolyser in Zhangjiakou,
trading in the open market. The balance will power a joint venture between Shell (China) Limited and
Although a hydrocarbon, natural gas emits between a 200 MW electrolyser which is set to be Europe’s Zhangjiakou City Transport Construction Investment
45% and 55% lower greenhouse gas emissions largest renewable hydrogen plant when it becomes Holding Group Co. Ltd. It is currently one of the
than coal when used to generate electricity, operational in 2025. world’s l hydrogen electrolysers and the companies
according to the International Energy Agency. Gas have plans to scale up to 60 MW in the next two
also produces less than one-tenth of the air pollutants years in phase 2. Using onshore wind power,
that coal does when used to generate electricity. the project produces hydrogen for public and
Hydrogen production commercial transport in the Beijing-Tianjin-Hebei
region, helping to decarbonise its mobility sector.
Gaseous energy carriers are and will continue to be
Renewable power needed in sectors where electricity falls short, such Elsewhere, we are partnering in the NortH2 project
as heavy goods transport by road, aviation and in the Netherlands – one of the largest renewables-
Electricity already plays a major role in steel shipping. But this is mainly the case in industries such based hydrogen projects in Europe – with Gasunie,
production today through EAFs. With EAFs set as those in the steel value chain. Hydrogen produced Groningen Seaports, RWE and Equinor. The project
to increase their share of global production from renewable energy is, at present, the primary is expected to produce 4 gigawatts of green
as the industry decarbonises, it is increasingly abatement solution that will lead the steel industry to hydrogen by 2030, powered by wind farms in the
important to source renewable power for their carbon neutrality. North Sea.
operation.

39
 Carbon capture and storage We are also involved in the development of several CO2 and hydrogen transport
other carbon capture and storage projects.
When selecting decarbonisation pathways for In the Netherlands, a joint venture called Porthos – Through public-private partnerships with government
the steel value chain, steelmakers have to consider between Energie Beheer Nederland (EBN), and industry in the Netherlands and Germany,
multiple factors such as their ability to invest Gasunie and the Port of Rotterdam Authority – we are supporting the development of the Delta
capital, the remaining lifespan of existing assets aims to transport CO2 from industrial plants in the Corridor project by 2027. It comprises four pipelines
and the competitiveness of their steel products. Port of Rotterdam and store it in empty gas fields between the Port of Rotterdam and , Chemelot in
With commercial-scale, 100% green hydrogen- beneath the North Sea. the Netherlands and the German Rhineland region
based steel manufacturing many years away, to provide access to clean hydrogen and carbon
solutions such as carbon capture and storage offer The project aims to capture up to 2.5 million tonnes capture and storage.
a path to reduce carbon emissions from existing of CO2 per year from 2024 and could make a
processes. significant contribution to meeting the Netherlands’ The Delta Corridor will unlock around 22 million
climate ambitions. In 2021, Shell Netherlands, tonnes of avoided and abated emissions a year.
We are already involved in two carbon capture along with Air Liquide, Air Products and ExxonMobil, In addition, branches to the Delta Corridor could
and storage (CCS) projects. In Alberta, Shell signed the final contracts with Porthos for the provide decarbonisation options in Belgium and
Canada operates Quest, a CCS facility that transport and storage of CO2 from their installations other parts of Germany. The access will be essential
captures, transports and stores more than 1 million at Rotterdam Port. in helping harder-to-abate industries in mainland
tonnes of CO2 every year from the Scotford Europe to meet the EU’s 2030 climate targets.
Upgrader. On Barrow Island, off the northwest We are also involved in a collaboration between
coast of Western Australia, Shell Australia EBN, Gasunie, Shell and TotalEnergies – called
holds a 25% interest in the Gorgon liquefied Aramis – which is designed to use depleted gas fields
natural gas project which also uses CCS. beneath the Dutch North Sea for carbon storage.
The project is expected to come on-stream as early
as 2026 with 5 million tonnes of CO2 stored in the
launch phase with sufficient flexibility to facilitate
future CO2 sources and storage options for further
expansion.

40
ENERGY SOLUTIONS
FOR THE MINING
VALUE CHAIN
Shell has a portfolio of At Shell, we have been focusing on how Low-carbon biofuels Electrification solutions
decarbonisation solutions for to decarbonise diesel-powered mobile for mining
equipment which accounts for around Low-carbon biofuels are one of the only
mining companies that span 40-50% of mining’s Scope 1 and 2 CO2 solutions available today for customers to Together with our partners, we have
the entire mining value chain. emissions. Shell is investing in short and decarbonise harder-to-abate sectors. developed a fully integrated electrification
The availability of these medium-term technologies to help mining Shell is already one of the world’s largest solution which can be used alongside
companies reduce their emissions. traders and blenders of biofuels and our existing technology at mines, offering
offerings differ around the world.
Two examples of how we are helping priority is to increase our low-carbon fuels the industry the potential to shift away
to do this are low-carbon biofuels and production capacity by commercialising from a long-standing reliance on diesel.
electrification. advanced technologies. Alongside our The pilot project 85 combines a high-
focus on new technology, we have invested powered battery solution with ultrafast
in existing solutions to increase supply. charging and a standardised micro-grid
For example, we are already one of the energy system which can be further
world’s largest producers of bioethanol. decarbonised with renewable electricity
In 2021, Raízen, our joint venture in Brazil generation on-site or through the grid.
with Cosan, produced around
2.5 billion litres of ethanol, from treated The solutions are built around technologies
bagasse (a type of sugarcane juice) from leading battery manufacturers,
and straw. supercapacitor innovations, energy
management systems and charging
infrastructure, all of which help to support
a mine operational and mobility needs.

41
SOURCES

1. World Steel Association (2022), World Steel in Figures 21. International Energy Agency (2020), Iron and Steel Technology Roadmap
2. International Energy Agency (2020), Iron and Steel Technology Roadmap 22. STEPS refers to IEA's Stated Policies Scenario
3. OEM usually refers to original equipment manufacturers. In this report it refers to automotive 23. SDS refers to IEA's Sustainable Development Scenario
and machinery and equipment manufacturers 24. World Steel Association (2022), World Steel in Figures; International Energy Agency (2020),
4. Others include a research and analysis organisation and a decarbonisation technology developer Iron and Steel Technology Roadmap; World Steel Dynamics (2021),
5. Regions refers to the organisation’s headquarters; most of the organisations involved operate globally Strategic Insights From World Steel Dynamics
6. World Steel Association (2022), World Steel in Figures; International Energy Agency (2020), 25. Siemens Gamesa (2022), A Clean Energy Solution - From Cradle to Grave
Iron and Steel Technology Roadmap; World Steel Dynamics (2021), Strategic Insights from World Steel Dynamics. 26. A 5-megawatt offshore wind turbine requires about 900 tonnes of steel for reinforced concrete foundations,
7. World Steel Association (2021), Top steel-producing countries, 2021 rotor hubs and nacelles, and the tower
8. The production of iron ore feedstock using technologies and processes that result in much 27. Definition according to Greenhouse Gas Protocol:
lower emissions compared to conventional production Scope 1: CO₂-equivalent emissions from owned or controlled sources;
9. There is currently no agreed definition of what constitutes green steel. The World Steel Association regards Scope 2: CO₂-equivalent emissions from the generation of purchased electricity, steam, heating and
it as low-carbon steel which is manufactured using technologies and practices that result in significantly lower cooling the reporting company consumes; and
emissions compared to conventional production. According to Klockner & Co, a metal solutions provider, Scope 3: All other emissions that occur in a company’s value chain, both upstream (procurement of
green steel refers to steel produced using a low-carbon process materials, assets, services) and downstream (transport, waste disposal, processing, etc.)
10. According to the European Environment Agency, green electricity refers to electricity produced from 28. Definition: CO₂ emissions associated with materials and construction processes throughout the whole life
resources such as solar, wind, geothermal, biomass, and low-impact hydro facilities cycle of a building or infrastructure (see Carbon Cure, What is Embodied Carbon?)
11. Green hydrogen is the production process which is powered by renewable energy sources, such as wind or solar 29. World Steel Association, Steel in automotive
12. Iron and steel emissions include steel production and finishing (downstream processes) 30. While there is no universally accepted definition of green steel, it refers to steel manufactured
13. Iron and steel indirect emissions originate from power generation through combusting steel using technologies and practices that generate significantly lower greenhouse gas emissions
off-gases and/or grid off-take compared to conventional production
14. Iron and steel direct emissions originate from fossil fuel combustion and industrial processes 31. Mission Possible Partnership, This is how the steel industry is forging a path to net-zero
15. Nature Communications (2021), 32. World Steel Dynamics (2021), Strategic Insights from World Steel Dynamics
Efficiency stagnation in global steel production urges joint supply and demand-side mitigation efforts; 33. TRL refers to Technology Readiness Level
International Energy Agency (2020), Iron and Steel Technology Roadmap; Belfer Center Global 34. The steps within the iron ore electrolysis vary based on the electrowinning process
Efficiency Intelligence (2019), How Clean is the U.S. Steel Industry?; International Energy Agency (2021), 35. MOE refers to Molten Oxide Electrolysis
World Energy Outlook 2021; Deloitte analysis 36. The cell interior temperature of the Molten Oxide Electrolysis is 1,550 °C
16. Excluding some steel finishing and end-market applications 37. International Energy Agency (2020), Iron and Steel Technology Roadmap; Deloitte analysis
17. On average, CO2 intensity for a BF–BOF plant is around 2.6 tonnes per tonne of steel and 38. PBL (2019), Decarbonisation Options for the Dutch Steel Industry; Green Steel for Europe (2021),
0.2 tonnes per tonne of steel for scrap-based EAF (see Mission Possible Partnership (2021), Technology Assessment and Roadmapping
The Net Zero Steel Sector Transition Strategy) 39. Green methanol can be used as biofuel for transport or cooking as well as an energy carrier for
18. International Energy Agency (2021), Net Zero by 2050: A Roadmap for the Global Energy Sector storing renewable electricity. (Methanol Institute, 2022)
19. Nature Communications (2021), 40. HYBRIT is a collaboration between SSAB, LKAB and Vattenfall to develop fossil-free steel in Sweden using hydrogen
Efficiency stagnation in global steel production urges joint supply-and demand-side mitigation efforts; and green electricity in a DRI-EAF decarbonisation route
International Energy Agency (2020), Iron and Steel Technology Roadmap; Belfer Center Global 41. ArcelorMittal (2022), ArcelorMittal successfully tests partial replacement of natural gas with green hydrogen to produce DRI
Efficiency Intelligence (2019) How Clean is the U.S. Steel Industry? 42. Recharge (2022),
20. World Steel Association (2021), Top steel-producing companies 2021 Largest ever green steel investment | Salzgitter approves €723m spend on first stage of hydrogen-focused project
43. Tata Steel (2022), Tata Steel invests 65 million euro in next phase hydrogen route

42
SOURCES

44. Not all iron ore is equal. Geological processes have led to iron content levels of between 63. Feedstock and energy costs exclude raw materials, H2 costs: $5.5/kg in 2020
55% and 65% in some ores, which are considered high grade. In the DR furnace, iron oxide is 64. Production costs assume asset upgrade cost for BF-BOF and asset upgrade costs BF-BOF
reduced in situ, with temperatures sufficient to remove the oxygen, but not high enough to fully to DRI-EAF, written off over 20-year lifetime and include maintenance cost
melt the ore. No fluxes are introduced to remove impurities from the final DRI either. For this reason, 65. Carbon price ranging from $38/t in 2020, to $324/t CO2 in 2050, excludes EU ETS free allowances
silica and alumina levels in iron ores entering the DR furnace need to be particularly low to avoid 66. Increase in cost of H2 DRI-EAF explained by increasing energy price
prohibitive cost escalation at the EAF steelmaking stage (see Fastmarkets (2021), 67. International Energy Agency (2020), Iron and Steel Technology Roadmap, BMWI; PBL; TSN IJmuiden (2021),
Understanding the high-grade iron ore market Klimaatneutrale Paden TSN, ICF & Fraunhofer, EIB; ECB, Deloitte analysis
45. Boston Metal (2022), Transforming Metal Production 68. A stock-keeping unit is a unit of measure in which the stocks of a material are managed
46. Nature Communications (2021), It often contains a scannable bar code which allows vendors to automatically track the movement of inventory
Efficiency stagnation in global steel production urges joint supply-and demand-side mitigation efforts. 69. International Energy Agency (2020), Iron and Steel Technology Roadmap
47. Norgate et Al. (2010), 70. Via the European Union Emissions Trading System and the recently adopted Carbon
Energy and greenhouse gas impacts of mining and mineral processing operations; Deloitte analysis'. Border Adjustment Mechanism; Deloitte (2022), CBAM adopted by EU Parliament
48. Mechanical dewatering is a process to separate water from solid rock to improve efficiency and 71. Such as the Important Projects of Common European Interest
reduce disposal volumes and water wastage 72. OECD (2021), Carbon Pricing in Korea
49. Diesel engines can convert around 40% of fuel into electricity, the rest is waste heat. Using waste 73. Including both direct and indirect emissions
heat recovery, diesel consumption can be reduced by about 7% ([Link], 2020) 74. The Sustainable Development Scenario (SDS) refers to an Ambitious IEA scenario to net-zero
50. A grid is fine-tuned to make optimal use of the resources available. A new, renewable resource emissions for the energy system by 2070, includes widespread deployment of CC(U)S and/or
should be integrated in a way to keep the grid efficient, reliable and economical (see IEEE, 2018) DRI with hydrogen
51. HVO refers to Hydrotreated Vegetable Oil 75. In the Stated Policies Scenario (STEPS), BF-BOF remains dominant for producing steel towards 2050
52. BEV refers to Battery Electric Vehicle 76. World Steel Association (2022), World Steel in Figures; International Energy Agency (2020),
53. Deloitte analysis Iron and Steel Technology Roadmap
54. World Steel Association (2022), World Steel in Figures; International Energy Agency (2020), 77. Deloitte analysis.
Iron and Steel Technology Roadmap; World Steel Dynamics (2021), 78. ResponsibleSteel (2022), ResponsibleSteel International Standard Version 2.0
Strategic Insights From World Steel Dynamics 79. HBI refers to Hot briquetted iron;
55. Projections from a green hydrogen producer; De Jong et al. (2017, Source: ResponsibleSteel GHG Emissions Requirements for ‘Steel Certification’;
Cost optimization of biofuel production. With 'Cost Optimization of biofuel production' ResponsibleSteel’s Members and Associates; XCarb Green Steel Certificate; Bluemint Certification;
56. PBL (2019) Decarbonisation Options for the Dutch Steel Industry; Environmental Product Declaration Library
Learn | OpenEnergyMonitor; Deloitte analysis 80. International Energy Agency (2020), Iron and Steel Technology Roadmap
57. Based on mid-2021 gas and coal prices 81. Company announcements; Deloitte analysis
58. Financial Times, May 14, 2022; X-rates, average EUR to USD rate at €1 = $1.095 82. John Hagel III, Deloitte Center for the Edge (2021, The Journey Beyond Fear; John Kotter,
(average rate for Feb, Mar, Apr and May) Harvard Business Review (2012), The 8-step process for leading change
59. MetalMiner (2022), HRC and CRC Steel Prices Stagnate Amid Energy Crisis 83. Jacqueline Cramer, Amsterdam Economic Board (2020),
60. European view, European steel plants are typically more CO2 efficient than the global average How Network Governance Powers the Circular Economy.
61. CCS rate assumed 52%, based on 70% capture rate for BF and 23% for coke oven. 84. European Commission (2021), Carbon Border Adjustment Mechanism: Questions and Answers
20% CCS cost reduction towards 2050, starting at $120/t CO2 captured 85. Carbon-compensated steel is where emissions generated from steel manufacturing are offset
62. Calculations assume DRI-EAF co-located using nature-based carbon credits
86. Shell (2022), Shell builds a winning consortium to accelerate the electrification of off-road mining vehicles

43
LEGAL DISCLAIMER

The companies in which Shell plc directly and indirectly Forward-looking statements include, among other or referred to in this section. Readers should not place reflect our 2050 net-zero emissions target and 2035
owns investments are separate legal entities. In this things, statements concerning the potential exposure undue reliance on forward-looking statements. Additional NCF target, as these targets are currently outside our
report, Decarbonising Steel: Forging New Paths of Shell to market risks and statements expressing risk factors that may affect future results are contained in planning period. In the future, as society moves towards
Together, “Shell”, “Shell Group” and “Group” are management’s expectations, beliefs, estimates, Shell plc’s Form 20-F for the year ended December 31, net-zero emissions, we expect Shell’s operating plans to
sometimes used for convenience where references forecasts, projections and assumptions. These forward- 2021 (available at [Link]/investor and www. reflect this movement. However, if society is not net zero
are made to Shell plc and its subsidiaries in general. looking statements are identified by their use of terms [Link]). These risk factors also expressly qualify all in 2050, as of today, there would be significant risk that
Likewise, the words “we”, “us” and “our” are also used and phrases such as “aim”, “ambition”, ‘‘anticipate’’, forward-looking statements contained in this report and Shell may not meet this target.
to refer to Shell plc and its subsidiaries in general or ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, should be considered by the reader. Each forward-
to those who work for them. These terms are also ‘‘intend’’, ‘‘may’’, “milestones”, ‘‘objectives’’, ‘‘outlook’’, looking statement speaks only as of the date of this Forward Looking Non-GAAP measures
used where no useful purpose is served by identifying ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, report, November 9, 2022. Neither Shell plc nor any
the particular entity or entities. ‘‘Subsidiaries’’, “Shell ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms of its subsidiaries undertake any obligation to publicly This report may contain certain forward-looking non-
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report refer to entities over which Shell plc either directly affect the future operations of Shell and could cause a result of new information, future events or other divestments. We are unable to provide a reconciliation
or indirectly has control. Entities and unincorporated those results to differ materially from those expressed in information. In light of these risks, results could differ of these forward-looking Non-GAAP measures to the
arrangements over which Shell has joint control are the forward-looking statements included in this report, materially from those stated, implied or inferred from the most comparable GAAP financial measures because
generally referred to as “joint ventures” and “joint including (without limitation): (a) price fluctuations in forward-looking statements contained in this report. certain information needed to reconcile those Non-
operations”, respectively. “Joint ventures” and “joint crude oil and natural gas; (b) changes in demand GAAP measures to the most comparable GAAP
operations” are collectively referred to as “joint for Shell’s products; (c) currency fluctuations; (d) Shell’s net carbon footprint financial measures is dependent on future events some
arrangements”. Entities over which Shell has significant drilling and production results; (e) reserves estimates; of which are outside the control of Shell, such as oil
influence but neither control nor joint control are (f) loss of market share and industry competition; (g) Also, in this report we may refer to Shell’s “Net Carbon and gas prices, interest rates and exchange rates.
referred to as “associates”. The term “Shell interest” environmental and physical risks; (h) risks associated Footprint” or “Net Carbon Intensity”, which include Moreover, estimating such GAAP measures with the
is used for convenience to indicate the direct and/or with the identification of suitable potential acquisition Shell’s carbon emissions from the production of our required precision necessary to provide a meaningful
indirect ownership interest held by Shell in an entity or properties and targets, and successful negotiation and energy products, our suppliers’ carbon emissions in reconciliation is extremely difficult and could not be
unincorporated joint arrangement, after exclusion of all completion of such transactions; (i) the risk of doing supplying energy for that production and our customers’ accomplished without unreasonable effort. Non-GAAP
third-party interest. business in developing countries and countries subject to carbon emissions associated with their use of the energy measures in respect of future periods which cannot be
international sanctions; (j) legislative, judicial, fiscal and products we sell. Shell only controls its own emissions. reconciled to the most comparable GAAP financial
Forward-Looking Statements regulatory developments including regulatory measures The use of the term Shell’s “Net Carbon Footprint” or measure are calculated in a manner which is consistent
addressing climate change; (k) economic and financial “Net Carbon Intensity” are for convenience only and not with the accounting policies applied in Shell plc’s
This report contains forward-looking statements (within market conditions in various countries and regions; (l) intended to suggest these emissions are those of Shell consolidated financial statements.
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results of operations and businesses of Shell. All entities, delays or advancements in the approval of Shell’s net-zero Emissions Target form part of this report.
statements other than statements of historical fact are, projects and delays in the reimbursement for shared
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Forward-looking statements are statements of future such as the COVID-19 (coronavirus) outbreak; and forecasted for a ten-year period and are updated every this report that the United States Securities and Exchange
expectations that are based on management’s current (n) changes in trading conditions. No assurance is year. They reflect the current economic environment and Commission (SEC) strictly prohibits us from including in
expectations and assumptions and involve known provided that future dividend payments will match or what we can reasonably expect to see over the next our filings with the SEC. Investors are urged to consider
and unknown risks and uncertainties that could cause exceed previous dividend payments. All forward-looking ten years. Accordingly, they reflect our Scope 1, Scope closely the disclosure in our Form 20-F, File No 1-32575,
actual results, performance or events to differ materially statements contained in this report are expressly qualified 2 and Net Carbon Footprint (NCF) targets over the available on the SEC website [Link].
from those expressed or implied in these statements. in their entirety by the cautionary statements contained next ten years. However, Shell’s operating plans cannot

44
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