Why is coal used in making steel?

Why do we need coal to make steel – and what could we use instead?

Whether in downtown Auckland or out in New Zealand’s backcountry, pretty much every human structure has steel in it – skyscrapers or ironclad huts, steel’s just about everywhere. The average new house for example, is made up of about 2.7 tonnes of the stuff[1].

Anyone going anywhere in New Zealand probably sees or uses steel on a daily basis, if not constantly. This is because the many desirable qualities of steel mean it lends itself to being used in just about everything.

Along with iron ore, coal’s one of the key ingredients when making steel from raw materials[2]. This is because coal, once turned into coke, provides a source of carbon, which is vital for stripping oxygen from iron ore and turning it into pure iron[3]. To this day this is the only way to economically produce steel from raw materials in the quantities required by modern societies.

The World Steel Association estimates on average internationally the steel industry uses about 2 billion tonnes of iron ore, 1 billion tonnes of metallurgical (coking) coal, and 575 million tonnes of recycled steel to produce 1.7 billion tonnes of steel every year[4].

On average, to produce one tonne of steel from raw materials in blast furnaces and basic oxygen furnaces this route uses 1,370 kilograms of iron ore, 780 kilograms of metallurgical coal, 270 kilograms of limestone, and 125 kilograms of recycled steel[5].

In iron’s natural form (iron ore), it is made up of oxygen and iron – iron oxide. To convert it to metallic iron, the oxygen must be stripped from the iron. Carbon is used because at high temperatures carbon is more reactive and exerts a stronger bond than the bond that exists between iron and oxygen.

This source of carbon comes from coke, produced from certain coals in a ‘coke oven’. This process involves heating high grade coals in the absence of oxygen to produce ‘coke’, a substance that is almost pure carbon.

One of coke’s most important roles in a blast furnace is to remove oxygen from iron ore. When coke burns, carbon monoxide forms, and this carbon monoxide strips the oxygen from the iron. In doing so, pure iron is created, but, with the extra oxygen particles, carbon monoxide becomes carbon dioxide.

This unavoidable by-product is a result of the chemical realities of steel-making and is impossible to avoid if carbon (in the form of coke) is being used as the reducing agent when producing steel from raw materials.

In 2019, steelmaking accounted for about 14% of global coal demand, and roughly 7%-9% of global carbon dioxide emissions.

What are the options for reducing or eliminating steel production’s greenhouse gas emissions?

While coal is an indispensable ingredient in producing steel, that’s not to say it’s impossible to produce steel in other ways, and at least lower the carbon footprint.

The easiest way to make steel without coal is to recycle scrap steel. This can involve either supplementing the iron ore and coal inputs with scrap, or by using 100% scrap steel in an electric arc furnace.

Supplementing raw materials with scrap steel

Every steel plant uses scrap as part of its raw materials mix, but this varies plant by plant, typically ranging from 15%-25% scrap metal[6].

By increasing the input of scrap steel, the demand for raw materials is reduced – every tonne of scrap steel used lowers a plant’s emissions by 1.5 tonnes of CO2[7] through the avoided consumption of 1.4 tonnes of iron ore, 740kg of coal and 120 kg of limestone.

Technically, all new steel could be made from scrap – if there were enough of the stuff. One of the main reasons there isn’t, is because steel has such a long life – the average shelf life of steel products ranges from a few weeks for steel packaging to up to a century for buildings and infrastructure[8].

Demand for steel worldwide continues to grow, especially as poorer countries develop and living standards increase. Because this demand is growing faster than can be supplied by scrap steel, production from raw materials is necessary – the demand for new steel reduces as economies become more developed and the flow of scrap increases.

Electric arc furnace

Provided the electricity being used was from low-emissions sources, using scrap steel alone in an electric arc furnace would produce steel with almost zero carbon dioxide emissions.

As noted above, the challenge comes from having enough scrap material.

International steel recovery rates, by sector, are estimated[9] to be at least 85% for construction, 90% for automotive, 90% for machinery, and 50% for electrical and domestic appliances.

To date, recycled steel accounts for about 30%[10] of steel production worldwide each year – the carbon intensity of the recycled steel is directly linked with how much renewable electricity is available in the country where the steel is recycled.

Steel from hydrogen

Another technology under development is to produce steel using hydrogen instead of carbon (from coal) as the reducing agent that removes the oxygen from iron ore – instead of releasing carbon dioxide as a by-product, the bonded hydrogen and oxygen would be released as water[11].

If this hydrogen is produced from renewable electricity, it is considered zero-carbon steel. Among others, a barrier to this technology developing will be ensuring there is enough clean electricity to produce enough clean hydrogen.

At present, 99% of hydrogen is produced from fossil fuels (76% from natural gas[12], and 23% from coal[13]) and demand for hydrogen continues to rise. This accounts for about 6% of natural gas use and 2% of coal use worldwide[14].

To simply maintain existing production levels of hydrogen with electrolysis (using water and electricity to create hydrogen) would require 3,600 terawatt hours of clean electricity[15]. To put this in context, 3,600 terawatt hours is more than the annual electricity generation of the entire European Union[16].  In 2018, electricity from renewable sources accounted for 31% of the European Union’s electricity generation[17].

If the entire steel industry worldwide were to convert to hydrogen – and stop using metallurgical coal – then about 2,500 terawatt hours from renewable sources would be needed to produce the green hydrogen (hydrogen from renewable sources) required[18]. Again, to put this in context, 2,500 terawatt hours is roughly the combined electricity consumption of India, Japan, and South Korea today[19].

Companies around the world, but especially in Europe, are currently working towards having commercial and operational plants producing steel from hydrogen. One of the leaders, a Swedish joint venture named HYBRIT, is aiming to open its first commercial plant in 2036[20]. Even if this is achieved, the question is what the word “commercial” means – it may be possible for steel produced at a high cost to supply a boutique market willing to pay a premium, but it’s another matter entirely to roll this technology out at the scale required to make coal an obsolete part of the steel making process.

In addition to the challenges inherent in producing enough green hydrogen to supply the steel industry (and likely other sectors), there are practical difficulties relating to the storage and transportation of hydrogen[21]. Hydrogen, the lightest element, is so small it can diffuse into some materials, including some types of iron and steel pipes, and increase their chance of failure. It also escapes more easily through sealings and connectors than larger molecules, such as natural gas.

Steel from biomass

Biomass can be used to produce charcoal, and this can in turn be used as a carbon component to produce steel in small quantities[22]. Charcoal is used to commercially substitute for some coal used in blast furnaces, mainly in Brazil[23].

Trials have also been held in Australia to substitute coal in blast furnaces with sustainable biochar[24].

One of the biggest barriers to scaling up such work will be the lack of availability of sustainable sources of biomass.


Technologies to displace the use of coal in steelmaking in the face of growing demand for steel remain in their infancy. It will take decades before these are commercialised and established worldwide at the scale needed to reduce the need for coal in primary steel production.

When considering the many needs for steel in things like rail, bussing, wind power generation, hydroelectricity, geothermal electricity, electric vehicles, and many other technologies that will play a part in reducing greenhouse gas emissions, demand for steel seems unlikely to fall in the coming decades – demand for steel is forecast to grow 6% by 2030[25] according to the International Energy Agency.

Until technology improves to a point where steel can be made without coal, steel production will not be possible without coal production.

New Zealand has reserves of high quality coking coals that can play a part in the international steel market, particularly in the Asia-Pacific. Our domestic steel production, and ability to supply high quality coals to the world, is entirely linked to our ability to mine coal.


View the references page for this article here.

Other Articles