Green steel needs more buyer commitments. These companies are stepping up

E-commerce and cloud software powerhouse Amazon and building technology company Johnson Controls are the latest to join a corporate coalition pledging to procure at least 1 million tons of “near-zero emissions steel” annually by 2028, so-called green steel.

Near-zero emissions steel has a carbon footprint of 0.05 to 0.4 metric tons of carbon dioxide per ton of steel, compared with an average of 1.4 to 1.85 tons. U.S. demand for green steel should reach 6.7 million tons by 2030, according to nonprofit RMI, which manages the initiative, the Sustainable Steel Buyers Platform. U.S. steelmakers produced 82 million tons in 2022; a typical plant produces two million tons annually.

Still, to meet ambitious net-zero goals by 2050, more buyers of green steel are needed, and forming collectives is seen as a way to accelerate the transition.

The buyers group that Amazon and Johnson Controls joined Sept. 24 includes home builder Dvele, renewables developer Invenergy, tech company Microsoft, solar manufacturer Nextracker and real estate firm Trammell Crow. 

It’s one of several initiatives committing to green steel purchases. Two others are the First Movers Coalition, through which members such as Ford Motor and General Motors have pledged 10 percent of their steel procurement to near-zero emissions steel by 2030; and SteelZero, a group of 40 companies committed to buying all steel from net-zero sources by 2050 or earlier.

Major source of industrial emissions

The steel sector accounts for more than 7 percent of global greenhouse gas emissions related to the energy sector, or about 2.6 billion metric tons. That’s largely because smelting iron ore requires high temperatures traditionally fueled by coal. To reach net-zero emissions, the industry will have to cut emissions 90 percent by 2050, according to the International Energy Agency.

Startups such as Boston Metal, Electra and H2 Green Steel (now known as Stegra) are developing technologies that could factor in the transition, and big U.S. steelmaker, Cleveland-Cliffs, has been awarded $500 million in federal funding to build a plant in Ohio that will eventually run on green hydrogen. Meanwhile, rival U.S. Steel, involved in a controversial merger with Nippon Steel, announced Sept. 24 that its plant in Osceola, Arkansas, is the first to earn a certification from the ResponsibleSteel initiative.   

Steelmakers seek buyer promise

The infrastructure investments required for these alternatives are capital-intensive. Steelmakers are looking to big buyers — especially the automotive sector — for signals that they’ll be willing to pay a premium to cover the costs of the transition. 

That’s where the buyers’ coalitions seek to play a role. They represent a range of industries, especially automotive, manufacturing, shipping, renewable energy and real estate infrastructure, including data centers. 

“European automakers have been at the forefront,” said Chathurika Gamage, principal climate-aligned industries at RMI. Also crucial will be government policies and regulations. At least $6.5 billion in European and U.S. incentives are in place. Steel imports are also a material subject to carbon-related emissions tariffs under Europe’s Carbon Border Adjustment Mechanism, or CBAM, starting in 2026. 

“The biggest thing is that [buyers] all recognize that they can’t shift this challenge on their own,” said Jen Carson, head of industry at the Climate Group, which manages SteelZero. “It requires a collective and supportive ecosystem.”

HVAC equipment supplier Trane Technologies, part of First Movers and SteelZero, is using low-carbon steel made in electric arc furnaces for 20 percent of its annual purchases. That is reducing emissions by about 16,000 metric tons of carbon dioxide annually. Trane pledges to procure, specify or stock net-zero steel for 50 percent of its needs by 2030 and 100 percent of its procurement by 2050.

SKF, a 117-year-old Swedish maker of ball bearings, has made a similar commitment. Companies should start their procurement transition now, not only to guarantee their supply of near-zero emissions steel but to run quality checks on these new materials, said Annika Ölme, chief technology officer at SKF. The company is engaging directly with an Austrian steelmaker to prototype its products, she said. 

SKF recognizes it will pay a premium during the transition but that the costs will be recovered as these processes become commonplace. “Even though steel is a major part of what we buy, we are still a small buyer of steel,” Ölme said. “If every buyer of steel does this, it will have an impact.”