The steel industry refers to the production of steel, which is one of the most important and widely used materials in the world. Steel is used in a variety of applications, including construction, manufacturing, and infrastructure, and it is an essential component of many products we use on a daily basis, such as cars, appliances, and packaging.
The $1.6 trillion steel industry is the backbone of the modern world. According to the World Steel Association, it contributes between 7% and 9% of the world’s carbon dioxide emissions, which is a considerable amount to global warming.
That’s why Boston Metal, a startup that branched off from Massachusetts Institute of Technology and invented a novel method of creating clean steel, is receiving investment from large worldwide corporations like international steel giant ArcelorMittal and tech giant Microsoft.
“There is no economy, there is no infrastructure without steel,” Boston Metal CEO Tadeu Carneiro told CNBC in a video call on Wednesday. So when it comes to decarbonizing industry to fight climate change, “it’s a big piece of the puzzle. I don’t think this is obvious to everybody,” Carneiro said.
In 2013, MIT professors Donald Sadoway and Antoine Allanore published a paper in the journal Nature with lab results proving that it is possible to generate steel without releasing carbon dioxide emissions. The same year they launched a company, Boston Electrometallurgical Corp., to scale and commercialize that technology.
In 2017, Carneiro joined the company as a CEO. He is a veteran of 40 years career in the steel industry, mostly at Brazilian metals giant CBMM. In 2018, Boston Metal raised its first round of funding, $20 million, in a round led by Breakthrough Energy Ventures, the climate investing firm founded by Microsoft co-founder Bill Gates.
Gates has for years emphasized the need to think about decarbonizing the manufacturing sector. Transportation gets a whole lot of attention but is responsible for only 16% of global emissions, where manufacturing generates 31%, according to Gates’ book, “How to Avoid a Climate Disaster.”
Every steelmaking company is in contact with us to understand our progress and when we will become commercial. They all making pledges to be carbon-neutral by 2050. And they don’t really have a solution right now. So, they really need a solution for large scale, and our technology is the only one that can scale up to this billions of tons of capacity.
Boston Metal CEO Tadeu Carneiro
“Whenever I hear an idea for what we can do to keep global warming in check whether it’s over a conference table or a cheeseburger I always ask this question: ‘What’s your plan for steel?’” Gates wrote on his own blog in 2019.
On Friday, Boston Metal announced it has raised $120 million Series C round, led by multinational steel giant ArcelorMittal, with funding from Microsoft’s Climate Innovation Fund as well.
With the money, Boston Metal will expand production of green steel at its pilot plant in Woburn, Massachusetts, and assist Boston Metal do Brasil’s construction in Brazil, where the business will produce a variety of metals. It plans to begin construction of a demonstration steel plant in 2024 and a commercial sized plant in 2026, Carneiro told CNBC.
The cost of carbon for ArcelorMittal
For ArcelorMittal, making steel without greenhouse gas emissions is not only a responsibility, but also a business necessity according to Irina Gorbounova, a vice president and the Head of XCarb Innovation Fund at ArcelorMittal.
“Our customers are asking for it, our investors expect us to transition and our employees and our future workforce want to work for a company that is part of the solution and not part of the world’s climate problem,” Gorbounova told CNBC.
“Increasingly, we are also seeing a cost of carbon,” Gorbounova told CNBC. In Europe, the Emissions Trading System, or ETS, already puts a price on carbon emissions, Gorbounova told CNBC.
“The EU has been at the forefront of climate policy, but it’s reasonable to expect other regions to follow. So, there is a business case for us to decarbonize as well,” Gorbounova told CNBC. “Zero or near-zero carbon emissions steel will become a reality. The only question is how quickly we can make that journey happen. If steel companies don’t decarbonize, they will not stand the test of time.”
“Ironically, steel is a primary component ingredient in many of the technologies being constructed to decarbonize, such as wind toward and electric vehicles,” Gorbounova said.
Despite not producing steel or vehicles, Microsoft is working to achieve its ambitious climate goals, which include becoming carbon negative by 2030 and eliminating all of the company’s previous carbon emissions since its founding in 1975.
How does Boston Metal do it?
Iron ore or iron oxide is traditionally combined with coal in a very hot blast furnace as the first step in the manufacturing of steel. That process generates significant CO2 emissions.
Scrap recycling is also a key part of the global industry, accounting for 30% of steel production (70%in the United States), and has a “much smaller” carbon footprint, Carneiro said.
Boston Metal’s technology, Molten Oxide Electrolysis, passes electricity through the iron oxide mixed with what Carneiro calls a “soup of other oxides” to make iron and oxygen. Oxides are chemical compounds that contain at least one oxygen atom, and Boston’s process includes common oxides like alumina, silica, calcium and magnesium.
“There’s no carbon involved” in the process of making the iron from this method, Carneiro said.
However, in order to produce one million tons of steel annually, 500 megawatts of clean baseload electricity, or roughly half the energy required to power a midsize city, must be used to heat the soup to the necessary 1,600 degrees Celsius. “The availability of electricity will dictate how fast the process will be implemented,” Carneiro said.
The electricity has to be clean as well, or it defeats the entire purpose.
“We believe in the future, we will have abundant and reliable and green and cheap electricity in order to use this process and manufacture green steel,” Carniero said.
There are other processes being developed to make clean steel with hydrogen, but they require very pure iron oxide, and only about 4% of the iron ore that is commercialized is suitable, Carniero said.
Boston Metal will eventually license its technology to steel companies, not be a steel manufacturer itself.
“Every steelmaking company is in contact with us to understand our progress and when we will become commercial,” Carneiro told CNBC. “They all making pledges to be carbon-neutral by 2050. And they don’t really have a solution right now. So, they really need a solution for large scale, and our technology is the only one that can scale up to this billions of tons of capacity.”
