WEBVTT - Forging a Clean Future: The Challenge for Steelmakers 0:00:00.120 --> 0:00:02.680 This is Dana Perkins and you're listening to Switched on 0:00:02.840 --> 0:00:06.800 the BNEF podcast. On last week's episode, we discussed aluminum, 0:00:06.800 --> 0:00:09.920 and this week we're looking at another important metal, steel. 0:00:10.280 --> 0:00:13.080 The sectors with harder to abate emissions by twenty fifty 0:00:13.160 --> 0:00:17.560 include things like cement, plastics, trucking, shipping, and aviation, and 0:00:17.640 --> 0:00:21.040 of course, the subject of today's show. Steel. It's produced 0:00:21.120 --> 0:00:25.239 with the world's most commonly mined metal ore iron and 0:00:25.400 --> 0:00:30.680 has extensive uses, whether these be construction, automotive, household appliances, 0:00:30.920 --> 0:00:33.600 or the renewable energy equipment that is essential for the 0:00:33.640 --> 0:00:36.839 paths to net zero. For BNOF subscribers, relevant research on 0:00:36.840 --> 0:00:40.080 the steel industry can be found on the Decarbonizing Industry 0:00:40.200 --> 0:00:44.000 series page. This is on BNF dot com or NYFW go. 0:00:44.320 --> 0:00:47.400 For those who have a terminal, hover over research and news, 0:00:47.760 --> 0:00:51.519 then go to series and then find Decarbonizing Industry. We 0:00:51.640 --> 0:00:55.160 drew upon a few specific research notes such as net 0:00:55.240 --> 0:00:59.600 zero needs set to boost metals demand nearly fivefold and 0:01:00.080 --> 0:01:03.560 Asian steel giants spread bets on hydrogen, along with the 0:01:03.680 --> 0:01:06.560 number of company profiles, and on the show today, we're 0:01:06.600 --> 0:01:09.240 going to talk about some of the major steel manufacturers 0:01:09.280 --> 0:01:12.920 and how they're approaching decarbonization. I speak with BNF's head 0:01:12.920 --> 0:01:16.800 of Sustainable Materials, doctor Julia Atwood, and our sustainable materials 0:01:16.800 --> 0:01:20.280 analyst in Bloomberg's Beijing office, Yu Chen Teng. Together, we 0:01:20.400 --> 0:01:23.679 go through the range of different production methods and innovations 0:01:23.720 --> 0:01:27.720 that steel producers are using to reduce their missions, including recycling. 0:01:27.959 --> 0:01:31.480 We also discuss the EU Carbon Border Adjustment Mechanism or 0:01:31.520 --> 0:01:36.000 CBAM for short, and how it's impacting global manufacturers emissions targets. 0:01:36.400 --> 0:01:39.039 And lastly, we get to whether or not nuclear power 0:01:39.240 --> 0:01:42.800 could play a big role in the decarbonization of this sector. 0:01:43.120 --> 0:01:45.679 As always, if you like this podcast, make sure to 0:01:45.680 --> 0:01:48.960 subscribe to receive updates on future episodes, and give us 0:01:48.960 --> 0:01:51.480 a review a rating on Apple Podcasts or Spotify to 0:01:51.560 --> 0:01:55.120 increase our discoverability. Now let's jump into my conversation with 0:01:55.240 --> 0:02:09.040 Julia and Yuchen about steel you ten, thank you for 0:02:09.120 --> 0:02:10.160 joining us on the show today. 0:02:10.280 --> 0:02:12.600 Thank you Dana for having me and Julia. 0:02:12.760 --> 0:02:15.160 Welcome back, Thanks Dana, nice to be here. 0:02:15.480 --> 0:02:18.239 So we're going to talk about steel decarbonization, which fits 0:02:18.240 --> 0:02:20.680 into the hard to abate category, the things that are 0:02:20.720 --> 0:02:23.520 really difficult to figure out how we're going to decarbonize. 0:02:23.600 --> 0:02:26.320 And as we're getting started, let's give it a little 0:02:26.360 --> 0:02:29.560 bit of context. How big are the emissions? What are 0:02:29.600 --> 0:02:31.320 we talking about in terms of scope? 0:02:31.840 --> 0:02:35.560 Well, Steele is about seven to eight percent of global emissions, 0:02:35.600 --> 0:02:38.119 depending on how you count them. But the really interesting 0:02:38.160 --> 0:02:41.799 thing is that in economies that are trying to decarbonize, 0:02:41.800 --> 0:02:44.200 it's often a much bigger slice of that. So in 0:02:44.320 --> 0:02:47.200 China and Japan and Korea it's actually in the teens. 0:02:47.360 --> 0:02:51.399 So steel decarbonization is an outsized topic for those countries 0:02:51.600 --> 0:02:55.160 because they know that in order to keep this critical material, 0:02:55.240 --> 0:02:56.520 they're going to have to make it green. 0:02:57.040 --> 0:02:59.120 Now you're saying they're going to have to make it green, 0:02:59.280 --> 0:03:01.240 and then that leads me to the question why is 0:03:01.280 --> 0:03:02.120 it hard to abate? 0:03:02.680 --> 0:03:06.000 Yeah, steel is particularly hard to abate because it uses 0:03:06.160 --> 0:03:09.160 coal intensively, and it's hard to get rid of those 0:03:09.200 --> 0:03:11.840 cold because not only are they used as fuel, but 0:03:11.919 --> 0:03:15.280 also they're used for their chemical properties. So in fact, 0:03:15.320 --> 0:03:18.960 they're used in blasphernesss as reducing agent to bring the 0:03:19.000 --> 0:03:22.240 iron ore to turn them into iron es centrally, So 0:03:22.919 --> 0:03:26.200 there's really no good substitute for those coal and coke 0:03:26.520 --> 0:03:30.840 used in blasphernesss and blaspherness using that process to make 0:03:30.919 --> 0:03:35.000 iron actually accounts for about seventy percent of total steel 0:03:35.040 --> 0:03:36.080 production in the world. 0:03:36.440 --> 0:03:39.200 And you previously said that there were a few main 0:03:39.440 --> 0:03:42.080 centers in the world where stale is produced and it's 0:03:42.120 --> 0:03:45.040 a big part of their exported economy, and so I 0:03:45.080 --> 0:03:47.520 guess my question is also why is it produced there 0:03:47.560 --> 0:03:50.160 and why is this not something that is part of 0:03:50.240 --> 0:03:54.960 this global deglobalization as we think about supply chains which 0:03:55.040 --> 0:03:57.920 keeps propping up this year. Why is it in so 0:03:58.080 --> 0:03:58.960 few centers. 0:03:59.240 --> 0:04:03.760 So, actually around half of steel steel is actually made 0:04:03.800 --> 0:04:06.800 in China, and most of the steel actually about ninety 0:04:06.840 --> 0:04:11.160 five percent of steel made there in China is consumed domestically, 0:04:11.360 --> 0:04:15.840 so it supports industries like the property industry, it supports 0:04:15.920 --> 0:04:19.320 the infrastructure build in China. So, as you can see, 0:04:19.360 --> 0:04:22.800 because we have such concentrated demand from China, that's why 0:04:22.839 --> 0:04:25.840 we have a large chunk of steel produced there. So 0:04:26.040 --> 0:04:29.320 following China, we have India, which is currently the second 0:04:29.360 --> 0:04:32.760 largest steel producing country in the world, accounts for about 0:04:32.800 --> 0:04:37.120 four percent of total steel production, and followed by South Korea, 0:04:37.720 --> 0:04:42.960 US and Japan, which roughly produces around the same share 0:04:43.000 --> 0:04:46.559 of steel. So I mean China is as Julian mentioned, 0:04:46.640 --> 0:04:50.520 China is pretty outsized and it's steel production. But steel 0:04:50.560 --> 0:04:53.960 as a material has been used extensively to help those 0:04:54.120 --> 0:04:58.920 developed economies basically urbanized in the past, and now it's 0:04:59.000 --> 0:05:03.080 really the emerging economies such as China and India driving 0:05:03.080 --> 0:05:07.279 those steel demands. So we'll soon see those steel production 0:05:07.560 --> 0:05:12.080 shifting increasingly to meet those demand from those emerging economies. 0:05:12.080 --> 0:05:15.159 In particular, that was a really good summary. The way 0:05:15.200 --> 0:05:18.680 to think about it is just that steel follows industrialization. 0:05:19.040 --> 0:05:21.599 You have to have steel in order to build cars 0:05:21.640 --> 0:05:25.640 and houses and roads and bridges, and we've typically only 0:05:25.680 --> 0:05:29.880 had one enormous country industrializing at a time, so we 0:05:29.960 --> 0:05:32.839 had China, and now it's moving into India and Southeast Asia. 0:05:32.920 --> 0:05:35.000 So I think you will see some shifts in where 0:05:35.040 --> 0:05:37.359 steel is produced in the pretty near future. 0:05:37.640 --> 0:05:40.240 And we certainly spend a lot of time talking about mitigation, 0:05:40.440 --> 0:05:42.880 but steel has an important role to play in adaptation 0:05:43.000 --> 0:05:46.240 when people are thinking about making more resilient infrastructure. So 0:05:47.040 --> 0:05:51.280 is the demand for steel and theory increasing, staying flat decreasing? 0:05:51.520 --> 0:05:55.599 What's our forward looking view not just on decarbonizing steel, 0:05:55.640 --> 0:05:58.279 which we will come to but whether or not it'll 0:05:58.320 --> 0:06:00.839 remain the critical material that it is today. 0:06:01.200 --> 0:06:04.240 Well, Julius, as your work done the new industry which 0:06:04.279 --> 0:06:07.919 contains our demand outlook all that do take that question. 0:06:08.040 --> 0:06:11.640 That is a masterful plug, Thank you, Jen. It depends 0:06:11.640 --> 0:06:15.000 on the country so incredibly. We actually see steel production 0:06:15.120 --> 0:06:18.680 going down in China, which would have been unthinkable ten 0:06:18.800 --> 0:06:21.720 or twenty years ago. Overall, we think it will ramp up, 0:06:21.800 --> 0:06:24.039 and that's because of a lot of growth in India, 0:06:24.080 --> 0:06:26.640 a lot of growth in Southeast Asia. Everybody else kind 0:06:26.640 --> 0:06:28.840 of stays the same because we really think of them 0:06:28.880 --> 0:06:31.680 as being in replacement cycles. So you only need as 0:06:31.720 --> 0:06:34.800 much steel as you need to replace anything that you're 0:06:34.800 --> 0:06:37.600 tearing down because the building's too old. The point about 0:06:37.600 --> 0:06:41.680 adaptation is really interesting. Obviously, for adaptation there's a lot 0:06:41.680 --> 0:06:45.160 of reinforcing of existing infrastructure that you would want to do, 0:06:45.279 --> 0:06:48.960 and construction is the biggest source of demand for both 0:06:49.000 --> 0:06:51.640 steel and cement, and cement, which we're going to be 0:06:51.680 --> 0:06:55.120 looking at soon, is a very similar portion of global emissions. 0:06:55.360 --> 0:07:00.760 So we've talked internally about adaptation being difficult because your 0:07:00.800 --> 0:07:03.920 problems just pile one on top of each other, and 0:07:04.000 --> 0:07:06.800 so a lot of build out of adaptation infrastructure. It's 0:07:06.839 --> 0:07:09.920 going to mean more cement, more steel, more emissions. So 0:07:09.960 --> 0:07:12.679 that just makes it even more important that the steel 0:07:12.760 --> 0:07:15.000 makers start to look at how they can get to 0:07:15.040 --> 0:07:15.480 net zero. 0:07:15.960 --> 0:07:19.440 Do they currently have the technologies that they need or 0:07:19.520 --> 0:07:22.280 is this a conversation that still continues to kind of 0:07:22.440 --> 0:07:24.000 let's say, lean on hydrogen. 0:07:24.480 --> 0:07:28.640 Our team dived into the possible net zero technologies who 0:07:28.680 --> 0:07:31.720 make steel, so hydrogen, as you mentioned, Dana is a 0:07:31.760 --> 0:07:34.600 big one of them. So currently I think with the 0:07:34.680 --> 0:07:39.640 technology readiness level where somewhere we're very close to commercializing 0:07:39.680 --> 0:07:43.840 this technology. So we'll see the leading steel makers putting 0:07:43.840 --> 0:07:48.120 out the first projects using green hydrogen around twenty twenty 0:07:48.120 --> 0:07:52.240 five twenty twenty six. And obviously there's some other technology, 0:07:52.320 --> 0:07:57.080 for instance retrofitting the emissions intensive blast furnaces with CCUS 0:07:57.400 --> 0:08:02.320 and also substituting some of the coal potentially with biomass, 0:08:02.480 --> 0:08:05.920 and they are emerging technologies such as electrolysis that can 0:08:05.960 --> 0:08:09.800 also help us make green steel. However, those other technologies 0:08:09.880 --> 0:08:13.640 are at a much less mature level compared to the hydrogen. 0:08:13.800 --> 0:08:17.000 So in Europe in particular, hydrogen is the e goo 0:08:17.000 --> 0:08:19.520 to option to help steal decarbonize. 0:08:19.840 --> 0:08:22.040 What is the state of the race to net zero 0:08:22.360 --> 0:08:25.680 by steel producers? And what I mean by that is, 0:08:25.840 --> 0:08:28.160 you know, I look sometimes at industries and I see 0:08:28.320 --> 0:08:31.280 net zero targets really come in waves. It's typically not 0:08:31.480 --> 0:08:34.800 one or two companies, it's either most of them or 0:08:34.960 --> 0:08:37.440 very few of them. Is this something that is a 0:08:37.480 --> 0:08:40.559 big push in the steel industry and are they all 0:08:40.679 --> 0:08:44.280 racing towards a net zero future? And perhaps what do 0:08:44.320 --> 0:08:45.240 the targets look like. 0:08:45.760 --> 0:08:50.000 Well, I wouldn't say they're as eager as racing, but 0:08:50.200 --> 0:08:53.280 there are certainly some big players out there putting out 0:08:53.280 --> 0:08:56.839 their net zero targets. So actually, very recently we've looked 0:08:56.880 --> 0:09:00.640 into some of the largest integrated steel makers, so those 0:09:00.880 --> 0:09:05.680 predominantly reliant on blaspherness production to make their steal right now. 0:09:05.760 --> 0:09:08.800 So we look at where they are in terms of 0:09:09.240 --> 0:09:14.360 net zero target setting, which actually converges mostly on twenty fifty, 0:09:14.559 --> 0:09:16.960 so that's like the common goal that they set. We 0:09:17.080 --> 0:09:20.080 also look at what are the technologies that they're planning 0:09:20.160 --> 0:09:23.679 on adopting to achieve those targets, and what are some 0:09:23.720 --> 0:09:26.959 of the projects that they put out there. So amongst 0:09:27.040 --> 0:09:31.439 those top eight integrated steelmakers we look at. There's actually 0:09:31.520 --> 0:09:35.920 one interesting outlier, which is SSAB. So it's the smallest 0:09:35.960 --> 0:09:38.240 amongst the a's that we look at, but it has 0:09:38.320 --> 0:09:41.640 the most ambitious target, planning to achieve net zero by 0:09:41.679 --> 0:09:46.319 twenty thirty, which is really impressive or really unusual for 0:09:46.520 --> 0:09:48.280 such an hartobate sector. 0:09:48.800 --> 0:09:54.000 Now, legislation certainly has a motivating force for companies, and 0:09:54.080 --> 0:09:57.320 I'm thinking about right now EU legislation. So the EU 0:09:57.440 --> 0:10:01.560 Carbon Border Adjustment mechanism, how is this acting the steel industry? 0:10:02.160 --> 0:10:05.560 Well, SEBAM really started the conversation for a lot of people. 0:10:05.840 --> 0:10:09.680 It has an extremely long implementation time, so we don't 0:10:09.679 --> 0:10:12.280 think we're really going to see the full effects of 0:10:12.400 --> 0:10:16.000 the carbon price and this tariff until the twenty thirties. 0:10:16.280 --> 0:10:18.360 We hope that everyone will have made a lot of 0:10:18.400 --> 0:10:20.840 progress by then. So I would say what this is 0:10:20.880 --> 0:10:23.920 doing is putting everyone on notice. Every other country that 0:10:24.040 --> 0:10:27.280 imports to Europe now has to either find a way 0:10:27.320 --> 0:10:30.880 to produce a green product to sell specifically into that market, 0:10:31.120 --> 0:10:33.680 or needs to start figuring out another place to send 0:10:33.720 --> 0:10:36.280 their steel. You tended you want to comment on the 0:10:36.520 --> 0:10:39.439 China dynamics. We talk a lot about how Oh, China's 0:10:39.440 --> 0:10:41.600 the biggest steel maker. This is going to be huge 0:10:41.640 --> 0:10:44.600 for them. But actually you were the first person to 0:10:45.440 --> 0:10:47.079 give a very different spin on it to me. 0:10:47.720 --> 0:10:51.160 So, as Julia mentioned, CEBAM certainly has raised a lot 0:10:51.160 --> 0:10:55.400 of tension outside of the U. So actually China is 0:10:55.920 --> 0:11:01.040 not the biggest exporter of steel to Europe, but certainly 0:11:01.160 --> 0:11:04.920 had the SEABAM caught a lot of retentionion in their people, well, 0:11:05.000 --> 0:11:09.280 particularly the industry is very eager to understand how SEABAM works, 0:11:09.480 --> 0:11:13.320 what are the methodologies, which we yet have very little 0:11:13.360 --> 0:11:16.920 details on terms of how producers are going to have 0:11:17.000 --> 0:11:20.280 to pay the carbon fees into the EU, but we 0:11:20.360 --> 0:11:24.360 will be expecting more details coming through leading to twenty 0:11:24.400 --> 0:11:28.200 twenty six. But this certainly is a great example of 0:11:28.240 --> 0:11:31.280 how a piece of legislation in the EU could have 0:11:31.400 --> 0:11:34.720 such large ripple effect to the rest of the world. So, 0:11:35.000 --> 0:11:38.720 I mean China, like other countries, they're very concerned about 0:11:39.080 --> 0:11:41.480 the impact of this piece of legislation. 0:11:42.200 --> 0:11:45.000 I'm generally pretty down on policy when it comes to 0:11:45.160 --> 0:11:48.199 industrial decarbonization. I think it hasn't really pulled its weight 0:11:48.320 --> 0:11:51.679 so far. It's been giving industry a pass. But that said, 0:11:51.800 --> 0:11:55.079 something interesting that could come out of SEABAM is a 0:11:55.120 --> 0:11:58.840 framework for standards for green steel. So most of the 0:11:58.840 --> 0:12:00.960 green steel that's bought, and so today it's B to 0:12:01.040 --> 0:12:03.480 B and those businesses have to spend a lot of 0:12:03.520 --> 0:12:06.440 time figuring out what do I think is green steel? 0:12:06.720 --> 0:12:09.440 What are my emissions criteria? How far down the supply 0:12:09.559 --> 0:12:12.160 chain am I going to go? If the EU sets 0:12:12.240 --> 0:12:14.520 up a really nice framework for this is how you 0:12:14.559 --> 0:12:17.400 report your emissions? These are what we think our standards are. 0:12:17.440 --> 0:12:19.640 That's a great jumping off point for the people who 0:12:19.679 --> 0:12:22.120 are trying to develop green standards that can be used 0:12:22.160 --> 0:12:24.679 throughout the industry. And then that sort of starts to 0:12:24.760 --> 0:12:27.160 lead you into thinking about this as a real product 0:12:27.320 --> 0:12:31.160 rather than something that a producer is doing to make 0:12:31.200 --> 0:12:33.520 their consumer happy, and speaking. 0:12:33.160 --> 0:12:35.360 Of a space that some may think as a whole 0:12:35.400 --> 0:12:37.640 pass and others may think is a tangible way to 0:12:37.760 --> 0:12:42.200 working towards net zero emissions right now voluntary carbon? Are 0:12:42.400 --> 0:12:46.600 the steel producers looking at voluntary carbon offsets? And are 0:12:46.640 --> 0:12:48.520 they big buyers of them at this moment in time? 0:12:49.080 --> 0:12:52.120 They're not big buyers of them. They're looking at everything, 0:12:52.440 --> 0:12:55.640 so they are looking at voluntary carbon offsets. I occasionally 0:12:55.679 --> 0:12:59.120 get questions about direct or capture, So is this something 0:12:59.320 --> 0:13:02.679 that they should consider doing. Should they just run their 0:13:02.720 --> 0:13:05.640 assets into the ground doe direct air capture as they 0:13:05.679 --> 0:13:07.679 need to in order to make a green product, or 0:13:07.720 --> 0:13:11.800 even just wait until it's hopefully less expensive in twenty fifty. 0:13:12.160 --> 0:13:15.520 That's kind of a dangerous strategy because this is one 0:13:15.520 --> 0:13:19.040 of those things where it's relatively straightforward to actually measure 0:13:19.080 --> 0:13:23.079 the emissions because these are centralized plants. So I think 0:13:23.240 --> 0:13:27.440 a product that is called green steel based on offsets 0:13:27.920 --> 0:13:30.720 is not going to be able to command a premium 0:13:30.800 --> 0:13:31.360 for very long. 0:13:31.880 --> 0:13:35.040 And I just want to also provide some context to 0:13:35.360 --> 0:13:39.800 how steel makers think about offsets. So currently, actually in 0:13:39.880 --> 0:13:44.360 steel production, the carbon element is an intrinsic part to steal. 0:13:44.480 --> 0:13:47.920 So actually steel is made up of about two percent 0:13:47.960 --> 0:13:51.320 of carbon, so physically you actually need that carbon to 0:13:51.400 --> 0:13:54.600 be added in the steel production process. So for instance, 0:13:54.679 --> 0:13:57.960 even though you are using one hundred percent of hydrogens 0:13:58.120 --> 0:14:01.240 grain hydrogen to make that stew, at some point you 0:14:01.280 --> 0:14:03.720 will have to add in some carbon content, be it 0:14:04.080 --> 0:14:06.800 biomass or say if you're add in some sort of 0:14:06.840 --> 0:14:09.600 fossil fuel and then capture the emissions later. So the 0:14:09.640 --> 0:14:14.640 point being there will be some carbon or carbon emissions left. 0:14:15.000 --> 0:14:19.600 It's almost unavoidable in like how steel is made. So 0:14:19.760 --> 0:14:22.920 that's why a lot of the steelmakers believe that at 0:14:22.920 --> 0:14:25.920 some point they're going to have to rely on carbon 0:14:26.000 --> 0:14:29.720 offsets or some sort of offsetting mechanism to help them 0:14:30.000 --> 0:14:34.600 reduce or tackle that residual emissions, which is approximately five 0:14:34.640 --> 0:14:37.840 to ten percent of their emissions. However, I feel like 0:14:37.920 --> 0:14:41.520 the focus of the steelmakers now in terms of decarbonization 0:14:41.840 --> 0:14:44.760 is that they want to look for technologies that will 0:14:44.880 --> 0:14:47.960 enable them to take the largest chunk of the emissions. 0:14:48.000 --> 0:14:51.800 So residual emission is important to get us to net zero. However, 0:14:52.000 --> 0:14:55.120 it is the smaller parts of the pie that we're 0:14:55.160 --> 0:14:59.440 looking at. So rather they're looking for really deep decarbonization 0:14:59.560 --> 0:15:03.640 technology such as hydrogen and ccus, which allows you to 0:15:03.800 --> 0:15:05.920 bate emissions to a large extent. 0:15:08.280 --> 0:15:11.160 Now, Julia, you've spent a lot of time at BNF 0:15:11.240 --> 0:15:16.360 thinking about circular economy solutions, and what I'm wondering is 0:15:16.720 --> 0:15:20.480 how much is recycling of steel a part of the 0:15:20.480 --> 0:15:23.600 solution for decarbonizing the overall output. 0:15:24.080 --> 0:15:26.280 Oh, it's definitely a big part. Most of the green 0:15:26.400 --> 0:15:29.920 steel that is sold today is recycled steel. It's going 0:15:30.000 --> 0:15:33.320 to be really important in these developing economies that are 0:15:33.400 --> 0:15:36.400 ramping up their steel production because they will also start 0:15:36.440 --> 0:15:40.120 to see the first cars, the first consumer goods, the 0:15:40.160 --> 0:15:43.280 first buildings that they built fifty years ago coming out 0:15:43.280 --> 0:15:45.880 of commission. So that's going to generate some scrap that 0:15:45.920 --> 0:15:49.520 they can then recycle into steel. The issue is there 0:15:49.560 --> 0:15:51.880 isn't a huge amount of upside here. When you look 0:15:51.880 --> 0:15:55.320 at something like plastics that's very badly recycled today, there's 0:15:55.360 --> 0:15:57.840 a huge amount of benefit that you can get from 0:15:57.880 --> 0:16:00.360 recycling them, both on the waste and the emission side, 0:16:00.400 --> 0:16:03.560 if you do it mechanically. For steel, the developed world 0:16:03.800 --> 0:16:07.040 recycles steel very well, and so there's not a huge 0:16:07.080 --> 0:16:09.720 amount of benefit that they're going to get emissions wise 0:16:09.760 --> 0:16:12.480 for that. But Eachen, I mean, you can tell us 0:16:12.520 --> 0:16:15.760 a little bit about the plans that steelmakers have for recycling. 0:16:16.160 --> 0:16:19.520 Thanks Julia and Dana. You raised the really important point 0:16:19.560 --> 0:16:22.080 that recycling is going to play a big role in 0:16:22.200 --> 0:16:25.960 terms of reducing immediate or short to medium term. It 0:16:26.040 --> 0:16:29.280 is almost the most important solution because it is the 0:16:29.320 --> 0:16:33.760 only mature, commercially available technologies that we have to make 0:16:33.800 --> 0:16:37.200 green steel So how the method works is essentially you 0:16:37.520 --> 0:16:40.760 scrap as feedstocks, you put it in the electric arc 0:16:40.840 --> 0:16:43.800 furnace also known as EF, and then you're plug in 0:16:44.120 --> 0:16:48.600 essentially low carbon renewables or some form of low carbon 0:16:48.720 --> 0:16:51.920 electricity into it and then magically you get your green steel. 0:16:52.080 --> 0:16:55.600 So one way or another, those eight steelmakers that we've 0:16:55.640 --> 0:17:00.360 studied plan to install such recycling capacity to help them 0:17:00.520 --> 0:17:03.320 to enable them to make green stew in the medium 0:17:03.360 --> 0:17:06.480 to short term leading to twenty thirty. So it's important 0:17:06.520 --> 0:17:10.520 part to help them achieve their interim targets. However, as 0:17:10.720 --> 0:17:15.040 Julian mentioned, yeah, it's not every solution. We need also 0:17:15.160 --> 0:17:18.359 other technologies to really help us get to net zero. 0:17:18.880 --> 0:17:21.359 Staying on the topic of technologies, you know, we talked 0:17:21.359 --> 0:17:24.480 about some of the things that we're currently being looked at. 0:17:24.520 --> 0:17:27.960 So you talked about hydrogen and carbon capture. What are 0:17:27.960 --> 0:17:31.280 some of the more experimental things that are being looked 0:17:31.280 --> 0:17:34.000 at at the moment from a technology standpoint, and is there, 0:17:34.280 --> 0:17:37.120 you know, a bleeding edge when it comes to innovation 0:17:37.280 --> 0:17:38.119 in the steel space. 0:17:38.560 --> 0:17:43.679 Yeah, so I want to maybe discuss too interesting technologies. 0:17:43.840 --> 0:17:47.919 One is actually one category of technologies that allows the 0:17:48.000 --> 0:17:53.800 existing integrated still making process to partially reduce emissions, and 0:17:53.880 --> 0:17:58.640 these category technologies we call them blasphemess based technologies, so 0:17:58.800 --> 0:18:03.359 they could be top gas recycling coupled with CCUS or 0:18:03.480 --> 0:18:07.639 carbon capture, So that essentially means that you're recycling the 0:18:07.680 --> 0:18:11.680 off gas from the emissions intensive furnaces such as blast 0:18:11.720 --> 0:18:14.840 furnace or basic oxygen furnace where you make steels, So 0:18:14.960 --> 0:18:19.320 you recycle those off gases that contains carbon and then 0:18:19.440 --> 0:18:22.439 you feed them back into the furnace so that you 0:18:22.560 --> 0:18:25.959 require less carbon to be fed into the blast furnace 0:18:26.000 --> 0:18:29.200 in the first place to serve as reducing agent, and 0:18:29.280 --> 0:18:32.640 that can partially help you lower the emissions. Now why 0:18:32.680 --> 0:18:37.280 this is important is because it's one important category that 0:18:37.520 --> 0:18:40.920 a lot of the Asian steelmakers are focusing on. So 0:18:41.280 --> 0:18:45.000 let's break the Asian steelmakers into a few categories. There's 0:18:45.040 --> 0:18:49.639 the Japanese steelmakers, so they are really the ones leading 0:18:49.760 --> 0:18:53.000 the steel making technologies currently in the world. So they 0:18:53.720 --> 0:18:57.240 are super fascinated with their blast furnaces and they're looking 0:18:57.280 --> 0:19:01.239 to preserve that edge in the industry. So certainly they 0:19:01.240 --> 0:19:04.040 don't want the blast furnaces to go away, so they 0:19:04.080 --> 0:19:07.720 would try to find technologies that could help blast furnaces 0:19:07.840 --> 0:19:12.240 to reduce emissions, so the top gas recycling and carbon 0:19:12.320 --> 0:19:15.840 captures one way. Another way is to inject hydrogen into 0:19:15.880 --> 0:19:19.520 the blast furnace. That will also allow you to reduce 0:19:19.520 --> 0:19:23.280 emissions by around twenty percent. And then there's also another 0:19:23.359 --> 0:19:27.119 category of the steelmaker or Asian steel makers is the 0:19:27.200 --> 0:19:32.000 Chinese ones. They are certainly also looking at blast furnace 0:19:32.040 --> 0:19:36.560 based technologies because their blast furnaces were very much built 0:19:36.600 --> 0:19:40.000 in the past ten years twenty years, so the acid 0:19:40.080 --> 0:19:43.919 live for these assets are very young, so these steel 0:19:43.960 --> 0:19:47.280 producers are still hoping to use them for a long time, 0:19:47.359 --> 0:19:49.920 so it doesn't really make sense to knock down those 0:19:49.920 --> 0:19:53.040 furnaces that are still quite young, still quite good, and 0:19:53.160 --> 0:19:56.200 to build new furnaces running a hydrogen so it makes 0:19:56.240 --> 0:19:59.200 more economic sense for them to preserve that and hence 0:19:59.400 --> 0:20:03.240 inherent they have the motivation to also figure out a 0:20:03.280 --> 0:20:05.919 way to reduce plastphorness emissions. 0:20:06.119 --> 0:20:08.600 It all comes back to hydrogen and ccs in the end. 0:20:08.600 --> 0:20:13.280 Though, one of the strategies you end up seeing from 0:20:13.359 --> 0:20:16.400 some really large companies is to wait for smaller companies 0:20:16.440 --> 0:20:20.320 slightly more in innovative, maybe nimble startups to really come 0:20:20.400 --> 0:20:23.040 up with the technology and then buy it. Then, is 0:20:23.119 --> 0:20:27.359 there a vibrant space of companies that are looking at 0:20:27.400 --> 0:20:31.399 innovating that aren't a part of these very large steel 0:20:31.400 --> 0:20:33.760 producers in these centers around the world. 0:20:34.160 --> 0:20:37.440 There is, but they have a very particular niche. They 0:20:37.560 --> 0:20:40.600 all want to try and make steel directly with electricity, 0:20:40.840 --> 0:20:45.439 So using hydrogen is basically just a convenient storage tool 0:20:45.640 --> 0:20:49.760 and transport unit for electricity that U ten has looked 0:20:49.760 --> 0:20:51.120 into this a lot more detail. 0:20:51.600 --> 0:20:55.280 So we've certainly noticed a few startups in this space 0:20:55.359 --> 0:20:59.159 that are claiming that they have this innovative technologies that 0:20:59.320 --> 0:21:03.280 doesn't really on either hydrogen or ccus, but allows you 0:21:03.359 --> 0:21:06.680 to make green iron or green steel. One example being 0:21:06.840 --> 0:21:11.919 Boston Metals. So they have their proprietary process which is 0:21:12.000 --> 0:21:16.919 known as molten oxide electrolysis or MOE, which is a 0:21:17.000 --> 0:21:21.600 high temperature process. You essentially pass a current into a 0:21:21.680 --> 0:21:25.640 chunk of molten iron ore and by the electricity will 0:21:25.760 --> 0:21:29.320 reduce those iron iron and bring them and turn them 0:21:29.320 --> 0:21:34.439 into molten iron. So another startup in this space, a 0:21:34.520 --> 0:21:39.159 few others. Actually, there's another startup called Electra so they're 0:21:39.200 --> 0:21:44.520 also developing an electrolysis based process. However, it's a low 0:21:44.760 --> 0:21:49.960 temperature electrolysis process, and interestingly, contrary to theme process from 0:21:50.040 --> 0:21:55.199 Boston Metals, it allows you to use intermittent renewables. So 0:21:55.400 --> 0:21:58.720 MOE relies on twenty four seven clean power. That means 0:21:58.880 --> 0:22:00.919 you're going to have to find in some kind of 0:22:01.240 --> 0:22:05.679 storage or like really nice renewable to allow you to 0:22:06.000 --> 0:22:11.160 produce green iron continuously. However, for electros process, you actually 0:22:11.280 --> 0:22:15.439 can ramp up and down your production very flexibly. So 0:22:15.600 --> 0:22:19.000 in some way, or according to the company, actually they 0:22:19.000 --> 0:22:22.840 claim that their production side could also potentially serve as 0:22:22.840 --> 0:22:25.720 a grid balancing facility for the local grid. 0:22:26.160 --> 0:22:29.200 Could it in theory? I mean you mentioned grid balancing, 0:22:29.240 --> 0:22:31.600 so I guess this is the other side of the 0:22:31.640 --> 0:22:34.719 same coin. But it could be quite then responsive to 0:22:35.000 --> 0:22:37.520 the intermittency issues that we talk about when we think 0:22:37.520 --> 0:22:38.479 about wind and solar. 0:22:38.920 --> 0:22:42.440 Potentially it could be. However, I must mention that their 0:22:42.520 --> 0:22:46.439 technology is still at a very early stage. So they've 0:22:46.520 --> 0:22:49.480 filed a patent a few years ago and now they're 0:22:49.520 --> 0:22:53.280 currently looking to build a pilot scale production plan by 0:22:53.400 --> 0:22:56.840 end of this year. However, I guess one challenge that 0:22:57.160 --> 0:23:01.359 this electrolysis based technology is facing is scale, so it 0:23:01.760 --> 0:23:05.880 can allow you to produce almost as much as say, currently, 0:23:05.920 --> 0:23:08.520 the scale that they're looking at is they produce these 0:23:08.600 --> 0:23:12.640 iron plates that are one meter squared, and that is 0:23:12.680 --> 0:23:16.320 actually very very tiny compared to what a blasphemis could do, 0:23:16.840 --> 0:23:20.320 and that's at a million tons of scale, so it's 0:23:20.359 --> 0:23:24.520 an order of magnitude of difference. However, it does shine 0:23:24.640 --> 0:23:28.440