The Potential of Green Steel
Green steel is produced using green hydrogen, direct electrification processes, or recycled steel. The automotive sector, consuming about 17% of EU steel, can drive demand for green steel. Cars, especially premium models, can absorb the short-term costs associated with greener steel production.
By 2030, Europe is expected to produce 172 million tonnes (Mt) of green steel, far exceeding the automotive sector’s projected demand of 21 Mt. Even if car steel use remains at 2022 levels (35.7 Mt), there will be more than enough green steel.
Climate Benefits
Switching to green steel can significantly reduce CO2 emissions from car production. Using 40% green steel by 2030 can cut CO2 emissions by 6.9 Mt, equivalent to the annual emissions of 3.5 million fossil fuel cars. By 2040, using 100% green steel could cut emissions by the same amount as removing 8.1 million internal combustion engine (ICE) vehicles from the road. This highlights green steel’s huge climate potential as manufacturers aim to reduce emissions and reach net zero.
Cost Implications
Adopting green steel in car production is surprisingly affordable. According to a study by Ricardo, using 40% green steel in new cars by 2030 will add only €57 to the price of a battery electric vehicle (BEV). This increase drops to €49 by 2035 and just €8 by 2040. If steel content remains constant, the cost increase is slightly higher at €69 in 2030—still less than the cost of a new car floor mat. These minimal costs make green steel a practical option for reducing the carbon footprint of car production.
Policy Recommendations
For green steel to succeed, policy support is essential. Transport & Environment (T&E) suggests several measures:
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- Define Green Steel Clearly: Establish a Europe-wide definition of green steel, aligned with the International Energy Agency’s (IEA) definition of near-zero emission steel. This should use a sliding scale to encourage both secondary EAF and green H2-DRI produced steel.
- Set Usage Mandates: Require carmakers to use increasing amounts of green steel in new cars: 40% by 2030, 75% by 2035, and 100% by 2040. This could be implemented through the revised End-of-Life Vehicles (ELV) regulation or separate CO2 standards for automotive steel.
- Improve Recycled Steel Quality: Enhance the quality of recycled steel scrap through measures in the revised ELV regulation. Set mandatory quality requirements for recycled steel to meet automotive-grade standards, ensuring more recycled steel can be used in car production.
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Conclusion
Shifting to green steel in car production offers a practical and cost-effective way to reduce the automotive sector’s carbon footprint. With ample green steel production projected by 2030 and minimal cost increases for consumers, this transition is both feasible and essential for achieving climate goals. Policymakers and car manufacturers must work together to create a strong market for green steel, ensuring a sustainable and climate-friendly future for the automotive industry.
