BLOG: Collaborative Procurement: The Key To Unlocking A Green Steel Market in North America
Power in Numbers: The Sustainable Steel Buyers Platform
While individual commitments to procuring green steel are important, collaborative procurement offers a powerful solution, enabling automakers and other key buyers to accelerate the availability of green steel together.
This is where the Sustainable Steel Buyers Platform (SSBP), launched by RMI, comes in. The SSBP is designed to expedite the availability of green steel through collaborative offtake commitments. Members include industry leaders such as Microsoft, Nextracker, Invenergy, and Trammell Crow Company.
How the SSBP Works
The SSBP has a two-stage process:
Request-for-Information (RFI): During this initial stage, RMI gathered data from steel producers and their technology partners regarding their capabilities to supply near-zero emissions steel.
Request-for-Proposal (RFP): The SSBP will issue a formal RFP to all potential suppliers at this stage. Producers will submit proposals to supply near-zero emissions steel, which buyers will evaluate.
Instead of placing joint purchase orders, buyers will negotiate individual offtake agreements based on the terms of the RFP. This method ensures flexibility while leveraging the collective bargaining power of the group. By representing a large collective offtake volume, the SSBP can substantially impact the market, pushing the steel industry to reduce its reliance on coal.
Making a Market Impact
Key steel buyers like automakers have a crucial role in ensuring the success of new green steel projects that can help them meet their sustainability goals. By driving demand and supporting the necessary infrastructure, initiatives like the Sustainable Steel Buyers Platform (SSBP) complement the efforts of steelmakers to foster green steel production.
Consider the efforts of SSAB, a leader in green steel, poised to develop the first commercial-scale green steel facility in the United States. At the same time, Cleveland-Cliffs, a major supplier to the auto industry, plans to retire its coal-fired blast furnace in Middletown, Ohio, and invest in a ‘hydrogen-ready’ direct-reduced iron (DRI) facility with the help of federal funding. Although this DRI facility is not yet set to produce green steel, it has the potential to do so if Cleveland-Cliffs transitions from natural gas to 100% renewable hydrogen.
By investing in green hydrogen, automakers and other major buyers involved in the SSBP can play a pivotal role in ensuring these facilities—and future ones—are truly low-emissions.
Conclusion
The automotive industry has a significant opportunity to transform the steel market through collaborative procurement initiatives like the Sustainable Steel Buyers Platform. By joining forces with other sustainability-minded companies, you can leverage your collective purchasing power to accelerate the availability of green steel and push the industry toward a sustainable future.
Your commitment today can make a substantial difference in achieving a net-zero steel industry by 2050. Ready to take the next steps? Connect with us at kramirez@rmi.org to learn how your company can join the Sustainable Steel Buyers Platform.
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