This week I joined global leaders at the UN General Assembly and New York Climate Week, where the spotlight was on the hard-to-abate sectors which are responsible for 30% of global greenhouse gas emissions. These sectors, particularly steel, play a central role in addressing one of the most significant challenges of our time – climate change.
While the global steel industry contributes 10% of the global greenhouse gas emissions and is therefore a necessary focus area as we move to a more sustainable world. At the same time, it plays a vital role in advancing low-carbon industries like hydrogen, clean energy and electric vehicles. To unlock this transformative potential of industries like steel, there’s a need for global cooperation and ambitious climate regulation to drive investments towards low-carbon technologies.
Now, after a productive week in New York City, here are the key opportunities we identified to accelerate the green transition. 
1. Global Alignment on Carbon Pricing
Incentivizing decarbonization globally in the hard-to-abate sectors depends on achieving a global alignment on carbon pricing. This is essential for encouraging industries to invest in green technologies, which require effort across the value chain.
Despite increasing global tensions, it was highlighted during the UNGA how it has never been more important to find alignment on how to globally mitigate climate change. Unlocking investments is key to advancing a green and just transition, with internal carbon pricing mentioned to play a critical role in embedding these investments into corporate strategies. It was also discussed last week how work is needed to create a level playing field aiming for fair trade – including the impact of carbon emissions in the material.
Beyond carbon, attention was also on emerging challenges in the industry such as biodiversity, pollution, and water management within hard-to-abate sectors. (This is a topic we discuss in our new Future of Steel white paper.)
2. Scaling Demand for Low-Emission Materials through Circular Economy
There is a pressing need to accelerate demand for low-emission materials such as green steel through regulatory measures. The transition to green steel needs to grow across the entire value chain, from suppliers to customers, and regulation has a vital role to play in shaping that demand. We also need transparent measures on how to define low-carbon steel and how to verify the value of it all the way across the value chain.
Although steel is infinitely recyclable, only 30% of its production currently utilizes recycled materials* – Outokumpu has managed to innovate its production processes to utilize up to 95% recycled material content already today. Could regulation bolster circularity in material production and offer competitive advantage for the companies ahead of the curve? Transitioning to circular economy is essential for sustainability, with regulation pivotal in scaling efforts. This is particularly important in sectors like steel, where access to critical raw materials also intersects with national defense concerns.
3. Leveraging Opportunities from the Green Transition
You could feel in New York how the narrative has evolved over the last year: companies are moving from discussing about climate commitments to asking the most important question – how do we finance this? It was also mentioned several times how only by harnessing the potential of innovation and growth, we can unlock the value potential of green transition and boost competitiveness. We already see how the finance sector, companies such as Blackrock, are investing funds to companies who globally benefit from circular economy.
The hard-to-abate sectors, such as steel, need to transition beyond traditional linear value chains towards partnerships and ecosystems aiming to solve shared challenges in sustainability. How can we collaborate with other energy-intensive companies to advance renewable energy infrastructure? What novel business models can emerge when we re-evaluate production processes such as utilization of waste streams? How can innovation enhance competitiveness, enabling companies to reduce emissions while simultaneously creating value?
The dialogues at the UNGA and NY Climate Week highlighted the pivotal moment for industries like steel in accelerating the green transition. By embracing ambitious climate regulation, advancing decarbonization technologies, and fostering cross-sector collaboration, we can transform the steel industry narrative. The path ahead is fraught with challenges, yet the potential for positive impact is vast.
Now it is time to convert climate anxiety into decisive climate action.
*In the steel produced today, only 30% comes from recycled steel (Source: Iron and Steel Technology Roadmap, International Energy Agency, 2020)