From buildings, railways and bridges, to cars to kitchens, steel is in use everywhere, every day of the week. It is safe, sound and durable, plus widely recyclable. However, steel has a sustainability problem: carbon dioxide emissions.

Steel is responsible for at least 7% of global carbon dioxide. At a time when almost every country in the world is signed up to the Paris Agreement on climate change, there is nowhere to hide on emissions.

Taking ownership of the problem not only makes political, but commercial sense too. On environmental matters, the economics and ethics of the business case are fully aligned, says Graham Couchman, chief executive of the UK's Steel Construction Institute:“The reality is that steel production worldwide remains a significant contributor to global emissions. Therefore, with net-zero targets looming large, not only does the industry need to take responsibility for its climate impacts to avoid being commercially disadvantaged, but there is a moral obligation to act, too.”

In principle, the call to climate action sounds compelling, coming from clients and investors alike. In practice, though, the industry seems slow to respond and things still need to change.

Innovation to drive decarbonisation

As production efficiencies are already high, innovative technologies will be needed to further decarbonise the primary steelmaking process. Next-level decarbonisation is doable, but potentially difficult at scale, explains sustainability expert and consultant Dave Knight: “Hydrogen is increasingly being used to displace coal and gas, as a reducing agent for iron ore either in blast furnaces or through direct reduced iron. As long as the hydrogen can be produced using zero-emission energy, such as renewables, then near-zero-emissions steel at scale is within our grasp. Other technologies such as electrolysis (used to make aluminium) are in earlier stage development for steel, with much promise, but little scale.”

When it comes to carbon capture, utilisation and storage (CCUS), the residual emissions not only need to be captured, but ideally used to maintain higher utility and value, then ultimately stored safely and securely for thousands of years.

In all of this, there is a risk of unintended consequences for sustainability, Knight adds:“While there are some promising technologies and pilot projects for chemical and mechanical uses and storage, CCUS needs to be proven at scale and rolled out with speed, without taking focus away from true decarbonisation. If collected emissions are used to force more oil and gas from production fields, this is not going to help the planet.”

As well as being a long-term representative for Cares – the independent provider of assured certification for the constructional steels industry – Knight was also a contributor to development of the Responsible Steel International Standard V2.0, launched this year.

Tellingly, this latest iteration of this standard incorporates additional requirements on greenhouse gas emissions and the sourcing of input materials, within 13 principles which address key environmental, social and governance (ESG) issues.

This broader remit represents a systemic shift. The new standard makes it clear that environmental concerns cannot be considered in isolation but should be addressed as part of a more holistic, joined-up sustainability strategy.

For the steel industry, its supply chain and clients, such a step change on sustainability means its traditional business models and mindsets are in need of a makeover.

Step change in models and mindsets

Take the construction market as an example. According to the World Steel Association, 52% of steel produced is used in buildings and infrastructure,the rest in automotive and transport, metal products, mechanical equipment, domestic and electrical appliances.

Responding to the sustainability agenda, the British Constructional Steelwork Association (BCSA) published a 2050 Roadmap last year, which flagged the key role design can play.

The issue is not the technology; we already have the tools we need to achieve the carbon dioxide reductions right now. It is the construction process that is the big blocker. Clients need to stop treating structural engineers like a commodity and pay more up front to get better design

Its research findings estimated that better design efficiency could produce carbon dioxide savings of up to 17.5%, more even than circular economy measures (15%). The change that is needed though, is arguably more cultural than technical, says Couchman: “The issue is not the technology; we already have the tools we need to achieve the carbon dioxide reductions right now. It is the construction process that is the big blocker. Clients need to stop treating structural engineers like a commodity and pay more up front to get better design, with shared incentives for efficiency wins that both save money and cut carbon.”

Industry-wide collaboration towards net zero

When it comes to moving to more sustainable business models across the steelmaking sector itself, SSAB is pioneering a plan built on a more collaborative industry ethos.

The company itself has a target of largely eliminating carbon dioxide emissions from its own operations by 2030. As part of this decarbonisation drive, however, SSAB will not only be offering fossil-free steel to the market in 2026, but also sharing the know-how with others.

Working with iron-ore producer LKAB and energy company Vattenfall, SSAB has developed a value chain for fossil-free iron- and steel-production, replacing the coking coal traditionally used for iron ore-based steelmaking with fossil-free electricity and hydrogen. This process virtually eliminates carbon dioxide-emissions in steel production.

Known as Hybrit, this project offers the prospect of carbon reduction delivered at country scale, as it seeks to reduce Sweden’s carbon dioxide emissions by 10% and Finland’s by 7%.

The project partners understand the climate crisis is bigger than any one individual player. That is why SSAB has together with its partners filed for a portfolio of patents for Hybrit, making the technology available to the world.

The revolutionising technique is all about replacing traditional coking coal with hydrogen. The hydrogen is used to remove the oxygen in the iron ore making water the by-product, instead of carbon dioxide. This is then reused to produce more hydrogen, thus creating a closed cycle.

The by-product is water, not carbon dioxide. In a bid to communicate the change, SSAB has even bottled some of the water for drinking, as part of its Pure Waste campaign.

Clean and green, this is sustainable steel for a net-zero age. It is a message in a bottle.

From energy companies developing low-carbon technology to carmakers making driving more environmentally friendly, businesses of all stripes are seeking to reduce their impact on the planet and help mitigate the effects of climate change by embracing sustainable innovation.

Given the potential financial returns of this type of innovation, many organisations are inevitably turning to patents to protect their intellectual property. While the growth in patents for low carbon tech has slowed since 2013, the number of annual patent filings are almost four times higher than what they were at the turn of the century, according to a report from the European Patent Office and the International Energy Agency.

“Once you’ve got your technology out there in the world, if you can make money off it, third parties will come and copy it, so you need patents to protect that,” says Paul Joseph, an IP partner at Linklaters.

With the urgency to meet the Paris Agreement’s net zero goal by 2050, some companies are looking to collaborate on IP to accelerate sustainable innovation and to inspire others. Take Scandinavian steelmaker SSAB. It has partnered with iron ore producer LKAB and Swedish energy company Vattenfall to create fossil-free steel in a bid to reduce the steel industry’s carbon emissions. Other companies are also following suit, particularly ones that have multiple partners in their supply chains.

“Often they will collaborate by sharing IP with their supply chain partners so they can achieve their net-zero targets overall because while the company themselves might be on track to meet those targets, they need to ensure their supply chain partners can meet them as well,” says Mark Marfé, a partner at Pinsent Masons.

The increase in collaboration around sustainable IP is also partly because innovators often lack the resources to expand on their own.

The technology may end up being used in some pretty remote places. What happens if it is misused in those places, and you haven’t protected yourself in those jurisdictions? The challenge is how do you devise a meaningful patent strategy

“A lot of the innovation is happening in R&D centres, university spinouts and startups, but the implementation of these ideas needs to happen at scale, so that is driving collaboration,” adds Joseph.

This is spurring larger businesses with deep pockets to invest in startups and other innovators, so they have a financial stake in potentially game-changing, low-carbon technology.

“They won’t take just one bet, they might take 10 bets and go well, we might lose on nine of them but one of them might win and therefore we’ll be in the right place,” Joseph says.

With a broad range of industries seeking to develop sustainable products or practices, many traditional businesses may be exposed to new technologies that bring with them more nuanced challenges. For instance, an increased use of data means needing to use standardised communication technologies such as 4G to manage data flow. Technology that is incorporated into such industry standards is usually subject to a standard essential patent (SEP) given that other businesses will be required to use the patented technology. SEP owners commit to license these patents on fair, reasonable and non-discriminatory terms, known as Frand licensing. However, what constitutes Frand is often disputed and is therefore something that is likely to become of growing relevance in the sustainable IP space.

“We’ve had litigation in lots of countries, initially in telecoms and then later on in the automotive industry around what constitutes a patent licence on Frand terms,” says Marfé. “There is a right and a wrong way to deal with demand to take a Frand licence. Now that sectors such as advanced manufacturing and energy companies are increasingly reliant on standardised technologies, this is something they need to be alert to.”

Given the need for wider adoption of sustainable technologies, there will be pressure on patent holders in this area to allow others to benefit from their IP.

“The time-critical nature of the more critical sustainability challenges like climate change, plastic pollution and loss of biodiversity means that the lifetime of IP, measured in decades, could limit the exploitation of sustainable technologies at a critical time if holders of relevant IP rights do not license them and cannot or will not provide their technology on a sufficient scale or at an affordable cost,” says Chris de Mauny, a partner at Bird & Bird.

Government policy can seek to tackle this by promoting licensing, either through initiatives such as compulsory licensing or tax policies that incentivise patents to be licensed out.

“Encouraging licensing is a clear way to address this without fundamentally changing the IP system; the innovator remains in control and gains revenue but the technology can be more widely commercialised,” says de Mauny.

Another issue innovators face is determining the jurisdictions in which they should file their patents.

“You don’t get a global patent, so you have to decide where you want to protect your technologies,” says Jamie Rowlands, an IP partner at Gowling WLG. “The technology may end up being used in some pretty remote places. What happens if it is misused in those places, and you haven’t protected yourself in those jurisdictions? The challenge is how do you devise a meaningful patent strategy.”

Some jurisdictions are more advanced in their handling of sustainable IP. The UK, for example, was one of the first countries to create a fast-track green channel to accelerate patent applications if the invention has an environmental benefit. Ultimately, however, IP law is likely to remain agnostic to sustainable innovation.

“IP law is a framework that companies adopt and use to push their businesses forward,” says Joseph. “Sometimes people talk about changing legislation to make things more favourable for companies in a particular niche of the market, but what commercial entities want is a settled landscape. The moment one country starts tinkering, things start to become inconsistent, and that can be problematic for rights holders and for R&D.”

As climate issues become more acute, the need for innovative ways to tackle global warming and sustainability are only going to intensify. By sharing their knowledge through patents, innovators can still protect and monetise their IP while also potentially saving the planet.

In the city of Luleå on the northern coast of Sweden, a pilot project has been under way to develop fossil-free steel that is virtually emissions free. Scandinavian steelmaker SSAB has partnered with iron ore producer LKAB and Swedish energy company Vattenfall on the project to create something called Hybrit technology, which uses hydrogen gas instead of carbon and coke in the steel production process, meaning the by-product is water instead of carbon dioxide. The water can then be recycled to produce hydrogen.

The initiative from SSAB to create fossil-free steel comes as heavy carbon emitters like steel producers are under pressure to cut emissions and help transition to a low carbon economy in order to limit the impact of climate change. The steel industry is one of the world’s heaviest emitters, responsible for about 7% of all global carbon dioxide emissions.

“SSAB is one of the biggest emitters of carbon dioxide in Sweden and Finland, despite having some of the most efficient blast furnaces in the world, so we have basically reached the end of the road with what we can do with this technology to mitigate climate change,” says Martin Pei, chief technology officer at SSAB. “At the same time, it’s been clear that we need to do something to eliminate emissions. Our decision was to tackle the root cause of the carbon dioxide emissions and for this we chose the hydrogen-reduction path, the Hybrit initiative.”

The company says its leadership role in the development of fossil-free steel is only of secondary importance when stacked up against the need to tackle climate change.

“The most important thing is to eliminate emissions,” says Pei. “In doing so, we hope that we can act as a source of inspiration to others who can now see that the Hybrit initiative works and brings results throughout the whole value chain. The fossil-free steel reduces our carbon footprint, as well as that of our customers and their customers.”

SSAB says it plans to offer fossil-free steel to the market in 2026 and has set a goal to largely eliminate carbon emissions from its operations in around 2030, 15 years earlier than initially planned. Those efforts will see it reduce emissions by 8 million tonnes a year compared with current levels, helping Sweden cut its carbon dioxide emissions by about 10% and Finland by roughly 7%. The company says it is not currently possible to eliminate all emissions. For instance, there will be some carbon dioxide emissions from the consumption of graphite electrodes in its electric arc furnace (no more than 7kg of carbon dioxide per tonne of crude steel, compared with about 2 tonnes for traditional blast furnace steelmaking).

SSAB says it also wants to support and inspire other steel producers and customers to become carbon neutral. To that end, rather than keeping it a trade secret, it has applied to patent the Hybrit process so it can license the technology to help reduce the steel industry’s carbon footprint while also making the science, methodology and technology behind the process available for anyone to study.

Speaking at COP27 in Egypt in November, Pei said: “We have proven that there is a functioning technology to make fossil-free steel, but we cannot change the entire industry ourselves. Others need to act as well if we are to reach the Paris agreement goals. I hope that our colleagues in the industry will seize this chance to transform our sector from a climate villain to a climate hero.”

The wider adoption of fossil-free steel will largely hinge on demand from buyers. If customers themselves are seeking to become more sustainable, that will put pressure on suppliers to offer fossil-free steel and potentially speed up the transition to a low-carbon economy.

We have proven that there is a functioning technology to make fossil-free steel, but we cannot change the entire industry ourselves

The cost of fossil-free steel is higher than traditional steel, but it can be used for all applications without the negative environmental impacts. It can also help steel-buying customers achieve carbon neutrality across their supply chains and help cut their own indirect carbon emissions, which in turn can demonstrate their commitment to sustainability for the benefit of their own customers.

“Thanks to years of dedicated work from the research team, we have made the hydrogen-based pathway to decarbonise steelmaking more accessible and efficient,” says Pei. “It can help to mitigate climate change.”

Steel is the most widely used material on Earth and touches every part of our daily lives. It’s in the beds we sleep in, the cars we drive and the offices we work in. It’s also enmeshed in global supply chains via roads and bridges, nuts and bolts, machinery and physical products.

But it has a big problem. The traditional process of making steel is carbon intensive and it’s responsible for 7% of global carbon dioxide emissions. That figure could increase with steel production still on the rise. Between 2020 and 2021 production increased by 3.6%.

Steel has been made in largely the same way for the past 1,000 years. Iron ore is heated and melted in furnaces to remove impurities before coal and coke is added. The result is vast amounts of carbon dioxide being released into the atmosphere. This is contributing to increasing global temperatures and climate change in the form of extreme weather events.

The industry must find new sustainable ways of making steel to achieve its target of reducing emissions by 30% by 2030. This would put the sector on track to reach net zero – the point at which more emissions are being removed from the atmosphere than are being added – by 2050. If it doesn’t, it will be impossible for global supply chains to fully decarbonise, particularly those in industries reliant on steel, such as manufacturing and construction.

Richard Warren, the head of policy and external affairs at UK Steel, says decarbonisation must happen in phases, using three technologies, to ensure steel demand can be met during this transition. “I’m pretty confident that there will initially be a big expansion of electric arc furnaces to make recycled steel from scrap,” he says. “Carbon capture will also help to reduce emissions while traditional steel production continues and then long term, we need to move to hydrogen-based green steel.”

Electric arc furnaces produce 75% fewer carbon emissions, but they can’t be considered a long-term solution as they still release emissions into the atmosphere. The supply of high-quality scrap steel still isn’t sufficient to meet global demand either, as issues remain over poor sorting and contamination during the recycling process. Carbon capture is another short-term solution to reducing emissions, but the availability of the technology is limited.

Additionally, recycling will not be enough to meet future need. With a growing population, around 50% of iron ore-based steel will be needed by 2050. Recycling is not enough; more creative solutions are required.

Long term, hydrogen-based green steel is the solution to a sustainable steel industry and net-zero supply chains. Three Swedish companies, specialised steel manufacturer SSAB, iron ore mining giant LKAB and energy company Vattenfall, have collaborated to create the world’s first fossil-free steel. To create its fossil-free steel, SSAB’s Hybrit technology uses hydrogen to reduce iron ore into sponge iron with significantly improved properties and quality. Hydrogen replaces the carbon and coke that would normally have been used in this process, so instead of seeing carbon dioxide as a by-product, SSAB just sees water. That water isn’t even a waste product, as it will be used to generate more hydrogen.

SSAB aims to make fossil-free steel available on an industrial scale in 2026 and its development is beginning to influence procurement decisions made by companies that source steel and need to achieve their own net-zero ambitions. Volvo Trucks has announced it will purchase fossil-free steel and Mercedes-Benz has also partnered up with SSAB. The first prototype parts for body shells made of fossil-free steel are already being planned for next year.

But if the steel industry and global supply chains are to reach net zero, then legislative change is needed. “The UK government should ensure that contractors carrying out big intensive steel projects have to report where their steel is produced,” says Warren.

Mercedes is also trying to bring about scalable change. The company’s ‘Responsible Steel Initiative’ is developing a sustainability standard for steel mills and the steel supply chain with the aim of ensuring environmentally friendly production along the entire value chain.

The UK government should ensure that contractors carrying out big intensive steel projects have to report where their steel is produced

Businesses are also trying to stimulate change. In 2020, the Climate Group Alliance launched its SteelZero initiative, which aims to speed up the steel industry’s transition to net zero. Organisations that join SteelZero make a public commitment to procure 100% net-zero steel by 2050 and an interim commitment to procuring, specifying or stocking 50% of its steel requirement by 2030. Through collective purchasing power and influence, businesses aim to send a strong demand signal to shift global markets and policies towards responsible production and sourcing.

If they succeed, then the path will be clear for the steel industry to decarbonise and supply chains to accelerate their race to reach net zero, helping humanity in its fight to reduce emissions and avoid the worst impacts of climate change.