Steelmakers around the world are failing miserably in making the switch towards low-carbon production, according to a report by the Sydney-based climate group, Action Speaks Louder (ASL). The report titled “Testing the Mettle: Ranking Steel Companies´ Current Renewable Energy Use” was released in November. It surveyed 18 of the world´s largest steelmakers and found some were still entirely dependent on fossil fuels for their energy, despite most having current renewable energy projects. Steel is responsible for 7% of global carbon dioxide emissions, with coal-fired blast furnaces producing two metric tonnes of CO2 for each tonne of output. The survey rated companies on their direct renewable energy procurement as a percentage of their overall energy consumption in 2022. The best performer was the Swedish company SSAB, with 19% renewable energy as a percentage of its total energy use in making steel. Next best – though well adrift – were Cleveland-Cliffs (2.9%) and US Steel (2.3%).

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The worst performers were the South Korean companies Dongkuk Steel and Hyundai Steel, with zero use of renewables – in part because neither showed any evidence of having a current renewable energy project. For most companies in the survey, renewables represented less than one percent of their total energy use. Those companies were: ArcelorMittal, Ansteel Group, China Baowu Group, JSW Steel, Tata Steel, SAIL, Posco and Kobe. The remaining five companies in the survey had a current renewable energy project at the time of the survey, but provided incomplete information and therefore did not receive a rating. Those companies were: HBIS Group, JFE Group, Nippon Steel, Nucor and ThyssenKrupp.

“From an international perspective, it is very surprising to see major companies that claim to have a carbon neutrality strategy purchasing literally zero renewable energy. Most leading global companies would at least attempt to purchase a small amount, for the sake of their brand’s credibility,” said Laura Kelly, author of the survey by Action Speaks Louder, a not-for-profit organisation. Kelly pointed out that all steel companies are only one investment cycle away from the global net-zero objectives set for 2050, and yet many are obviously making very little investment in renewable energy supply.

Kinam Kim, a senior campaigner for ASL in South Korea, said Hyundai Steel needs to address its reliance on fossil fuels otherwise it will place in jeopardy the ESG ratings of its customers. “Hyundai Steel’s poor performance globally exposes its major customer, Hyundai Motor, to brand risks. Unless Hyundai Motor adopts a strong green steel target, it will struggle to compete with European and American brands. This will mean more jobs being created in the US instead of in South Korea, where Hyundai Motor is building new factories to benefit from more abundant renewable energy and generous government sustainability subsidies,” Kim said.

The “Testing the Mettle” survey was reviewed by SteelWatch, a global climate organisation focused on driving transformation of the steel sector to align with 1.5 degrees Celsius of climate change. “While steel companies are increasingly telling us they’re working hard to clean up production, this report again underlines that they simply aren’t taking the most basic, immediate actions to reduce emissions,” said Caroline Ashley, Executive Director of SteelWatch. “Steelmakers tend to be huge energy consumers, and powerful political players, so they need to publicly shift their weight behind renewables. This will be ever-more important in the next decade as steelmakers exit coal use and will depend on renewable-powered clean production of iron and steel,” she added.

The Action Speaks Louder survey followed the release in November of a report by the Australian think tank, Climate Energy Finance, in which it predicted Australia could lose as much as half its revenue from iron ore exports if it fails to start producing green iron soon enough. Australia accounts for 56% of global seaborne iron ore trade and the mineral is our biggest export earner, but we risk losing around $69 billion a year in revenue from the sector as international steelmakers decarbonise and restructure their supply chains, the report said. Conversely, the report also posited that Australia could potentially double its current revenue to $250 billion a year if it manages to position itself as a leader in green iron.

In response to the report, Marilyne Crestias, interim CEO at Clean Energy Investor Group, a Melbourne-based advocacy group, said: “In the global race to green iron exports, Australia has numerous competitive advantages – such as abundant and cheap renewables – that we must capitalise on.”

Climate Energy Finance has recommended Australia develop a clean commodities trading company with South Korea and Japan, and that the federal government’s Future Fund should provide $20 billion to enable green metals processing. It has also suggested Australia’s trade bodies should work on an Asian Carbon Border Adjustment Mechanism (ACBAM) to create a premium price signal for Australian green iron.