Decarbonising steel – a net-zero pathway
INDUSTRY NEWS
Steel production could be made with almost no carbon emissions via US $ 278 billion of extra investment by 2050 , according to a new report from research firm BloombergNEF . Hydrogen and recycling are likely to play a central role in reducing emissions from steel production . Steel is responsible for around 7 % of man-made greenhouse gas emissions every year and is one of the world ’ s most polluting industries .
Government and corporate net-zero commitments are pushing the steel industry to cancel out its emissions by 2050 . Efforts to decarbonise steel production are central to the net-zero aspirations of China , Japan , Korea and the European Union . The report ‘ Decarbonizing Steel : A Net-Zero Pathway ’, which was launched in time for the virtual BNEF Summit Shanghai , outlines the path to making profitable , low-emissions steel and describes how a combination of falling hydrogen costs , cheap clean power and increased recycling could reduce emissions to net zero , even while total output increases .
“ By 2050 , green hydrogen could be the cheapest production method for steel and capture 31 % of the market . Another 45 % could come from recycled material and the rest from a combination of older , coal-fired plants fitted with carbon capture systems and innovative processes using electricity to refine iron ore into iron and steel . This would be a dramatic shift in the type of furnaces and fuels used to produce steel ,” said the report .
Today , around 70 % of steel is made in coal-fired blast furnaces , with 25 % produced from scrap in electric furnaces and 5 % made in a newer , typically natural gas-fired process known as DRI , or direct reduced iron . Converting a significant portion of the fleet to hydrogen would require more DRI plants and more electric furnaces . Blast furnace production would fall to 18 % of capacity in this scenario .
Actions to consider
“ The steel industry cannot afford to wait for the 2040s to start its transition ,” said
Julia Attwood , head of sustainable materials at BNEF and lead author of the report . “ The next ten years could see a massive expansion of steel capacity to meet demand in growing economies , such as India . Today ’ s new plants are tomorrow ’ s retrofits . Commissioning natural gas-fired plants could set producers up to have some of the lowest-cost capacity by retrofitting them to burn hydrogen in the 2030s and 2040s . But continuing to build new coal-fired plants will leave producers with only bad options toward a net-zero future by 2050 .”
To achieve this transformation , said the report , there are five key actions for the sector to consider : boost the amount of steel that is recycled , particularly in China ; procure clean energy for electric furnaces ; design all new capacity to be hydrogen- or carbon capture-ready ; begin blending hydrogen in existing coal- and gas-based plants to lower the cost of green hydrogen ; and retrofit or close any remaining coal-fired capacity by 2050 .
Producing green steel from hydrogen and electric furnaces will require massive amounts of clean energy , and a shift to higher grades of iron ore . This could change where most steel is made or shake up the mining industry . Russia and Brazil both have access to high-quality iron ore reserves and to abundant clean power . Brazil is expected to have one of the lowest costs for hydrogen production by 2030 , according to research by BloombergNEF .
“ South Africa and India have good iron ore reserves and the potential to produce a large amount of low-cost clean power . The world ’ s largest iron ore producer , Australia , however , currently produces lower grade ores and could lose its number one place in the supply chain if it does not invest in equipment to upgrade its product . China will continue to play a pivotal role . Currently home to 57 % of the world ’ s steelmaking capacity , its path to lower emissions will set the direction for the industry , as a whole . The Chinese steel industry intends to focus first on increasing recycling and energy efficiency before adopting early-stage technologies such as hydrogen and carbon capture ,” said the analyst .
Disruption and opportunity
Kobad Bhavnagri , head of industrial decarbonisation at BNEF , said : “ The global steel industry is poised to begin a titanic pivot from coal to hydrogen . Green hydrogen is both the cheapest and most practical way to make green steel , once recycling levels are ramped up . This transition will cause both great disruption , and great opportunity . Companies and investors don ’ t yet appreciate the scale of the changes ahead .”
The support that policymakers provide for industrial decarbonisation could also be a deciding factor for steelmakers . Subsidies for key enabling technologies , such as the hydrogen and carbon capture tax credits in the U . S .’ s pending Build Back Better Bill , green steel procurement mandates for the public sector ( like the Industrial Deep Decarbonisation Initiative announced at COP26 ) or rising carbon prices ( like those in the EU ’ s Emissions Trading Scheme ) could all help green steel to compete with fossil fuelbased production .
BloombergNEF estimates that new clean capacity and retrofits for lower emissions will cost the steel industry an additional US $ 278 billion compared to businessas-usual capacity growth . This , it says , is a relatively modest figure , compared to the US $ 172 trillion estimated by BNEF to decarbonise the global energy sector . Most of the costs to make green steel come from operations , rather than capital costs . Reducing the cost of green hydrogen is therefore critical , and BNEF estimates that these should fall by more than 80 % by 2050 to under US $ 1 / kg in most parts of the world . “ Green recycling is also a cost-effective and immediate solution . Steel recycled using 100 % clean electricity would only require a 5 % premium to match costs for today ’ s recycled material . By 2050 , with lower clean power costs , this premium could shrink to less than 1 %,” concluded the analyst . n
. bloomberg . com / company
ISMR December 2021 / January 2022 | sheetmetalplus . com | 13