Circular economics in steel industry could reduce carbon emissions

06 December 2017 Consultancy.uk

As countries work to meet the demands of the Paris Agreement, they must look beyond the most obvious industries in order to reduce carbon output. According to a new report, increased steel recycling and focus on energy decarbonisation as well as emission control technologies are needed to decarbonise the steel industry's output, which continues to represent a sizable share of total global carbon emissions.

The Paris Agreement places a clear limit of 2.0 C, with a strong preference for 1.5 C, on global warming by the end of the century. To stay within the 1.5 C bound, considerable shifts need to be implemented in how energy is produced, as well as in how it is consumed. However, while the burning of fossil fuels is one aspect of the decarbonisation of the global economy in line with global level targets – other processes, such as those used to create steel and cement also generate carbon equivalent emissions, which need to be decarbonised as well.

A study based on data gathered by the Climate Action Tracker, an independent science-based assessment of global emissions reduction efforts, which is supported by Navigant company subsidiary Ecofys, has suggested circular economic principles could make a major impact on the steel industry. The report features three scenarios which would see a reduction in the carbon impact of the steel sector, in line with global targets. The research considers a broad approach, from improving key fuel processes, to a wider circular economic model for the respective industries.

Demand for steel, particularly in developing economies, has seen global production increase steadily, particularly in China as the economy rapidly expanded through, among other areas, investment in infrastructure. The increase in production has seen the impact of the industry on global emissions increase steeply, up from 1.3 Gt to 2.8 Gt over 1990-2015, or about 5% of global GHG emissions in 2012.

As it stands, there are two predominant ways to produce steel, the blast furnace-basic oxygen furnace (BF-BOF) route and the electric arc furnace (EAF) route. The former is used in around 70% of steel production, even while the latter’s energy consumption is around a third of the former. The EAF route, however, is dependent on scrap steel, which, given the growing demand for steel in China, saw the country’s production largely (96%) focused on blast-furnace production.

The firm’s analysis focused on two structurally different regions: the EU and China, which differ for reasons related to their respective maturity and, consequently, their access to scrap. The firm also developed three different models to map how the respective industry output of steel is able to change over the coming decade, including two that see decarbonisation.

Scenario A would see current trends continued, with only incremental efficiency improvements and increase in EAF steel production rates in line with scrap availability, albeit with a considerable fall in demand. Scenario B sees the same negative demand growth, but decarbonisation of electricity production and focused increases in energy efficiency. Finally, in scenario C, in which circular economic principals are used, the focus lies on the maximisation of scrap utilisation, as well as demand reduction and energy efficiency gains, and will therefore include the less polluting EAF procedure.

In the EU, the status quo scenario would see total emissions from scenario A fall slightly on the back of decreased demand – with total emissions hitting around 230 Mt CO2 eq per year by 2050. The scenario sees recycling of scrap increase slightly, to 44% from the current 39%. In scenario B, the EU benefits considerably from reductions in fossil energy intensity for the EAF process, as well as wider direct energy efficiency improvements, with total emissions in scenario B of around 180 Mt CO2 eq per year by 2050. Further increasing recycling in the EU to around 53% of total production could support a further reduction in emissions to around 150 Mt CO2 eq per year by 2050.

EU and China emission from steel

The growing economic power of China would see radically varying fortunes for steel production by 2050, under each plan. In scenario A, the current trend, as demand for the material tapers off, and scrap volumes increase to around 30% of total production, emissions would decrease to around 800 Mt CO2 eq per year. In scenario B, a similar level of scrap presides, but increased focus on energy efficiency and decarbonisation of energy supply create additional benefits. There would be a reduction in total sector emissions of up to 500 800 Mt CO2 eq per year. In the final scenario, the firm suggests a higher recycle rate of 45% for China, with a resultant emission profile of around 420 Mt CO2 eq per year.

In terms of cumulative outcomes from the different scenarios, the research points to considerable gains for a shift to scenario C. The authors write, “However, in cumulative terms, i.e. considering the sum of emissions in 2016 to 2050, this difference is 6% for the EU and 10% for China. Under Scenario C, emissions are further reduced; by 2050, steel sector emissions in the EU and China are 34% and 51% lower than Scenario 1. Cumulatively, this translates to reductions of 8% and 14%.”

In conclusion, the firm notes, “Why is it so difficult to get emissions to near-zero levels? In steelmaking, the most common method – the BF/BOF route – requires high-carbon coke as fuel. Recycling of scrap steel through the EAF route avoids large amounts of emissions associated with fossil fuel combustion, but scrap availability is limited, which will constrain the shift towards a circular steel sector.”

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