Excerpt posted with permission from ESG Impact Zone. (The key components of steel and cement in building data centers makes concerns over thir GHG impact of high relevance to the Digital Infrastructure industry. More information from the author of this excerpt is available.)

The steel industry is considered to be one of the difficult industrial sectors to abate in terms of GHG emissions intensity, and one particularly exposed to the risks arising from the transition to a low-carbon economy.

There are two main methods of producing steel: an integrated process based on producing steel from iron ore and a semi-integrated process using scrap metal as the main source of iron.

The integrated process is significantly more emission-intensive. The global average for this production route is around 2.3 tonnes CO2e/tonne liquid steel (Pardo, Moya, & Vatopoulos, 2012; Global Efficiency Intelligence, 2019), while the semi-integrated process has an average emissions intensity of 0.33 tonnes CO2e/tonne liquid steel (Pardo, Moya, & Vatopoulos, 2012). The integrated process accounts for around 70% of global steel production.

The proportion is similar in Chile, where in 2019 it made up 68.9% of national production (World Steel Association, 2019a). It is not possible to achieve decarbonisation of the sector exclusively by migrating from one method of production to another. It is estimated that, due to the availability of scrap and the long lifetime of finished steel products, it is not feasible to increase the collection and recycling rate to the level that would be required to meet future global steel demand through the semi-integrated process alone (A&P Global, s.f.).

The integrated process therefore presents the greatest technological and economic challenges to reducing emissions while meeting the growing demand for steel in a sustainable manner over time. The integrated process is characterised by the transformation of raw materials, mainly iron ore (e.g. in the form of lumps and pellets), limestone and metallurgical (coking) coal into steel.