Using LKAB's pellets, the carbon footprint from steel's lifecycle emissions is reduced.
Steel is an important material in many industries. The automotive industry, for example, uses high-strength steel for lightweight components that are also important safety details in cars. The transition from fossil fuel-based transport to electric vehicles will contribute further to reduced emissions, from the perspective of the vehicle's entire lifecycle. This effect is reinforced when the car is powered by green electricity. This trend will increase the significance of production and materials in the vehicle's lifecycle emissions. LKAB's pellets offer low carbon intensity in steel production, which improves the lifecycle performance of low-emission vehicles.
EU and national legislation in the construction sector is encouraging a reduction in the climate impact caused by buildings. Improved insulation and highly efficient heating, cooling and lighting minimise the energy requirement in modern buildings. Based on an equivalent lifecycle perspective to the automotive sector, this is increasing the importance of hidden emissions in the manufacture of building materials.
Environmental assessment and certification systems such as BREEAM and LEED score these concealed emissions. In this respect, the use of steel based on LKAB's pellets can improve the environmental performance of these materials.
An effective environmental policy is required to reduce industry's dependence on coal. We believe in a high global charge on carbon dioxide emissions in order to promote the reduced use of coal in industry. Europe is leading the way in this respect through the EU's emissions trading system (EU ETS). Global efforts are now required.
Within the EU, emissions from most industrial sectors are regulated through EU ETS. We consider this to be a good tool in forcing companies to reduce their climate impact. We are also convinced that greater price pressure than at present is required in order effectively to share the burden of reduced emissions and ensure that there is a common game plan on a global level. The EU's ETS system also needs to be reformed.
On a global level, the Paris Agreement shows that there is a worldwide ambition to freeze emissions of greenhouse gases. Climate change is a global challenge, which is why we need a global solution. A sector-oriented strategy is the most effective way of ensuring the necessary reduction in a cost-effective manner.
We intend to continue leading developments globally when it comes to environmental performance within iron ore production and the manufacture of pellets. Unfortunately, similar systems for carbon dioxide emissions have not yet been introduced in large parts of the world, including in areas where our competitors are based. This not only affects our competitiveness on the world market. It is also preventing a global transition to an economy that is not based on fossil fuels.
LKAB's pellets can reduce carbon dioxide emissions in the value chain equivalent to up to seven times LKAB's direct emissions from our production of pellets. Steel that is manufactured using only LKAB pellets leads to a 14% reduction in carbon dioxide emissions compared to the average production methods used for ore-based crude iron production in Europe. Rules for carbon dioxide emissions should therefore be drawn up so that the market is encouraged to select such pellets rather than other iron ore products. At the very least, the regulations should not support the opposite.