The company, which supplies sheet metal to the auto industry, says the move will cut carbon emissions from production by approximately 70%, a reduction equivalent to removing more than 900,000 cars from the road each year. This is good news for the climate and for the auto sector. As the second-largest consumer of steel after buildings and infrastructure, the auto industry needs low-carbon steel products if it’s going to meet its own emissions targets.

Virtually every vehicle on wheels is made primarily of steel. That’s a problem since the steel industry is one of the highest emitting sectors of the economy, responsible for 7% of global greenhouse gas emissions, mostly due to its reliance on coal. Currently, tailpipe emissions are responsible for the bulk of the pollutants from road transportation. But that’s changing as uptake of electric vehicles continues apace. EVs don’t produce exhaust and, in many places, the grid is increasingly generating power from renewable or other green power sources.

Increasingly, attention is turning to the carbon footprint of an automaker’s supply chain and all the materials that go into building a vehicle. Of those materials, steel makes up the largest proportion at 60%. Indeed, the embedded, or production, emissions of an electric car will likely account for around 60% of total life-cycle emissions by 2030, with steel making up anywhere from 16% to 27% of that, according to the EU-based advocacy group Transport and Energy.

Auto sector takes small steps toward green steel

To date, only a handful of automakers have pledged to increase their use of either fossil-free steel or steel with reduced carbon intensity by 2030. BMW announced its procurement of “carbon-reduced” steel supplied by H2 Green Steel, based in Sweden, and has partnered with Salzgitter AG to receive “low-carbon steel” in 2026.

Volkswagen has signed a memorandum of understanding with Salzgitter AG to procure carbon-reduced steel starting at the end of 2025; Volvo has pledged that 50% of its steel purchases in 2030 will be lower in emissions intensity compared to current levels. And General Motors announced a supply agreement with U.S. Steel and ArcelorMittal for reduced carbon steel. (Algoma will in all likelihood also supply the automotive industry with green steel given that approximately 30% of its products go to the auto sector.)

The climate impact of shifting to low-carbon steel is profound. If, as recommended by groups such as Transport and Energy, European automakers replace 40% of the steel used in their manufacturing process by 2030, carbon dioxide emissions from the production of cars plummets by 6.9 megatonnes, equivalent to the annual GHGs emitted from 3.5 million fossil fuel cars. Switching to 100% green steel in new cars by 2040 will reduce emissions equivalent to taking 8.1 million gas-powered cars off the road.

In a recent report, the International Council on Clean Transportation (ICCT) acknowledges the importance of the public announcements made by some of the biggest players in the auto industry while also pointing out that “among major automakers selling vehicles in Europe and North America, only four have pledged to procure any fossil-free steel by 2030.” The report authors note that those commitments apply to a mere 2% of the global steel used by all these major automakers. Adding in “commitments to procure steel with reduced GHG emissions,” they write, “increases the share of cleaner steel to 4% of all automotive steel.”

The authors further argue that the auto sector is in a unique position to push the steel industry to decarbonize. “Automakers have significant purchasing power,” says Marta Negri, an associate researcher at ICCT and lead author of Which Automakers Are Shifting to Green Steel? “They can influence demand for green steel.”

Steel’s great big carbon footprint

Around 75% of steel worldwide is manufactured using coal-fired blast furnaces. According to the International Energy Agency’s Net Zero Emissions scenario, the steel industry must reduce its carbon output by 25% by 2030 to achieve climate neutrality by 2050 – and the sector is nowhere close to being on track.

On the bright side, the carbon intensity of steel production can drop considerably through deployment of low-carbon technologies and resource efficiency. For starters, the coal-blast furnaces can be replaced with electric ones, like Algoma’s, reducing emissions by as much as 95%. Scrap steel can be incorporated at much higher volumes than is done currently, and green hydrogen power is being actively explored for its potential as a cost-effective energy source.

Transportation, in turn, leaves a massive carbon footprint. Road transport in Canada is the second-largest source of carbon pollution after oil and gas, responsible for 22% of the country’s overall emissions. Electrifying road mobility is essential to meeting Canada’s international obligation under the Paris Agreement to limit global warming to below 1.5°C. Steel’s importance in the auto sector is becoming increasingly visible in part because more of it is needed in electric vehicles – due to their large battery units – than in combustion vehicles.

To see a significant dent in steel-related emissions, carmakers will need to employ a combination of strategies. “Green steel can be a competitive advantage for an automaker,” Negri notes. “Some companies are exploring this and being very vocal about their green steel use.”

Still, the road to industrial decarbonization is long. “We’d like to see more ambition,” Negri adds. “Two-thirds of the automakers we analyzed haven’t made any commitments to purchase low-carbon or fossil-free steel. And we need to see that the commitments made are carried through.”

Victoria Foote is a writer and editor who specializes in clean energy and climate.

The post Green steel may be a climate game-changer. Which carmakers are making the shift? appeared first on Corporate Knights.

Around North America (and soon the United Kingdom), a growing number of provincial and state governments have started requiring carmakers to meet annually increasing zero-emissions vehicle (ZEV) sales targets.

In Canada, the federal government has indicated it intends to introduce such a regulation – called a Clean Car Standard – with the hope of phasing out the sale of new gasoline cars by 2035. Meanwhile, car industry lobbyists have been pushing back. The auto industry likes to talk a good game about its recent ZEV investments, usually with the implication that regulating them isn’t necessary. Car industry lobbyists argue that, rather than regulating, Canada can achieve the same results by increasing the federal purchase incentive for ZEVs to $15,000 from $5,000. 

We decided to put their proposal to the test in a new report Environmental Defence and Équiterre worked on with the Sustainable Transportation Action Research Team at Simon Fraser University (SFU). The expert team at SFU modelled it, and even when the subsidies were offered all the way up to 2035, ZEVs only reach 65% of new car sales – massively missing the 100% sales target for that year. It’s higher than business as usual, which will only get us to 39% by 2035 – but it just isn’t enough.

The automaker’s recommendation to triple incentives up to 2035 would also cost the federal government more than $54 billion, while the proposed regulation costs virtually nothing. With a Clean Car Standard, the cost of transitioning to electric vehicles is instead shifted onto the auto industry, resulting in a slight decline in profits compared to business as usual.

This should give you a hint as to why automakers are so vocally opposed to this proposal. The auto industry has a financial stake in slowing the transition to electric vehicles, because it makes more money by selling gasoline-fuelled cars.

Our analysis also reveals something far more sinister. Automakers actually capture a significant portion of the value from ZEV purchase incentives by hiking prices. That is, instead of passing the full value of the incentive onto the consumer, they increase the price markup on their electric vehicles to pad profits and slow ZEV adoption.

Furthermore, we found that of the $54 billion cost to taxpayers from a more generous subsidy, automakers would be able to pocket $10 billion through widening their profit margins on these vehicles, a process recently coined as “greedflation.” Here’s the kicker. They actually use a portion of these funds to reduce prices for gasoline-fuelled cars instead, and this is one of the reasons why the incentives approach fails to meet sales targets.

Championing increased incentives is a great way for automakers to appear to be climate champions while lobbying against regulations that would actually make them clean up their act.

The regulation also delivers more affordable electric vehicles – without subsidizing the auto industry. We found that a Clean Car Standard can lead to more than a 20% reduction in electric vehicle prices for the average consumer. This is because automakers would have to bring affordable models to the market and manufacture at scale to meet ZEV sales targets, instead of their current focus on producing a low volume of high-priced luxury models. 

The Clean Car Standard results in Canada hitting every sales target outlined in the federal government’s emissions reduction plan, cumulatively reducing carbon emissions by 135 million tonnes by 2035. To put that into perspective, that is equivalent to 57.5 billion litres of gasoline not burned – enough to fill 23,000 Olympic-sized swimming pools.  

Automakers have a responsibility to address the role they play in contributing to climate disaster. The first step is requiring them to live up to their own green pledges and deliver more affordable electric vehicles to Canadians, even if it means slightly less for their bottom lines. By shaving the price of a ZEV down by 20% while helping Canadians escape from high gas prices, it’s clear that a Clean Car Standard is both a win for the climate and consumers’ pocketbooks.

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Carbon fibre is a material perfectly suited to electric vehicles. Manufactured from long strands of carbon blended with plastic resin (think fibreglass, with carbon replacing the glass), it’s far stronger than steel – up to 10 times as strong – and much lighter. Plus it doesn’t corrode. Owing to these advantages, carbon fibre has been coveted by car makers since it was first introduced in the early 1980s. Because of its steep price, though, it has until recently been used primarily in racing cars and next-generation prototypes. (Carbon fibre costs as much as US$7 per pound wholesale, compared to about 40 cents per pound for steel or 80 cents for aluminum.) The explosive growth in electric vehicle sales, however, creates a unique and potentially enormous market for carbon fibre – especially if the manufacturing costs of the stuff can be slashed somehow.

And this is where Alberta’s oil sands come in. Alberta produces nearly three million barrels of bitumen from the oil sands each day – heavy oil in need of expensive and energy-intensive processing to be turned into transportation fuel. The industry faces an uncertain and perilous future as the high cost and large carbon footprint of its product becomes harder and harder to sell as demand for oil begins to level off and eventually decline, in part due to the rise of emissions-free technologies such as electric cars. Might there be a place for bitumen instead in the carbon-fibre frames of those vehicles?

This was the question Alberta Innovates, the Alberta government’s research arm, aimed to answer with its Bitumen Beyond Combustion program, launched three years ago to begin exploring new commercial uses for bitumen. The program’s research identified a range of potential new markets, including asphalt for paving and the production of vanadium, a metal present in relatively abundant quantities in bitumen and in increasing demand as a component in new battery technology. But nothing else so far has shown the “major mid- to long-term potential” that carbon fibre has. What’s more, its greatest weakness as a transport fuel – its heaviness, owing to the very large carbon molecules that comprise it – becomes an asset.

“Bitumen is a bigger molecule, and you are competing with lighter oils as transportation fuel,” John Zhou, vice president of clean energy at Alberta Innovates, explains. “You are always at a disadvantage. But when you are making big molecules like carbon fibre, that high carbon in the bitumen compared with other oil becomes a competitive advantage.”

To transform bitumen into the lighter crude oils that are refined into gasoline and transportation fuels, oil sands operations either add a lighter petroleum product called diluent to their bitumen to make it flow down a pipeline to a distant heavy oil refinery or use costly, energy-intensive upgrading facilities that “crack” the bitumen into smaller molecules, turning it into synthetic crude. In recent years, oil sands companies have been developing “partial upgrading” technology, which cracks off a smaller piece of the bitumen molecule and allows it to be shipped without diluent. One of the heavy carbon molecules cracked off the raw bitumen is called asphaltene, and it shows enormous promise as a feedstock for producing the long carbon fibres that go into the lightweight, ultra-strong carbon-fibre panels used in cars like the Toyota Prius Prime.

Asphaltenes make up around 15 to 18% of a typical barrel of bitumen. Produce 100 barrels of bitumen and send them through a partial upgrader, in other words, and you have 15 to 18 barrels of asphaltene on your hands. The world’s current supply of carbon fibre is about 100,000 tonnes per year, a total that oil sands operators could easily exceed with the widespread use of partial upgrading.

“The supply is not the issue,” Zhou says. The big question is whether carbon fibre produced from bitumen could cut carbon fibre costs to the point where the material made sense not just for a flagship Prius but for Honda Civics and Ford Fusions. “If you can reduce the cost of carbon fibre by 50% or more, you will have a chance to get into medium-priced vehicles. So you will open up a much greater market.”

It’s an enticing possibility, especially for an oil sands industry battered by low prices, fleeing investment capital and a barrage of criticism over its expanding greenhouse gas emissions and other environmental impacts. “It’s early days in looking at the potential for carbon fibre production from bitumen; however, we think there’s value in looking at different ways of optimizing our barrels – value in the traditional sense and in potential environmental benefits,” says Carrie Fanai, who is leading Suncor’s participation in the carbon fibre project at Alberta Innovates. With partial upgrading technology perhaps only three years away from commercial-scale operation, oil sands companies will soon have stronger motivation to find uses for the by-products of bitumen processing.

“When you are making big molecules like carbon fibre, that high carbon in the bitumen becomes a competitive advantage.”

–John Zhou, Alberta Innovates

The carbon fibre market, though, remains a young and volatile one, and that means any plans regarding its future role come freighted with caveats. Cecilia Gee, an analyst with Lux Research who tracks the carbon fibre market, explains that carbon fibre is at present a niche product, and many factors beyond the price and availability of the raw material, in the automotive market and beyond, will determine future demand. At present, the use of carbon fibre in EVs, for example, is limited by a lack of standardized production and supply chain certainty, and as much as 70% of the cost associated with using carbon fibre comes from the high price of manufacturing and installing components made from carbon fibre – not from the cost of the raw material the oil sands might one day supply. Meanwhile, plummeting battery prices are taking some of the pressure off EV manufacturers to pay a premium to reduce the weight of their vehicles. BMW, for example, recently announced it will no longer be using carbon fibre in some of its electric cars as it expands production.

“Is there an opportunity for the oil sands? Yes,” Gee says. “Are there a lot of unknowns about that future? Also yes. But if they have the opportunity to make things more circular, more green, why not?”

In any case, Alberta’s carbon fibre industry is a long way from supplying frames for hundreds of thousands of Civics; at present, it’s not even an industry. In the wake of the Bitumen Beyond Combustion program’s final report in January 2018, Alberta Innovates freed up $2 million in seed money for a handful of initiatives, one of which is a laboratory at the University of Alberta now working on developing an industrial process for converting bitumen-derived asphaltenes into carbon fibre. The early results have been so promising that Alberta Innovates has already connected the lab with industry heavyweights like BASF and Mitsubishi Chemical. A representative from SGL, a market leader in carbon fibre manufacturing, has paid multiple visits to the lab and has made plans to connect the researchers with similar projects at the Oak Ridge National Laboratory, the U.S. Department of Energy’s top energy research lab.

These are, to be sure, very early days. There remain many hurdles yet to clear. But presuming that partial upgrading expands at the rate Zhou and his colleagues in the oil sands hope it does and that the lab research on bitumen-derived carbon fibre continues apace, there could be viable commercial-scale carbon fibre production in Alberta by around 2030 – which just so happens to be around the time experts predict electric vehicle sales will roar into overdrive worldwide.

Zhou concedes that from an investor’s point of view, the project is very much in the high-risk, high-reward category. At a recent funding meeting with federal officials in Ottawa, he compared it to the $50 million the government recently invested in General Fusion, a Vancouver start-up working on nuclear fusion reactors. Still, the long timeline and uncertain payoff don’t worry Zhou much. “If in 10 to 15 years we can create a multi-billion-dollar business in Alberta, I will be very happy,” he says. Significantly less time, come to think of it, than it took bitumen production to go from Karl Clark’s lab at the University of Alberta to the first mine site north of Fort McMurray.

Chris Turner’s most recent book is The Patch: The People, Pipelines, and Politics of the Oil Sands.

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