Value of CO2 neutrality for sustainable engineering steel: A case study of Ovako AB

Abstract: Steel production is today one of the most CO2-demanding activities and causes 8% of the global emissions of GHG. It is crucial for the industry to reduce its emissions radically in order to be in line with the goals of the Paris Agreement and the Science-Based Target initiative. Ovako AB, one of the leading producers of high-strength engineering steel, has been at the forefront when it comes to sustainability initiatives within the industry. Heavy investments are being made into sustainable steel production methods and technologies and to make this viable, the company has, from January 1st, 2022, started to put a price premium on their steel products of 30 € per tonne. This study aims to answer the question of how Ovako's customers, based on the three different industries of mining, automotive, and bearing, experience this price premium and how a green steel can justify this surcharge. Furthermore, this case study aims to understand the extent to which those customers require carbon neutrality when sourcing steel. Connected to the findings from the innovation theories and the literature, this study aims to answer the question of how sustainable innovations may influence future competitiveness regarding engineering steel. To answer these questions, interviews with key individuals from different customers of Ovako were conducted. Moreover, focus groups at Ovako with relevant employees have been held at the same time as a literature study has been conducted. Based on the answers obtained from the data collection, a thematic analysis has been performed where overarching themes have been identified. Additionally, a carbon impact calculator has been used to calculate the carbon reduction potential of using a carbon-neutral engineering steel in three different applications connected to the three industries investigated, namely a complete bearing, a drill bit, and a final drive unit. The results from the calculations as well as the answers obtained regarding the research questions will be presented in the conclusion chapter of the report.