15 November 2021

Introduce carbon tax to make steelmakers more green, says SSAB boss

15 November 2021

The boss of one of Europe’s largest steel producers has called for an international tax on carbon to ensure that the industry cuts its environmental impact, but warned against greenwashing.

Martin Pei, the head of Swedish steel giant SSAB, said that many of the attempts to claim steel is green are nothing other than branding.

“There are so many green steel initiatives and many of them are only greenwashing. They are not doing anything, they are selling certificates,” he said on the side lines of the Cop26 climate conference in Glasgow.

He called for transparency so that companies could not continue making the same product but brand it green.

What is required in order to make this transition possible and quick enough is to set a price on emissions

The global metals industry is one of the largest emitters in the world, and cutting carbon is notoriously difficult.

According to an estimate from the World Steel Association, steel alone accounts for about 8% of global carbon emissions.

To help counter this, SSAB plans to produce 1.5 million tonnes per year of “fossil-free steel” by 2026, by using electricity to produce hydrogen by splitting water molecules. It would be a large chunk of the business’s current nine million tonnes.

But he said that governments need to step in to help make the case for carbon reduction by setting a price on each tonne that companies emit.

“(What is required) in order to make this transition possible and quick enough, which we need, is to set a price on emissions,” he said.

It will help climate mitigation efforts and create the business logic to go green.

“Ideally, this would have been better if you could do it globally, and everybody sets the same price. But that is, of course, very tough,” he told the PA news agency.

The International Monetary Fund (IMF) envisions a three-tier system which sees developed countries paying 75 dollars (£56) per tonne of carbon, reducing to 50 dollars (£37) and 25 dollars (£18) in less-developed parts of the world.

His calls were echoed by Lord Barker, a former UK energy minister who now chairs Russian aluminium producer EN+.

While steel and aluminium face many different issues, Lord Barker also called for an international price on carbon.

Coal-fired aluminium often emits about 16 to 18 tonnes of carbon per tonne of aluminium, he said. While electric-powered aluminium only emits about 2.5 tonnes.

The biggest challenge in cutting those last emissions is the smelting process. EN+ is trialling a method that will reduce the emissions to about 10 kilograms per tonne.

More colourfully put, this is the weight of a dachshund, compared to a world average of three elephants.

He made these comments while sat under an aluminium sculpture in Glasgow that the company had created using this low-carbon method.

Lord Barker said that shipping and logistics are still challenges for all metal producers that want to decarbonise.

“I think no single part of the supply chain – be that aluminium or steel – is capable of solving the net-zero challenge on their own,” he said.

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