Greener steel production is the first step. Next comes scaling it up

One way to understand this critical challenge is to look at it in through numerical scales, from smaller to larger.

Start with thousands — or really, just one thousand. Global Energy Monitor counts 1,016 steel plants in 89 countries that combined have an annual capacity of 3 billion tons. That’s barely 7% as many steel plants as there are coal-fired power plants in the world, and a far cry from the more than 1 billion automobiles on roads today. Quantifying emissions from this group is doable, and the addressable market for steel decarbonization technologies is clearly defined.

The second scale to look at is millions. Boston Metal’s series C round will not go to building a series of full-scale production plants, or even one: Instead, the company will spend it on growing its team and demonstrating its technology commercially. Hundreds of millions of dollars, in the steel sector, are a starting point at achieving scale, not an end point.

Next comes billions. H2 Green Steel’s private placement from at least 15 investors will go toward a large-scale production plant. That equity capital is not all that will be needed, though; the company has also gotten commitments for more than €3.5 billion in debt financing.

While H2 Green’s production plans are ambitious, they’re not on the same scale: It aims to produce 5 million tons of steel by 2030, which would be a sliver of the output of the entire sector. In 2021, the world’s steelmakers produced 1.95 billion tons, double as much as just two decades earlier and more than 10 times the global amount made in 1950. H2 Green’s production goal would not rank it within the top 50 steel producers by volume in 2021.

These numbers hint at the scale of capital required to transform today’s steelmaking into a lower-carbon industry. Deploying any new technology widely enough to make a dent in steelmaking emissions will require trillions of dollars of investment. And that is just the funding needed for capital expenditure.

At this still-early stage for H2 Green Steel and Boston Metal, capital commitment is evident. Some of the world’s biggest private equity and infrastructure investors are in both deals, as are some of the largest iron ore producers, fuels producers and steelmakers themselves.

Leveling up that commitment to the trillions will require much more — not just from the industry but from everyone else. Policymakers must provide long-term investment incentives and build a bridge from today’s innovations to tomorrow’s standards. Asset managers will need to allocate capital to companies that hold the express goal of decarbonizing an essential sector. Industrial consumers need to have an appetite for steel products that perform the same, but are made differently.

Ordinary consumers will need to support innovation, too. Fortunately there are billions of people who buy steel or products made with it, and we all stand to benefit from its decarbonization.

(By Nathaniel Bullard)