Coal can broadly be divided into two categories - thermal coal, which is used to generate electricity, and metallurgical coal (also referred to as coking coal), used in steel production. 

The iron and steel industry produces more carbon pollution than any other heavy industry -  it’s responsible for up to 11% of all global carbon dioxide emissions. [1] The main reason conventional steelmaking is so polluting is that it requires a lot of coal. 

Coal plays a couple of roles in conventional steel making - it provides heat for the furnaces, and also provides an essential ingredient for the chemical reaction that produces steel.  Without getting too technical, metallurgical coal is reduced to a carbon-dense substance called coke. When that coke is put in a blast furnace with iron ore, it acts as a ‘reducing agent’ that removes oxygen from iron ore to leave pure iron, the main ingredient in steel.

The good news? It is now possible to create low-emissions ‘green steel’ using processes that don't require any metallurgical coal. Heating can now be provided by renewable energy like solar and wind instead of coal. And new steelmaking processes such as Direct Reduced Iron (DRI) allow hydrogen made with renewable energy to act as a reducing agent, instead of coal. [2] 

These low-emissions steelmaking technologies are proven and being used today. Many major steel companies are already seeking to reduce their use of coal or completely replace it with renewable energy. [3] As these 'green steel' technologies develop and get cheaper, they will have a significant impact on demand for metallurgical coal. [4]

The transition to green steel will take time. It will require support from both government and the private sector to accelerate the production of hydrogen and cheap renewable energy, fund research and development and train-up and re-skill workers. But it’s entirely possible to decarbonise steel production and reduce our reliance on coal in the process.

[1] Pedal to the Metal - No time to delay decarbonizing the global steel sector, Global Energy Monitor, 2021

[2] Solving Iron Ore Quality Issues for Low-Carbon Steel Technology Solutions Are Under Development, IEEFA, August 2022

[3] The end of an era: how the global steel industry is cutting out coal, The Narwhal, May 2021

[4] Technology developments starting to challenge the long-term future of Australia’s metallurgical coal, IEEFA, August 2022