The automotive industry is well positioned to accelerate the use of low-emission steel, and automakers are increasingly using this material to increase competitiveness in the electric vehicle (EV) market, according to the global climate change agency.
"We are at the beginning of a new era where sustainability premiums and market demand are starting to support the first wave of environmentally friendly or low-emission steel production," Roger Smith, head of the Asian non-governmental organization SteelWatch, said in an interview with Fastmarkets on Friday, March 6.
According to Smith, the automotive sector is a key sector for the decarbonization of the steel industry due to its ability to maintain an eco-friendly premium. According to his estimates, in the production of direct reduction cast iron based on hydrogen (DRI), 20-30% of the premium is accounted for per ton of "green" steel compared to traditional coal-based blast furnace steel.
.The impact on the final price of the car is minimal, usually "several hundred dollars" are added to the cost of the car, depending on the weight of the car and the amount of steel used, Smith explained.
Automakers are increasingly using low-carbon steel and aluminum to boost the competitiveness of new electric vehicle models, according to the fourth issue of the Lead the Charge Auto Supply Chain Leaderboard report.
The leaderboard ranks and evaluates the sustainability of the supply chain of 18 automakers worldwide, including Tesla, Ford, Volvo, Mercedes and Hyundai.
A report released on Wednesday, March 4, showed that demand for environmentally friendly steel among automakers has increased in recent years. The number of automakers taking measures to decarbonize the steel used in their cars has grown from 7 out of 18 in 2023 to 13 out of 18 in 2026.
The analysis was published by a network of climate, human rights, and investment organizations, including SteelWatch.
"The Lead the Charge rating table is only a few years old. At the beginning, most companies scored 0 points in the steel production segment. In fact, there were no purchases, there was no talk of acquiring low-emission steel, and that changed," Smith said.
"Today, eco-friendly steel is probably used in cars that[automakers]consider the most environmentally friendly.[Automakers]ultimately need to transform the production of everything they produce," Smith said.
The volume of steel consumption in the automotive sector is large enough to support new projects for the production of environmentally friendly steel, which contributes to scalability and long-term commitment to the introduction of low-carbon steel.,
