Steel’s gambit: AI, transparency, and the battle against ‘greenwashing’

Green steel has emerged as a promising solution to reduce the carbon footprint of the steel industry, but the lack of standardized definitions and regulations has led to concerns about “greenwashing.”

Companies are increasingly labeling their products as "green" or "eco-friendly" without clear criteria or substantial emission reductions, potentially misleading consumers and investors.

Green steel is crucial for society's transition to a low-carbon future, as traditional steelmaking accounts for 7% of global CO2 emissions. Genuinely sustainable steel production can significantly reduce waste, conserve natural resources, and meet growing market demand for eco-friendly products, most often sold at a premium.

However, the lack of standardized definitions allows companies to make environmental claims without substantial emission reductions. Unlike the well-regulated organic sector, where regional variations exist but core principles are globally recognized, green steel lacks unified certification frameworks, leaving room for misleading marketing.

While some companies are making genuine efforts to reduce emissions through technologies like hydrogen-based production and increased use of recycled materials such as Gerdau (which uses 100% recycled feedstock), others may be overstating their environmental impact.

For example, a major steel producer was recently accused of greenwashing its steel products under a “green” brand. Environmental groups claimed that the company's carbon reduction efforts represent less than 1% of its overall emissions, yet it markets a significant portion of its steel as "low carbon." This has opened the industry debate about what should constitute as a green or low carbon steel product, and whether there should be a standard.

While some companies exploit the absence of clear standards, others are already striving for transparency. SSAB, for instance, distinguishes its Fossil-free steel, made from iron ore without fossil fuels, from other "green" labels. Their HYBRIT technology, which uses hydrogen instead of coal to remove oxygen from iron ore, creates a closed water cycle with virtually no CO2 emissions.

The problem extends beyond individual companies and has become a priority for the steel industry to solve. The lack of common labeling rules and standardized assessment methods makes it difficult for customers to compare products and verify environmental claims. This confusion can hinder genuine efforts to reduce emissions and create an uneven playing field for competitors.

As the industry evolves, a combination of technological innovation, standardized regulations, and increased transparency will be crucial to combat greenwashing and ensure that green steel delivers on its environmental promises. This transition mirrors the early challenges faced by the organic industry, underscoring the need for clear, globally recognized standards in the green steel sector.

Artificial intelligence is emerging as a catalyst for true production circularity in the steel industry. Industrial AI can optimize resource use, improve energy efficiency, and enhance recycling processes, helping to identify the most effective pathways to reduce emissions and create closed-loop systems. For example, Klöckner & Co. uses an AI solution developed with Boston Consulting Group to provide customers with accurate Product Carbon Footprint Declarations for each order.

Steel producer Gerdau has been an early adopter of industrial AI for more efficient utilization of ferroalloys and energy utilization when using entirely recycled feedstock. In turn, they saved $3 per ton in alloy costs and reduced their quality variation by a significant 15%.

However, despite the reported benefits of industrial AI, adoption rates have been slower than expected across heavy industry. Fero Lab’s latest industrial survey found that only 18% of factories are tapping the potential of AI capabilities, and only 11% are using digital twin environments to innovate and solve problems faster and risk-free for production teams.

The transition to green steel faces challenges, but lessons from the organic industry suggest that standardized definitions, rigorous certification processes, and increased transparency are key to combating greenwashing. As with organic products, conscious consumer awareness and demand for verifiable green credentials will likely drive the adoption of clear standards in the steel industry.

By learning from the organic sector's experience and leveraging AI technologies, the steel industry can forge a path to genuine sustainability, ensuring that "green steel" delivers on its environmental promises while meeting the growing global demand for eco-friendly materials.