Date: 2024-10-19 Page is: DBtxt003.php txt00025782 | |||||||||
STEEL
GREENER PRODUCTION POSSIBILITIES What It Would Take to Make Steelmaking Greener Source: Bloomberg Original article: https://www.bloomberg.com/news/articles/2023-06-20/why-steel-s-carbon-emissions-are-so-high-and-what-s-needed-to-lower-them Peter Burgess COMMENTARY I note that in this Bloomberg heading the active verb is 'would take' rather than 'will take' ... suggesting that the big decision makers are unlikely to actually do much to move the needle towards a more sustainable world! Peter Burgess | |||||||||
What It Would Take to Make Steelmaking Greener
Severstal PJSC Steel Mill as Omicron Ruffles Metals Market
Written by Lars Paulsson and Liz Ng ... with assistance by Joe Deaux June 20, 2023 at 10:25 AM EDT Steel is one of the world’s most vital commodities, and making it is a major cause of planet-warming carbon dioxide emissions. Demand for the alloy is growing as an expanding world population forces more investment in infrastructure and buildings. While the shift to lower-carbon technologies is under way in other sectors such as electricity generation and road transportation, steel still relies overwhelmingly on production techniques devised more than a century ago. So a race is on to develop “green steel” before environmental taxes and tighter pollution rules render much of the industry obsolete. 1. How big is the challenge? The steel industry accounts for about 7% of global carbon emissions. Conventional steelmaking belches carbon dioxide twice: first when coal is heated to create coke, then again when the coke is burned to melt iron ore in furnaces where temperatures can reach above 2000C. Global demand for steel is poised to grow by 20% by 2050 from present levels, according to a forecast by the World Steel Association. Decarbonizing the ferrous industry — which includes construction and engineering steel as well as cast and wrought iron — by midcentury will require an estimated $1.4 trillion of investment, according to consulting firm Wood Mackenzie Ltd. 2. What is green steel? There’s no real difference in the product itself compared with conventional steel. It’s the way it’s manufactured that defines how green, or clean, it is. The industry is experimenting with several newer techniques, all of which are at an early stage of development. One of the most promising involves replacing coal with green hydrogen made using renewable power. Biomass — material derived from plants and animals — is also being tested as an alternative fuel. Steelmakers see recycling as a further avenue to lowering emissions, as melting scrap metal in an electric arc furnace requires less energy than making new steel from ore. Emissions can be lowered further if the electricity comes from renewable sources. However, the on-site electric arc process still generates localized carbon emissions which can only be avoided through heavy investment in carbon-capture technology. 3. What are the largest obstacles? First there’s the massive cost of rebuilding a vast, established industry from the bottom up, as manufacturers are only likely to invest if they can make a decent return. In other words, steel companies, and the banks that would finance these upgrades, need to be confident that green steel will sell for a big enough premium over regular steel to ensure the enterprise is a profitable one. While many old-fashioned coal-based steelmakers in Europe and Asia have sketched out plans for a shift to green steel, their US counterparts have yet to come up with serious proposals. Japan’s biggest steelmaker, Nippon Steel Corp., has asked the government to provide subsidies to help pay for its green shift. China’s government has said the country’s steel industry will reach peak carbon emissions by 2030 and net zero by 2060. Making the World's First Fossil-Free Steel WATCH: A venture in Sweden is making the world’s first fossil-free steel. Bloomberg’s Lars Paulsson reports. https://www.bloomberg.com/news/videos/2023-10-30/netanyahu-under-pressure-over-deleted-social-media-post 4. Who is working on it? Several large steelmakers have begun steps to green their output or set targets to stop using fossil fuels in the next decade or further out, with more companies coming on board each year. Here’s a snapshot of what the industry is doing:
SSAB’s product commands a premium of about €300 per ton, or about 20-30%, over regular steel, according to BloombergNEF. The price differential could narrow as greener technologies are adopted more widely and economies of scale come into play. The benefit for buyers is an opportunity to decarbonize their own supply chains, and SSAB has said its customers are already willing to pay the current premium. End-consumers may see little difference overall. BNEF estimated that the price of a high-value end product would grow by only about 1% with the switch to green steel, making it “well affordable” for the automotive industry, for example. In Europe, the average person indirectly spends 200 euros ($231) a year on steel, and using low-carbon methods would add 60 euros, consultancy McKinsey & Co. has said. 6. What are governments doing to help? Carbon pricing — which imposes a cost on greenhouse gas emissions — has helped to prod manufacturers to go green. More recent policies include a European Union mechanism that imposes a tax on products imported from countries with more lax carbon-emissions requirements, helping to ensure that overseas producers can’t gain a competitive advantage by investing less than their European rivals in cleaner technologies. In the US, President Joe Biden’s Inflation Reduction Act includes billions of dollars in investment to decarbonize the domestic steel industry, though it’s not yet clear how the money will be spent. The Reference Shelf
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