- Radical decarbonization is possible if the steel, transport and infrastructure industries work together.
- Hydrogen has the potential to deliver far-reaching change, replacing fossil fuels in everything from steel production to transportation.
- Innovative, well-orchestrated collaboration – across companies and industry sectors – offers a solution to tackle the climate crisis.
In a constant search for new ways to reduce climate impact, big industries must find new solutions and think beyond the traditional, to identify new collaborative partnerships. In the transport sector, vehicle production is one such route being explored, and it is leading to exciting new partnerships with the steel industry, currently a major contributor of greenhouse gas (GHG) emissions, but committed to changing its ways.
In 2020, 1.87 million tonnes of crude steel were produced worldwide, 16% of which was destined for the transport sector. A staple of the world’s industrial economy and used in everything from energy and construction, to automotive and transportation, infrastructure, packaging and machinery, steel is everywhere. Lightweight but strong, it’s the perfect material for the automotive sector which demands durability, fuel and cost-efficiency, as well as a product that is easily repairable and remanufacturable.
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Whilst infinitely recyclable, demand for new, virgin steel is rising, as much of the steel already in existence is in use in products like bridges where it will remain for many years to come. On average 1.85 tonnes of CO2 are emitted for every tonne of steel produced and the industry is heavily reliant on fossil fuels, namely coal and natural gas, to reduce iron ore and produce the steel.
Roadmap to change
The steel industry accounts for around 8% of GHG emissions annually. Like the transportation sector, it is doing much to tackle its impact, driving more reuse, remanufacturing and recycling, all of which are key components of a circular economy. In the last 50 years, the steel industry has reduced its energy consumption per tonne of steel produced by 61%. But to continue to deliver improvements, the development of breakthrough technologies and the implementation of new processes will be critical.
Hydrogen – a revolution in steel production
Perhaps one of the most exciting innovations on the horizon for steel production is the use of hydrogen. By switching from fossil fuels to hydrogen for reducing iron ore, GHG emissions can be virtually eradicated and the only waste gas produced is water. This new approach offers one of the best opportunities to slash emissions from steelmaking.
Hydrogen has become a key area of focus for steelmakers like SSAB, and they are developing breakthrough hydrogen reduction technology. At Volvo Group, we are proud to be partnering with SSAB, who are providing us with the fossil-free steel we need to research, develop and commercialize the world's first vehicles made from green steel.
With around 70% of a truck’s weight coming from steel and cast iron – and the figure for Volvo construction machines even higher – their production will be another step in our journey to net zero. Coupled with the roadmap we have set to reduce our carbon footprint at the end-user phase through the electrification of our vehicles – either via battery-electric or hydrogen fuel cell technology – the potential to deliver significant change is compelling.
What's the World Economic Forum doing about the transition to clean energy?
Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.
Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.
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For organizations committed to limiting their footprint and decarbonizing, it is imperative to look beyond one’s own operations to identify opportunities for improvement both up and down the supply chain. By demanding better, more sustainable products, we can be the impetus for change.
Like SSAB, Ovako is also looking to use hydrogen in its steel production – using it to heat steel prior to rolling – and is constructing a new fossil-free hydrogen plant in Hofors, Sweden. A hydrogen filling station will be built alongside the plant, with the surplus hydrogen used to power Volvo’s next-generation trucks. Future installations at multiple locations would create a network of locally produced fossil-free hydrogen for the transport sector. At Volvo Group, we see hydrogen playing an important role in our shift to electrification, with fuel cell power for long haul and heavy-duty application. Green hydrogen can also play a role as a fossil-free fuel for combustion engines.
Collaborate for systemic change
Just as the world’s nations come together at COP26 to address climate change, so industries and organizations must also work together. Few companies, if any, can achieve substantial decarbonization on their own. The development of a fossil-free value chain requires partnership, cooperation and shared learnings. Organizations should see themselves as part of the puzzle and not the complete solution. They need to identify inter-connections with other partners, be that suppliers, customers, academia, competitors, policy-makers and even other industries, and work to piece together the answer to today’s climate challenge.
Changemakers have the power to lead by example, through innovative, well-orchestrated collaborations that deliver much-needed change. They also set a benchmark that can be replicated by other organizations across the world. As European Commission President, Ursula von der Leyen, recently stated: “Our current fossil fuel economy has reached its limits. And we now have to move to a new model, one that is powered by innovation.”
And this is precisely what we are seeing emerge, as both the steel and transport industries look to work together to introduce ground-breaking new initiatives that will transform the way they operate and the products they provide to their customers.