Applauding a landmark year for federal support of green steel
When it comes to climate action, the federal government is demonstrating that when there is a will, there is a way. Despite legislative hurdles and political battles, we have seen unprecedented support for climate tech companies like Boston Metal this year thanks in large part to persistent efforts from the White House, Congress, and executive agencies. Most notably, the Biden Administration’s emphasis on decarbonizing heavy industry will yield some of the greatest returns, with the potential to eliminate approximately 30% of the country’s CO2 emissions. In particular, the past three months have illustrated the government’s commitment to prioritizing green steel in its climate and economic goals.
The Inflation Reduction Act (IRA), which was born out of different iterations of defeated reconciliation bills, marks the largest investment in climate action that will directly impact green steel. Because of the bill, steel producers, along with other companies engaged in energy-intensive industrial processes, will be able to leverage the nearly $6 billion in grants and loans to deploy innovative decarbonization technologies, such as Boston Metal’s MOE platform, under the Department of Energy’s Advanced Industrial Facilities Deployment Program. In addition, the IRA’s provisions for increasing the availability of affordable renewable electricity and hydrogen will be critical for scaling the commercial deployment of green steel technologies that rely on it.
Traction for green steel is also being boosted by previous actions taken by the Biden Administration that occurred when there wasn’t much hope for investment like that in the IRA.
In December 2021, when a version of Congress’ spending bill was thought of as dead, the White House unveiled a new procurement policy called the Buy Clean Initiative to address emissions from sectors like steel and cement. Following the $4.5 billion in continued support of Buy Clean included in the IRA, the White House just released new actions for the initiative last month that utilize the government’s purchasing power to accelerate the availability of low-carbon construction materials including steel and make them cost competitive. With the U.S. government being the largest direct purchaser in the world, “Buy Clean” will undoubtedly propel the green steel market forward.
The IRA’s provisions for increasing the availability of affordable renewable electricity will be critical for scaling the commercial deployment of green steel technologies
The DOE also took steps last month to boost the deployment of clean materials like steel with the “Industrial Heat Shot” initiative, which will support the overarching strategy detailed in the agency’s Industrial Decarbonization Roadmap released in September 2022. The effort plans to reduce the cost, energy use, and carbon emissions associated with the heat used to make everything from food to cement and steel. More specifically, it plans to electrify heating operations, integrate low-emissions heat sources, and innovate low or no-heat process technologies.
These demand-side policies have helped encourage the private sector to invest as well. Given the hundreds of billion in capital required to wean the steel industry off fossil fuels, federal support alone won’t be enough. As a means to take advantage of the growing demand and reduce the carbon intensity of their loan portfolios, the world’s biggest banks are pouring money into green steel. During Climate Week NYC in September, Citi, Crédit Agricole CIB, ING, Société Générale, Standard Chartered, and UniCredit announced the signing of the Sustainable STEEL Principles, the first Climate-Aligned Finance (CAF) agreement for lenders to the steel industry. This represents a combined bank loan portfolio of approximately $23 billion in lending commitments to the steel sector. In creating a common set of rules to simplify and encourage competition among banks to fund zero-carbon projects, this agreement will be instrumental in lowering capital costs for green steel innovators.
The traction we saw in 2022 demonstrates how much we can accomplish when the full force of the federal government and the private sector simultaneously strive towards a common goal. Having witnessed the green steel movement accelerate before our eyes, we at Boston Metal look forward to the further implementation of these policies and seeing the benefits come to fruition across the entire industry. Further, as the leading U.S. company working to commercialize a green steel technology, we’re honored to help make emissions-free, low-cost, American-made steel.