Green Steel Market Size, Share & COVID-19 Analysis, By Production Technology (Renewable – Electric Arc Furnace (R-EAF), Hydrogen Direct Reduced Iron – Electric Arc Furnace (H2 DRI – EAF), and Molten Oxide Electrolysis (MOE)), By Application (Building & Construction, Automotive, Renewable Energy Infrastructure, Home Appliances, and Others), and Regional Forecast, 2023-2030

The global green steel market size was valued at USD 0.98 billion in 2022 and is projected to grow from USD 2.70 billion in 2023 to USD 98.84 billion by 2030, exhibiting a CAGR of 67.2% during the forecast period.

Essentially, the steel produced without using any fossil fuel is called green steel. It is produced through a process that will not emit any greenhouse gases and will be carbon neutral. Steel production's main carbon emission occurs during the reduction of iron ore in blast furnaces. Currently, coal is a primary energy source to fuel these furnaces. As per the World Steel Association, the steel industry accounts for nearly 9% of global emissions, and in China, it accounts for about 15% of national emissions. Thus, it triggers the call for action and creates a necessity for sustainable solutions. 

Many leading companies and governments are investing millions of dollars and have pledged to invest billions over the projected period (2023-2030) to develop sustainable technology to produce carbon free steel. For instance, in 2022, at the World Economic Forum, 50 companies joined together and pledged to buy aluminum, steel, and other commodities with little to no carbon. Such initiative will create demand for green products and motivate suppliers to invest in sustainable solutions. Attributed to these factors, the market is projected to experience a skyrocketing growth during the forecast period.

COVID-19 IMPACT

The COVID-19 Outbreak had Low to No Impact on the Market

The COVID-19 pandemic disrupted many industries, including the metal and mining industries. During the COVID-19 outbreak, metal and metal product prices declined due to low demand from end-use industries. Short-term and long-term contracts were delayed as a result of mine closures. However, post-pandemic, sudden demand for metals, such as copper and iron ore, pushed their prices to new heights. The COVID-19 outbreak also alarmed that ecosystem disturbances can cause many pandemics.

Amid this, carbon free steel is seen as an ideal solution to tackle the huge emissions generated by traditional steel production. The market is still at its nascent stage of development, with only a few pilot plants in operation. As a result of this, the COVID-19 outbreak had low to no impact on global market growth. However, the positive attitude created toward environmental sustainability will be a progressive foundation for the market growth.  

LATEST TRENDS

Momentum toward Low-CO2 Steel is Set to Give the Green Signal to Green Steel 

For a long time, the steel industry has remained under the spotlight in the discussion of decarbonizing industry. In response, Electric Arc Furnace (EAF) production technology became commercial, reducing carbon emissions by almost three-fourths of the traditional production method. Where the Blast Furnace - Blast Oxygen Furnace (BF-BOF) method emits 1.8 tons of CO2 per ton of steel production, the EAF method emits only 0.6 tons of CO2 per ton of steel produced.

In the past decade, many ways have been explored to reduce carbon emissions during steel production. For instance, the direct reduction method uses natural gases rather than coal and produces Direct Reduced Iron (DRI), which can be a direct alternative to pig iron. Natural gas, including LNG, has the lowest CO2 emission of all fossil fuels. Using natural gas further reduces the carbon emissions occurring during steel production.

Apart from the aforementioned existing technologies, new emerging technologies, such as powering EAF with renewable electricity, will make this process 100% carbon-free, reducing carbon emissions to almost zero. In addition, other technologies, such as hydrogen-powered blast furnaces and molten oxide electrolysis, are set to create new routes to produce zero-carbon emission steel.

DRIVING FACTORS

Commitments towards Emission Free Steel by Various Governments Globally are set to Drive Market Growth

As sustainability is becoming a new norm and need of the hour, many governments and leading steel manufacturing companies are investing millions of dollars to make the steel as green as possible. The Paris Climate Agreement highly emphasizes limiting global warming to 1.5°C as crossing this limit may unleash severe climate challenges, including droughts, heatwaves, and rainfall.

The steel industry, being one of the largest greenhouse gas contributors, has gained the attention of governments and manufacturing companies to make it green. For instance, The European Research Council (ERC) awarded USD 2.8 million for five years of projects focusing on reducing iron oxides without carbon using hydrogen plasma. Australian Renewable Energy Agency (ARENA) has announced a fund of over USD 50 million to target research and development (R&D) on producing renewable hydrogen, low-carbon iron, and steel.

Similarly, the leading steel manufacturing country, China, has a roadmap that will assist in making steel green. For instance, in 2022, the China Iron and Steel Association invested over USD 5 billion in energy conservation and environmental protection projects. Such huge investments made by various economies across the globe will fuel the development of green steel, thus increasing its market share in the global steel market.

RESTRAINING FACTORS

Enormous Investment Needed to Make Carbon Free Steel May Limit its Market Growth

Efforts to move away from traditional steel to carbon free steel will cost enormous amounts to steel manufacturers, delaying its mass production.  As steel production relies more on electricity, natural gas, and hydrogen, it creates extra demand for these resources, which may hamper their existing flow of supply and demand. Currently, electricity production is mostly coal-powered and to make steel green, manufacturers need electricity from renewable sources.

Similarly, another green technology that uses hydrogen to produce DRI will require green hydrogen to make this process carbon-free. To this date, there is no such technology that can mass produce green hydrogen, but it is under the R&D phase. As per the estimates made by one of the world’s largest steel makers, i.e., ArcelorMittal, it will cost USD 40 billion to decarbonize its operation in only Europe.

Similarly, according to the European Steel Association, total steel production costs will rise by 35-100% per ton by 2050 owing to costs associated with the usage of new technologies and more renewable energy. The aforementioned factors and the huge investments needed to make steel green will limit its growth over the forecast period.

SEGMENTATION

By Production Technology Analysis

Hydrogen DRI - EAF Segment to Account For Major Share by the Forecast Period Owing to Its Green Nature

Based on production technology, the global market is segmented into Renewable – EAF (R-EAF), Hydrogen DRI – EAF (H2 DRI – EAF), and Moten Oxide Electrolysis (MOE).

The Hydrogen DRI – EAF segment is expected to dominate the global market. Hydrogen DRI – EAF production technology is set to emerge as a green solution for the steel manufacturing industry. This production technology will use hydrogen to replace carbon, which is currently used as a main reduction agent for the iron ore reduction stage. In this process, if the used hydrogen is produced through green technology as well, then the steel produced from this process will be considered green steel. Owing to its green nature, this method has gained a lot of attention from steel manufacturers, who poured millions of dollars of investment into establishing this technology. Based on the above facts, it is poised to become the primary production technology in the market by the end of the mid-term forecast.

Renewable – EAF production technology is identified as a primary method to produce this type of steel until 2024. As EAF production technology is the only production method that exists widely across the globe, it is more feasible to make this process green compared to blast oxygen furnaces. This process already has nearly 75% less Scope 1 and Scope 2 greenhouse gas (GHG) emission intensity, and using renewable electricity will lower its GHG footprint further. This has made it a more practical solution for steel manufacturers to adopt at present.

By Application Analysis

Automotive Industry Led the Way for Green Steel Demand

Based on application, the green steel market share is segmented into building & construction, automotive, renewable energy infrastructure, home appliances, and others.

The automotive segment held the highest revenue share in 2022. Metal accounts for over half of the total materials used in the construction of new automobiles. This makes automobiles one of the largest steel consumers, accounting for more than 10% of the global steel demand. As per the Energy Transitions Commission, embedded emission associated with the material used in new Electric Vehicles (EVs) is estimated to account for more than half of its lifecycle emissions by 2030. This is 10% more than the lifecycle emission generated from an internal combustion engine. As the automotive industry is trying to become green by adopting electric mobility, many manufacturers are investing in using sustainable materials as well.

Companies, such as General Motors, Jaguar Land Rover, Volvo, Mercedes, and Volkswagen are the few companies aggressively investing in ecofriendly steel to become the first movers in the market. For instance, Volvo has committed to use 100% carbon free steel in its automotive manufacturing by 2050. Similarly, Mercedes Benz and BMW have dealt with “H2 green steel” to use its steel in their automobiles. Such initiatives make the automotive industry the first consumer in the market and will remain prominent until the mid-term forecast.

The building & construction segment is the largest consumer of conventional steel and is poised to remain one of the largest consumers of emission free steel during the forecast period. Many steel manufacturers, such as Boston Metal, ArcelorMittal, SSAB, Voestalpine, and Nucor Corporation, have mentioned in their press releases that they expect huge demand for new climate friendly steel from the building and construction industry. A new steel plant under construction by ArcelorMittal at the Sestao plant will produce flat steel products for the automotive and construction sectors and general industry.

Other applications, such as solar panels, wind turbines, home appliances, and metal products, are set to create additional demand for carbon free steel during the forecast period.

REGIONAL INSIGHTS

The market size in North America stood at USD 0.75 billion in 2022. North America is the world’s fourth largest steel manufacturer. This is on the back of the U.S., which produces nearly 87% of the total regional production. The U.S. is also identified as a first mover in the market among a few countries: Germany, China, Australia, Saudi Arabia, and others. Steel manufacturing companies, such as Nucor Corporation, H2 Green Steel, and Boston Metal, are the few companies that will drive production in the U.S.

Asia Pacific is the largest steel producer, but still, EAF production technology accounts for less than 15% of the total regional production. Hence, this region is in the early stage of the green transition that is happening around the world. However, few market giants have taken concrete steps toward the transition. China Baowu, HBIS Group, Ansteel Group, and Nippon Steel Corporation are the few regional companies with concrete plans to decarbonize their steel production in the next 5 to 10 years.

Europe is identified as a prominent region in the market, as many European companies have invested millions of dollars in establishing new production plants that will be capable of producing carbon free steel by the midterm forecast. Germany is poised to become a production hub for green steel as companies, such as Salzgitter AG, Thyssenkrupp Steel, and Stahl-Holding-Saar have plans to establish new carbon free steel production plants with millions of tons of production capacities. 

In the Rest of the World, countries, such as Brazil, Saudi Arabia, and Oman will assist the growth of the global market during the forecast period.

KEY INDUSTRY PLAYERS

Capacity Expansion in Lucrative Regions to Remain Prominent Strategy by Market Players

Market giants to pave the path for green steel market growth. Nucor Corporation, Swiss Steel Group, Outokumpu, China Baowu Steel Group, Salzgitter AG, ArcelorMittal, SSAB, and Emirates Steel Arkan are some of the major manufacturers that will establish their green steel production plants by 2025. Companies are involved in setting up new manufacturing plants with advanced technologies that can use modern technologies, such as hydrogen-based DRI production. Companies are also partnering with renewable electricity vendors and hydrogen producers to get their production lines as soon as possible.

LIST OF KEY COMPANIES PROFILED:

• Ansteel Group (China)


• ArcelorMittal (Luxembourg)


• Boston Metal (U.S.)


• China Baowu Group (China)


• Cleveland-Cliffs (U.S.)


• H2 Green Steel (U.S.)


• Nippon Steel Corporation (Japan)


• Nucor Corporation (U.S.)


• Steel Dynamics, Inc. (U.S.)


• United States Steel Corporation (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• In June 2023- Mercedes-Benz and H2 Green Steel signed a binding agreement to deliver about 50,000 tons of steel annually, manufactured in Boden, northern Sweden.


• In August 2022- H2 Green Steel and BMW Group signed an agreement on delivering CO2-reduced steel. The agreement includes recycling and end-of-life management measures.


• In March 2023- Midrex Technologies, Inc., a subsidiary of Kobe Steel, announced to supply and construct the MIDREX Flex reduction plant for German company thyssenkrupp Steel Europe AG at its Duisburg site, with a production capacity of 2.5 million tons/year.


• In May 2022- Kobe Steel launched a new product named “Kobenable Steel,” Japan's first blast furnace steel product with very low CO2 emissions during the blast furnace ironmaking process.


• In October 2022- Jindal Steel and Power signed a MoU with Greenko to provide 1000 MW of carbon-free energy. Both have agreed to reduce carbon emissions to zero by 2035.

REPORT COVERAGE

The research report provides detailed market analysis and focuses on crucial aspects such as leading companies, production technology, applications, and end-use industries. Also, it provides quantitative data regarding volume and value, market analysis, research methodology for market data, and insights into market trends and highlights vital industry developments and competitive landscape. In addition to the abovementioned factors, the report encompasses various factors contributing to the market's growth in recent years.

Report Scope & Segmentation