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Introduction.
We expect the pace of change to accelerate as other parts of the world become more ambitious with their transition plans. That optimism has given us the confidence to commit to publishing a Science Based Target within two years. We look forward to collaborating with the Science Based Targets initiative through a project to define a fit-for-purpose methodology to develop additional science-based target resources for the steel industry, building on the work we have been leading with our peers across our sector. Our hope is that this accelerates progress not only for ArcelorMittal, but across the entire industry.
For our target setting today, midway through 2021, we assume progress in other regions of the world will be at least five years behind Europe.
Policymaking therefore has a catalytic role to play. The Energy Transitions Commission, of which we are an active member, estimates that the required additional investments to achieve a zero carbonemissions economy in 2050 – while significant in absolute dollar terms – will amount to no more than 1% to 1.5% of global GDP (~US$1 trillion to US$2 trillion per year). Steel represents approximately 7-9% of global emissions. Investments that are comparatively small by global standards but massive for the industry have the potential to deliver outsized returns on the global carbon footprint. That makes it a sound goal of policy.
We will continue to step up our advocacy for policies that support the acceleration of this transition, addressing the fact that both capex and opex costs will be significantly higher, at least in the short to medium term. This includes developing clean energy infrastructure, providing access to transition finance, and addressing the carbon leakage resulting from the unequal regional pace of change in an industry that is globally traded.
Against this context, we believe it is sensible to continue to develop two pathways that have the potential to achieve zero-carbon emissions steel: Innovative DRI (Direct Reduced Iron) and Smart Carbon. A third pathway, Direct Electrolysis of Iron, also represents considerable potential – albeit within a longer time horizon.
In Europe, our strategy at present is largely focused on the Innovative DRI pathway. This reflects the commitment in Europe to prioritise the availability of green hydrogen at competitive prices. Countries including Spain and Germany plan to accelerate the availability of renewable energy that will support the introduction of green hydrogen. This is the foundation of zero carbonemissions through the DRI-EAF (Direct Reduced Iron-Electric Arc Furnace) route and supports our plans in these countries.
Smart Carbon also has the potential to achieve zero carbon-emissions. With the potential to also become carbon-negative, Smart Carbon harnesses bio-energy and carbon capture utilisation and storage (CCUS) – all technologies that the International Energy Agency and the UN Intergovernmental Panel on Climate Change see as critical to achieving net-zero by 2050.
We are convinced that both of these technologies offer a real pathway for the steel industry to be competitive.
However, these technologies today are still far from being competitive.
The intention is that over time low carbon technologies will become more competitive as the carbon price increases and is applied globally and the decarbonisation technologies themselves become more mature and efficient. But this will take at least ten years and in the transition period support will be required to support the development of innovation while moderating capital spend which will not yield an immediate return and ensuring operational competitiveness.
That is why we are asking for support with capex – estimated to be US$10 billion – to achieve our 25% target, as well as support on opex costs in the short to medium term.
In many respects, the challenges confronting steelmaking today resemble those faced by renewable energy over a decade ago. In that case, the importance of solar and wind power was widely acknowledged yet the technology remained economically prohibitive. The levels of investment, innovation and adoption we have seen since, have reached up to 90 billion of annual European subsidies per annum and have driven the cost of solar and wind power down to be cheaper than coal. They were assisted by targeted, reliable and thoughtful policies that enabled both companies and their financing partners to make long-term planning decisions. We are optimistic that the same will happen in steel. It is too critical a material on so many levels for that not to be the case. And, as developing economies continue to grow, the world will need more steel – not less – to give a better quality of life to millions of people.
Our activity and progress will continue to be overseen by a robust governance structure that includes an executive-level Climate Change Committee and the board-level Sustainable Development Committee, chaired by our lead independent director. Having set a 2030 group target, we will now link this to executive remuneration. In terms of our investment decisionmaking, each major capex project proposal is required to demonstrate its CO2 impact to the Investment Allocation Committee (IAC). The IAC considers both the potential future carbon cost as well as the capital cost of decarbonisation, to maximise our chances of achieving our targets while ensuring each project is economically justifiable and earns its cost of capital. It is a crucial part of our strategy to manage risk and deliver long-term growth.
Over this past year, we have engaged with our stakeholders on climate more than ever before. I hope this report demonstrates how seriously we take your input, how closely we have listened to your questions, and how committed we are to providing solutions.
We expect that the year ahead will enable us to make further progress on our journey to decarbonise. We look forward to leading the steel industry’s path to decarbonise.
Aditya Mittal Chief executive officer.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 5
Photo: © Shutterstock • Finance: Given the high levels of capex and opex required for the transition, it is critical there are policies in place to support regional and global competitiveness of assets that are first movers in the transition to net zero carbon steel and to create the necessary market conditions to ensure net zero steelmaking is commercially viable. Access to “green” or “transition” finance will be imperative for hard-to-abate sectors like steel. We continue to see encouraging progress on this front with considerable funds being made available by governments at both a national and continental level, for example, the EU Innovation Fund for which our CarbHFlex project was shortlisted. Financial institutions also have a vital role to play and the creation of a sub-group of the Centre for Climate Aligned Finance to look specifically at the steel sector is another welcome development. It is critical that both funding and finance is available to companies for which the transition is costly, but which cannot finance the transition by themselves.
The steel industry’s transition to net zero by 2050 is a big challenge. Clearly, the steel sector has a central role to play in a successful transition. Additionally, as we have explained in our previous Climate Action Reports, the industry’s progress will be faster if there is a collaborative effort by all its stakeholders.
Since the publication of our first Climate Action Report in July 2019, we have joined a number of important platforms that bring critical stakeholder groups together to identify the key levers required for the steel industry’s net-zero transition. These include the Energy Transition Commission (ETC), the World Economic Forum and the Centre for Climate Aligned Finance – all part of the Mission Possible Partnership – as well as other stakeholders in order to play an active role in accelerating progress, including ResponsibleSteel, the International Energy Agency and the ScienceBased Targets Initiative.
Over the past two years, we have been encouraged by the active interest these groups and organisations have shown, the time they have taken to understand the unique challenges faced by the sector, and the willingness they have shown to work together to unlock and accelerate progress.
Similar to Mission Possible Platform, we believe a number of key goals will support transition: coalition building, finance, policy engagement, demand signals and net-zero roadmap. Those levers can be powerful tailwinds to help us achieve our short-, medium- and long-term targets.
• Technology roadmap: Technology progress continues to be encouraging. We remain confident that both the Innovative DRI route and the Smart Carbon route offer the potential to achieve net-zero by 2050. Low and zero carbon-emissions steelmaking projects are under construction and are expected to be operational in 2022. We are also developing a third technology route that utilises direct electrolysis.
• Demand signal: One of the main challenges of the transition is that low-carbon steel costs considerably more to produce than the current ways of steelmaking. A customer demand signal for this premium steel is therefore an important foundation of the transition. Earlier this year, ArcelorMittal launched the first products under its new XCarb™ brand. XCarb™ green steel certificates and XCarb™ recycled and renewably-produced steel have both been very well received by customers and attracted a premium price. This gives us confidence that a demand signal, at least in Europe where the first products have launched, is real.
Section 1 Progress overview 1.1 Progress in 2020 • Policy engagement: It is now generally well understood that without a supportive policy environment the steel industry will find it very hard to make significant decarbonisation progress. We are encouraged that stakeholders have taken the time to understand the specific policy instruments that will be required to accelerate the transition and are open to publishing joint policy positions with the industry. Policy is not uniform across the world and therefore it is logical to accept that those regions that are more ambitious with targeted policy will decarbonise their steel industry faster, provided they also take into account the requirement to protect against carbon leakage. As our own thinking on the optimum policy combination to accelerate progress develops, we intend to actively engage with governments in the regions where we operate to share that thinking and help shape policy.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 6
September 2019.
ArcelorMittal commits to Equinor-led carbon capture and storage project.
The company signed a Memorandum of Understanding with international energy firm, Equinor to develop value chains in carbon capture and storage. ArcelorMittal will participate in a number of joint activities, including the development of logistics, exploring potential commercial models, and advocating on the topic of carbon capture and use (CCU) or storage (CCS).
May 2019.
ArcelorMittal publishes first Climate Action Report.
In its first Climate Action Report, ArcelorMittal announced its ambition to significantly reduce CO2e or greenhouse gas emissions globally and become carbon-neutral in Europe by 2050. The report set out two technology pathways that can lead to net zero steelmaking and a range of low and zero carbon-emissions technologies.
July 2019.
ArcelorMittal ranked best steel company for low carbon innovations.
CDP’s Melting Point report ranked ArcelorMittal first in five categories relating to steel companies’ readiness for a low carbon transition. The categories were low carbon innovations, transition opportunities, data transparency, renewable energy use, and board and executive climate management.
Section 1 Progress overview 1.2 ArcelorMittal’s timeline since publication of its first Climate Action Report.
ArcelorMittal commissions design of demonstration plant for hydrogen steel production in Hamburg.
ArcelorMittal commissioned technology provider Midrex Technologies to design a demonstration plant at its Hamburg site to produce steel with hydrogen. The demonstration plant will produce around 100,000 tons of direct reduced iron per year, initially with grey hydrogen sourced from natural gas and eventually green hydrogen from renewable energy sources.
ArcelorMittal unveils Belgium’s largest solar roof.
The installation of more than 27,000 solar panels on the roof of ArcelorMittal in Ghent was completed, creating the largest solar roof in Belgium. The project will aid ArcelorMittal Belgium’s journey to low-carbon steelmaking as the power generated will be used internally in Ghent.
October 2019 worldsteel acknowledges ArcelorMittal’s excellence in sustainability.
For the third consecutive year, ArcelorMittal won worldsteel’s Steelie Award for excellence in sustainability. The award highlights the company’s industry leadership on sustainability and was given in recognition of ArcelorMittal publishing the steel sector’s first Climate Action Report in May 2019.
December 2019.
ArcelorMittal Europe sets target to cut carbon emissions by 30% by 2030.
ArcelorMittal Europe announced its roadmap and plans to reduce CO2e emissions by 30% by 2030. The target is in line with the company’s ambition to become net zero in Europe by 2050 which was announced in May 2020.
© CDP 2019 © Equinor.
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Photo: © ArcelorMittal.
June 2020.
ArcelorMittal Europe sets out path to net-zero by 2050.
In its Climate Action in Europe Report, ArcelorMittal Europe announced details of how it plans to become net-zero by 2050. By investing in two routes for low carbon-emissions steelmaking – Smart Carbon and Innovative DRI – ArcelorMittal Europe can significantly reduce CO2e emissions by 2030 over a 2018 baseline.
September 2020.
ArcelorMittal sets 2050 net-zero target.
ArcelorMittal announced a group-wide commitment to becoming net-zero by 2050, building on the commitment made in 2019 for its European business to reduce emissions by 30% by 2030, and become net zero by 2050.
Section 1 Progress overview 1.2 ArcelorMittal’s timeline since publication of its first Climate Action Report.
October 2020.
ArcelorMittal Europe starts producing ‘green steel’
ArcelorMittal Europe announced details of the CO2e emissions technology strategy that will enable it to offer its first green steel solutions to customers. Production will rise from 30,000 tonnes in 2020 to 120,000 tonnes in 2021 and 600,000 tonnes by 2022.
December 2020.
ArcelorMittal ranked at global leadership level on climate action.
ArcelorMittal was again recognised by CDP for its strong performance in corporate transparency and action on climate change. ArcelorMittal successfully retained its A- score in the 2020 CDP Climate Change assessment, putting the company within the top quartile of all metal smelting, refining and forming companies and the top 10% of the steel industry.
January 2020.
CDP recognises ArcelorMittal as a global leader on climate action.
CDP recognised ArcelorMittal for its leadership on corporate transparency and action on climate change from among over 8,000 companies worldwide that were scored on their 2019 disclosures. ArcelorMittal scored an A- in the 2019 CDP Climate Change assessment, an improvement from C in 2017, which means the company has now reached leadership level. The score put ArcelorMittal amongst the top 11% of companies within our industry.
May 2020.
European Investment Bank makes €75 million loan to finance breakthrough technology.
The European Investment Bank, with the support of the European Commission, granted a €75 million loan to ArcelorMittal for the construction of two ground-breaking projects at the company’s Ghent facility in Belgium. The Carbalyst and Torero projects require total investment of €235 million and will save 350,000 tonnes of CO2 by converting waste and by-products into valuable new products.
You can read more about these projects in chapter 2.2.2.
ARCELORMITTAL • CLIMATE ACTION REPORT 2 8
Photo: © Shutterstock.
June 2021.
ArcelorMittal XCarb™ innovation fund makes its first investment.
ArcelorMittal announced the completion of its first XCarb™ innovation fund investment since launching the initiative in March 2021. The Company has invested an initial $10 million in Heliogen, a renewable energy technology company that focuses on “unlocking the power of sunlight to replace fossil fuels”. Heliogen’s technology will harness solar energy by using a field of mirrors that will act as a multi-acre magnifying glass to concentrate and capture sunlight. The sunlight will then be subsequently converted into heat (HelioHeat™), electricity (HelioPower™) or clean fuels (HelioFuel™). All three Heliogen products have the potential to be applicable to the steelmaking process and support the steel industry’s transition to carbon-neutrality. In addition to the $10 million investment, ArcelorMittal and Heliogen have signed a Memorandum of Understanding that aims to evaluate the potential of Heliogen’s products in several of ArcelorMittal’s steel plants.
Section 1 Progress overview 1.2 ArcelorMittal’s timeline since publication of its first Climate Action Report.
January 2021.
Vow ASA and ArcelorMittal join forces to build biogas plant in Luxembourg.
Specialist provider of technology for decarbonising industry, Vow ASA, signed a strategic Memorandum of Understanding with ArcelorMittal to work on a project to build a biogas production plant that will reduce CO2 emissions produced during the steelmaking process. The Rodange biogas plant is planned to come online in 2023.
February 2021.
ArcelorMittal Asturias starts coke-oven gas injection for Blast Furnace B.
ArcelorMittal Asturias announced its coke-oven gas injection project for Blast Furnace B in its Gijón plant. The Smart Carbon technology allows gases from various sources to be injected into the blast furnace, resulting in a reduction in CO2 emissions of 125,000 tonnes a year, equivalent to the emissions generated by the annual consumption of 84,000 Spanish households.
March 2021.
Air Liquide and ArcelorMittal join forces to decarbonise steel production in Dunkirk.
Air Liquide and ArcelorMittal signed a Memorandum of Understanding with the objective of implementing solutions to produce low-carbon steel in Dunkirk. The companies will join forces to develop innovative solutions involving low-carbon hydrogen and CO2 capture technologies.
ArcelorMittal launches XCarb™
ArcelorMittal launched its first three XCarb™ initiatives as part of the company’s journey to deliver on its 2050 net-zero commitment. XCarb™ will bring together all of ArcelorMittal’s reduced, low and zero-carbon products and steelmaking activities, as well as wider initiatives and green innovation projects, into a single effort focused on achieving demonstrable progress towards net zero steel. The three XCarb™ branded initiatives launched include: XCarb™ green steel certificates, XCarb™ recycled and renewably produced and the XCarb™ innovation fund.
ArcelorMittal plans major investment in German sites.
ArcelorMittal announced plans to build a large-scale industrial plant for DRI and EAF-based steelmaking at the company’s site in Bremen. It also disclosed plans for an Innovative DRI pilot plant and EAF in Eisenhüttenstadt, following the announcement of the planned expansion of Germany’s hydrogen infrastructure. Using green hydrogen, up to 3.5 million tonnes of steel could be produced by the Bremen and Eisenhuttenstadt sites by 2030, with significantly lower CO2 emissions.
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