Steelmaking to be mainly primary-based beyond 2050 due to insufficient scrap: NZSPMP
Most steel will still be made from primary raw materials including iron ore and metallurgical coal beyond 2050 because of limited supplies of ferrous scrap, according to information presented July 28 by the Net-Zero Steel Pathway Methodology Project, or NZSPMP, a sectoral grouping.
We “can’t rely on scrap to decarbonise steelmaking; iron ore (primary) based steelmaking will remain critical beyond 2050 … steel production from scrap will only satisfy about 45% of future demand due to limited scrap availability,” Javier Bonaplata of steelmaker ArcelorMittal said on a NZSPMP webinar.
This means that the steel sector’s decarbonization targets and budgets should be split into two, between iron ore-based (primary steel) production and scrap-based (secondary steel) production which are quite different in terms of their decarbonization needs, Bonaplata said.
Setting different carbon intensity targets and decarbonization budgets for primary and secondary steelmaking is the first recommendation made in the NZSPMP’s report, launched this week, he said.
According to data presented by Bonaplata, scrap-based steelmaking accounts for 0.3 mt CO2 in Scope 2 emissions and 0.04 mt CO2 in Scope 1 emissions per metric ton of steel produced, making it “basically carbon neutral steel” if it also uses clean energy sources.
This compares very favorably to iron ore-based steelmaking, which produces between 1.4 and 2.2 mt CO2 in Scope 1 and 2 emissions combined, per mt of steel produced, he said.
Currently scrap-based steelmaking accounts for just over 30% of global steel production.
Fifteen international steelmakers including ArcelorMittal, Tata Steel, GFG Alliance, Bluescope Steel, Nippon Steel, POSCO, Severstal, the Brussels-based World Steel Association and German steel association WV Stahl have participated in the NZSPMP’s final report and recommendations for decarbonization. ResponsibleSteel, a steel benchmarking organization is managing NZSPMP, the organization’s representative Matthew Wenban-Smith said on the webinar.
According to NZSPMP, so far only limited Science Based Targets, or SBT, have been developed for the steel sector’s decarbonization process, even though the sector accounts for 7-9% of total global carbon emissions, and for this reason NZSPMP has established its set of recommendations.
Adjustments to the steel sector carbon budget will be needed to accommodate specific product families with diverging emissions profile, such as stainless steel, Bonaplata said.
Annie Heaton, also of ArcelorMittal, said that electric arc furnace-based steelmakers may tend to have a relatively high amount of Scope 3 emissions compared to their Scope 1 and 2 emissions but that the steel industry does not currently have guidance on how to quantify its Scope 3 emissions, unlike downstream sectors such as the automotive sector.
NZSPMP is therefore proposing that an SBT be established not only for crude steel production emissions but also for downstream steel product processing emissions, Heaton said.
Another recommendation is to establish the greenhouse gas reduction that can be achieved by using co-products made by the steel industry, said Pete Hodgson of Tata Steel on the webinar.
Co-products may include chemicals, dust and sludge, process gases, emulsions and used oils, carbon capture and utilisation products, heat and electricity and slag, he said.
The cost of co-products emissions could potentially be shared between the co-products producer and their end-users, Hodgson said.
State aid seen with important role
Liberty Steel UK’s Ed Heath-Whyte noted on the webinar that the steel sector has a long investment cycle, of approximately 25 years to 40 years, and because there has been rapid growth in production capacity in China since 2000, there is currently a low average asset age of approximately 13 years.
Due to the capital-intensive nature of the industry and potential current difficulties in investing, state aid is “very important in ensuring we can quickly move to a low-carbon future,” he said.
State aid may vary from country to country depending on national priorities, and there are rules in place in the World Trade Organization and at national and regional levels to determine what is an acceptable level of support that can be provided by the state, he said.