How the auto industry could steer the world toward green steel
“The relatively high value of cars, especially of premium brands, also means they can absorb the short-term green premium of greener steel,” Alex Keynes, cars policy manager at the European Federation for Transport and Environment, said in an email.
The same principle might hold for some other common products made with steel. One estimate from Hannah Ritchie, a data scientist and deputy editor at Our World In Data, put the added cost for using green steel in a house at less than 1% of its purchase price.
There’s a complicated web of actors in construction though, from architects to builders to contractors, which could make purchasing more expensive materials that come with a climate benefit a more complex proposition. And bigger projects that require more steel could face much larger price increases that make green steel unaffordable in those contexts, at least for now.
Automakers committing to purchasing green steel from steelmakers could help ensure they’re able to grow quickly, and some companies have already secured such commitments. As of January 2024, H2 Green Steel had binding agreements in place for more than 40% of its steel production in the initial years of its new plant.
However, there are still challenges facing the industry, including questions about the future cost and availability of green hydrogen, Keynes says. Policy measures, from subsidies to encourage the fuel’s production to regulations, could be crucial to getting greener steel into our vehicles and beyond.
