“The relatively high value of cars, especially premium brands, also means they can absorb the short-term green premium for greener steel,” Alex Keynes, auto policy manager at the European Federation for Transport and the Environment, said in an email.
The same principle could apply to other common steel products. Hannah Ritchie, data scientist and deputy editor at Our World In Data, estimates that the additional cost of using green steel in a home is less than 1% of the purchase price.
However, there is a complicated web of players in construction, from architects to builders to contractors. This could make buying more expensive materials that provide a climate benefit a more complex endeavor. And for larger projects that require more steel, prices could rise much higher, making green steel unaffordable in these contexts, at least for now.
If automakers commit to buying green steel from steelmakers, it could contribute to their rapid growth, and some companies have already secured such commitments. As of January 2024, H2 Green Steel had binding agreements for more than 40% of its steel production in the first years of its new plant.
However, the industry still faces challenges, including questions about the future cost and availability of green hydrogen, Keynes says. Policy measures, from subsidies to encourage production of the fuel to regulations, could be crucial in bringing greener steel into our vehicles and beyond.
