Ford and GM are Green. 1 Radar Radar Owners can take advantage. | Rare Techy
Although Tesla (TSLA -1.14%) It is a leader in electric vehicles (EV), while other parts of its business promote the use of clean energy. Its rooftop solar and energy storage segment accounted for 5% of revenue in the third quarter, more than $1.1 billion.
Just like the old car manufacturers Ford (F 0.15%) a Great Cars (GM 0.94%) work to build their electric car line, they are also trying to expand the use of clean energy. But those companies are taking a different approach, and it gives investors an angle to play in the growing EV sector.
The new (green) steel
Automakers are now looking instead at building electric vehicles; is looking up to find the sustainability of the work that goes into making those vehicles. The average car weighs about 2,000 pounds of steel, making it a big market for the steel industry.
Steelmaking has long been considered a dirty, smoky industry. Instead Nucor (NUE -0.37%) pioneered the electrolytic steelmaking (EAF) process in the 1980s and built a very successful business using that technology. Good walk Another company emerged using EAFs and was founded by former Nucor employees. Other steel companies, incl U.S. Steel, also transitioning to EAF production now.
That technology uses mostly recycled materials to make steel. Nucor will produce more than 23 million tons by 2021, more than three-quarters of its production needs. But the North American leader is also working to further reduce the greenhouse gas (GHG) impact of its operations, and is expected to produce zero-emission steel in large quantities.
One way he did it was by looking at customers, including Ford and GM. Late last year, Nucor introduced a new product it claims is the world’s first steel. General Motors was the first customer for what Nucor called Econiq.
Nucor has confirmed its Econiq Certification and availability across its product line. The company says it “indicates that steel will be produced with 100% renewable energy to eliminate Scope 2 emissions, and Scope 1 emissions will be offset by the purchase of carbon dioxide.”
Scope 1 includes emissions from company operations. Nucor has addressed Scope 2 emissions — indirect GHG emissions associated with purchasing electricity for steelmaking and processing — by establishing virtual power purchase agreements with wind and solar generators. in his houses.
Emissions 3 are not part of the certification because those emissions are the result of operations from materials not owned or controlled by the steel producer. But Nucor is committed to working to reduce and disclose most of its Phase 3 emissions. And it’s not just General Motors that wants to pay for green steel from companies like by Nucor.
Heating, ventilation, and air conditioning (HVAC) and refrigeration company Trane Technology it has also announced plans to buy Econiq from Nucor as its primary supplier of low-alloy steel. The company will also add its supply to US Steel’s new version called verdeX for its operations in the United States. According to Trane, the steel will be used to make heat pumps and air conditioners for homes and thermal management systems for commercial buildings. Green steel contracts represent 20% of total steel sales each year, according to the company.
Ford has now joined the program. Ford recently signed a memorandum of understanding (MoU) with the European Union of India Tata Steel for the release of its carbon-free net. Tata’s approach to carbon-free steel is to replace the use of carbon with hydrogen as part of steelmaking. Its plant in the Netherlands is working to build that process to scale, and Ford is at the front of the line for its use.
Another type of green
With these automakers pushing the supply chain to meet their sustainability goals, Nucor and others become potential investors to participate in the growth of the EV sector. It is fair to note that the volume of these green steel donations will not have a significant impact on the top and bottom lines of companies in the near future. But there are more reasons to invest in steel giant Nucor as the renewables business grows, and investors can take a green alternative.
The machinery business represents 7% of Nucor’s volume. The construction sector is still its main driver, accounting for 55% of its business. But Nucor isn’t just focused on its green steel offering. It will become a major provider of the infrastructure needed for the transition to renewable energy. In a presentation to investors, Nucor provided more information on how it will participate.
Nucor aims to use sustainability trends to create new opportunities, expand its capabilities, and grow market share in the engineering, construction, and energy sectors. And the company is using its strong cash flow to give shareholders a bigger share of those opportunities.
In its reported third quarter, Nucor revealed that its stock sales were significantly lower than its outstanding share count. As part of its goal of returning at least 40% of earnings to shareholders, Nucor has repurchased 20% of its shares over the past five years.
Nucor also expects 2022 to be another record-breaking year. Iron ore prices contributed to that, but are now down. Sales prices are still at high levels, however, and Nucor has many projects coming online in the future. That includes a new plate mill in Kentucky that will open up new markets for the steelmaker, including wind turbines.
Nucor is not only leading the industry in introducing green steel. Most importantly for investors, it is also driving profits. Investors are given several good reasons to buy the stock.