Green Steel, the Super Hero of the Auto Industry
The supply chain is becoming more sustainable, one innovative step at a time. Mercedes-Benz already announced plans to release ten new EV models by next year, in line with many other auto manufacturers committing to greener vehicles. But Mercedes intends to take their sustainable commitment one step further by launching green steel in select vehicle models by 2025.
Electric vehicles are an essential alternative to make the transportation industry more environmentally friendly. But there are still plenty of emissions issues when it comes to vehicle production. Steelmaking makes up seven to nine percent of direct emissions from fossil fuels. In a sedan made from about 50 percent steel, 30 percent of the carbon emissions during the production of that vehicle come from steel alone.
Green steel offers a solution that, with proper scaling, can be implemented in both electric and traditional car production, helping to reduce emissions of car manufacturers across the globe. Green steel is produced using electricity from 100 percent renewable sources.
Initial reservations include the perception that green steel comes at a premium price point. However, Rocky Mountain Institute (RMI) analysts suggest that that may no longer be the case.
The largest cost difference is the cost of the power used to produce the steel. But as renewable energy sources like hydrogen electrolyzation, solar, wind, and others become more widespread, renewable energy will prevail as a cost-effective solution. Using hydrogen electrolyzation at the cost of around $450 per kilowatt, a ton of zero-carbon primary steel can be manufactured for about $400, which is a competitive price compared to traditionally made steel today, which is priced around $555 per ton in 2021, according to Statista.
It is not up to existing steel mills to make the switch to green production. Start-ups have begun building infrastructure for completely green steel production. One startup, H2 Green Steel (H2GS), was founded in 2020 and already raised $105 million through Series A equity financing.
H2GS plans to build the world’s first large-scale fossil-free steel plant in northern Sweden, including a giga-scale green hydrogen plant that will power the steel production. According to Environment + Energy Leader, the firm will use 100 percent renewable energy and plans to produce 5 million tons of fossil-free steel by 2030.
While electric vehicles can be an effective solution to carbon emissions from the transportation industry, it is wholly dependent on how that energy is created. The electricity produced from fossil fuels just relocates the source of harmful carbon emissions. Re-evaluating production pipelines and energy sources should be on the agenda for every business and manufacturer, as sustainable solutions don’t just include the final product. There are sustainable changes we can make every day to ensure more environmentally friendly commerce.
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