Globally, transportation is fingered as a major climate polluter with between 15-20% of total yearly emissions. Consequently, the sector has received significant attention in green research leading to breakthroughs in alternative fuels like hydrogen and the advance of electric vehicles.

What is fossil-free steel?

Fossil-free steel is created with sustainable practices that do not rely on fossil-fuel energy and which avoid the dirty byproducts of traditional steelmaking.

Traditionally, steel is made from iron ore which is converted into iron pellets that constitute the key ingredient in steel production. Under the process, iron ore is converted into iron by removing the oxygen in the ore. The procedure relies on a blast furnace powered by coke and coal.

However, the process is energy-intensive and the “coking coal” burnt during the conversion releases vast amounts of carbon into the atmosphere.

In contrast, fossil-free steel uses a procedure dubbed HYBRIT – Hydrogen Breakthrough Ironmaking Technology – to convert iron ore into sponge iron using green hydrogen rather than coking coal. The conversion process relies on sustainably-powered electric arc furnaces which remove oxygen from iron ore using electrolysis with water as a byproduct.

The procedure was created by a joint venture between mining company LKAB, steelmaker SSAB, and energy company Vattenfall.

Potential impact on global emissions

Considering that steelmaking contributes 7% of global yearly emissions, I believe there’s great potential for fossil-free steel. Research from the Carbon Brief, cited by Forbes, puts that number at 9% of global emissions from 553 conventional steel plants, meaning fossil-free steel could make a serious dent in total transport pollution.

LKAB President and CEO Jan Moström notes that fossil-free steel “is a crucial milestone and an important step towards creating a completely fossil-free value chain from mine to finished steel.”

Currently, there’s evidence that fossil-free steel is comparable to traditionally-made types in all respects, including strength and durability. SSAB delivered the first shipment of the green steel to Swedish automotive company Volvo which has in turn unveiled the world’s first fossil-free steel vehicle – a mining load carrier.

Considering that the International Energy Association forecasts global steel production to grow by 33% by 2050, this new innovation may be significant in the race to net-zero.

However, as I see it, there are still a few rough spots to work out. SSAB says their steel won’t be ready for industrial-scale use until 2026 at the earliest. In addition, price will be a significant concern as fossil-free steel production costs an estimated 30% more than conventional steelmaking. Even though fossil-free steel is more energy-efficient, needing 41% less energy than traditional steel, the technology will need to become cheaper before mainstream adoption.

Nevertheless, fossil-free steel is a welcome development in both the transport and steelmaking industries.

Although Buy Now Pay Later (BNPL) emerged before the pandemic, the attractive e-commerce payment option is soaring on post-COVID adoption.

BNPL provides short-term financing to online shoppers, allowing them to split the cost of purchases into affordable installments. For most shoppers, BNPL is a comfortable payment alternative since it lets them enjoy goods instantly while experiencing the benefit of spread-out, potentially interest-free payments.

While the trend began with innovative Fintech companies, global payment processors and banks like MasterCard and Goldman Sachs have taken notice. Consequently, BNPL is on an explosive growth trajectory, and estimates are that spending using the service will reach nearly $700 billion by 2025.

But what is behind the BNPL rise and how does it work?

How BNPL works

As the name suggests, BNPL lets buyers purchase goods, typically online, and pay later either in a lump sum or installments. As I see it, the process involves three parties: the merchant, the customer, and the BNPL provider.

Between the customer and the BNPL provider, the agreement is that goods will be bought and paid for at a later date (a grace period of sorts), usually within a few weeks or months of the purchase. During this grace period, the buyer can pay installments or the full debt at no interest.

But if the buyer does not make payment within the agreed period, interest may begin to run. Likewise, if the buyer misses an installment, they may be liable to pay late fees in addition to the outstanding installment.

Between the merchant and the BNPL provider, the agreement is that goods bought will be paid for immediately by the BNPL provider. This way, the merchant need not wait potentially several months to receive full payment and can enjoy optimal liquidity. In exchange, the merchant agrees to pay the BNPL provider a percentage of the sale price (between 2-8%) for the service rendered.

Due to the fact that BNPL provides ease and convenience for both buyers and sellers, the payment trend has secured wide approval. Some of the major BNPL providers globally include firms like Affirm, Ant Financial, Afterpay, Klarna, Zilch, Flava, MasterCard, Visa, and PayPal.

Rapid spread of BNPL

As described by e-commerce platform VTEX, BNPL is currently the “fastest growing way to pay in the developed world.” To underscore just how fast the payment trend has grown since COVID, one study reports that BNPL use quadrupled in 2020.

While the trend is highest amongst younger shoppers, the affordable payment option is popular amongst adults of all ages, according to the BBC. Compared to credit cards, users see BNPL as a simpler and more transparent alternative since it avoids the complex terminology and conditions associated with bank cards.

The top reason why people adopt the payment method is its ease and convenience. Because it is instantly available and potentially more forgiving than credit card loans, buyers feel more confident adopting this payment option.

Likewise, merchants possibly attract higher average order volumes because people tend to spend between 10-40% more with BPNL. They’re also more likely to overcome buyer hesitancy because BPNL encourages more convenient returns – it’s easier to test out a product when you don’t have to pay immediately. It also works wonders for cart abandonment. In fact, Afterpay reports that 69% of millennials and 42% of Gen Z shoppers are more likely to complete the buying journey when BNPL is offered.

However, despite its clear advantages to buyers and merchants, there are several unavoidable red flags with BPNL. In my opinion, unrestrained lending will only help perpetuate the ongoing global consumer credit debt crisis. Besides, consumers are naturally prone to underestimating risks and overestimating benefits, which might work to put many people in more debt than they expect.

While countries like the UK are already working on potential regulations for the sector, the question is: can they work fast enough to pass needed guidance before consumers get in way over their heads?