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The climate debate has sparked an interest for alternative steelmaking processes within the European steel industry. For the steel industry the Paris Agreement means it must undergo large-scale technological change. Public funding for research and demonstration projects has been successful in nurturing a variety of technology innovation projects, such as projects aiming to use renewable hydrogen in the direct reduction process, or to produce chemicals from steel off-gases via carbon capture and utilisation. If these technologies can be demonstrated successfully, their commercialisation will require further public support in the form of demand pull policy to create a market for these technologies in which they can mature and reach competitiveness. In respect of the large sums of public support required for the push and pull of climate-friendly steelmaking technologies, support decisions must be based on a project’s compatibility with climate goals and avoid carbon lock-in. The aim of this paper is thus to analyse the implications the Paris Agreement has for future investments in the EU steel industry. We do this by reviewing technological pathways and suggest a methodology to determine if investments are in line with climate goals. The methodology is based on the carbon footprint of steel and we review the main choices that have to be made in a life cycle analysis for alternative steelmaking processes. We conclude that the technological options to reach zero emissions by mid-century are limited. The early articulation of support for high-ambition investments has the potential to create stable long-term market expectations and form the basis of a demand pull for green steel. Our insights can inform policy makers to bring innovation policy in line with long-term climate goals.
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What is green steel? - Towards a strategic decision tool for decarbonising EU
steel
Author Names and Affiliation
V. Vogl, M. Åhman,
Department of Environmental and Energy Systems Studies, Lund University
Contact data
Valentin Vogl, Department of Environmental and Energy Systems Studies, Lund University, Box 118, 221 00 Lund,
Sweden, valentin.vogl@miljo.lth.se
Summary
The climate debate has sparked an interest for alternative steelmaking processes within the European steel
industry. For the steel industry the Paris Agreement means it must undergo large-scale technological change.
Public funding for research and demonstration projects has been successful in nurturing a variety of technology
innovation projects, such as projects aiming to use renewable hydrogen in the direct reduction process, or to
produce chemicals from steel off-gases via carbon capture and utilisation. If these technologies can be
demonstrated successfully, their commercialisation will require further public support in the form of demand pull
policy to create a market for these technologies in which they can mature and reach competitiveness.
In respect of the large sums of public support required for the push and pull of climate-friendly steelmaking
technologies, support decisions must be based on a project’s compatibility with climate goals and avoid carbon
lock-in. The aim of this paper is thus to analyse the implications the Paris Agreement has for future investments in
the EU steel industry. We do this by reviewing technological pathways and suggest a methodology to determine if
investments are in line with climate goals. The methodology is based on the carbon footprint of steel and we review
the main choices that have to be made in a life cycle analysis for alternative steelmaking processes. We conclude
that the technological options to reach zero emissions by mid-century are limited. The early articulation of support
for high-ambition investments has the potential to create stable long-term market expectations and form the basis
of a demand pull for green steel. Our insights can inform policy makers to bring innovation policy in line with long-
term climate goals.
Key Words
Climate policy, innovation, steel, Paris Agreement, deep decarbonisation, LCA
Introduction
The Paris Agreement on climate change in 2015
requires us to reduce global greenhouse gas
emissions to zero by 2050 to 2070 [1]. Based on the
common but differentiated responsibilities principle
(CBDR) enshrined in the climate convention
(UNFCCC) developed countries should pioneer this
process and reduce emissions faster than the global
average. The production of steel is one of the large
emitters globally and responsible for 5% of global
greenhouse gas emissions [2]. It is also one of the
economic sectors that are the hardest to
decarbonise, due to tough global competition, the
dependence of the production process on carbon,
and the need for new “breakthrough” technologies
with high abatement cost and long investment cycles.
In Europe a set of technologies have been identified
and a variety of research projects aims to develop
these breakthrough technologies. Most of these
projects follow one of two distinct strategies either
1
Carbon is an essential component of steel. With low-
carbon we mean low in emissions. Decarbonisation refers
to reducing emissions, not the carbon content in steel.
using renewable fuels (hydrogen, electricity,
biomass) or end-of-pipe capturing of CO2. The
successful commercialisation and diffusion of these
“low-carbon
1
” technologies for steel will require
significant public support, especially with regards to
the short time horizon the threat of climate change
mandates.
The prescribed climate policy solution for reducing
emissions has been the pricing of carbon on a “free”
carbon market. However, both the actual experiences
from the development of renewable energy [3-5] and
innovation theory [6, 7] strongly suggest that a
carbon price must be complemented with directed,
technology-specific support for creating an early
niche market for new innovative technologies. This is
especially true for steel companies, which stand
under strict global competition but are subject to
different climate regulations in the various countries
they operate in. Innovative and climate-neutral steel
comes with higher production cost compared to
business as usual and faces several other systemic
barriers such as a lack of infrastructure, weak trust in
long-term climate policy, technical uncertainties, and
immature market knowledge. Carbon pricing alone
cannot alleviate all of these disadvantages. An
effective technology policy thus contains both a
supply push and a demand pull [6, 8, 9].
In the EU, the emissions of CO2 in the steel sector is
primarily governed by the emission trading system
(EU ETS) that covers 45% of EU emissions and
includes both the power sector and all large industrial
installations. The EU ETS sets an emission cap that
declines down to -40 % by 2030 with an indicative
target of minus 80 95% by 2050. It is
complemented with several other policy instruments
in order to avoid the negative societal consequences
of a carbon price and to align with industrial policy
objectives. The most salient are the free allocation of
emission allowances to protect energy-intensive
industry from carbon leakage and various supply
push technology policies such assuch as the R&D
programme Horizon 2020 and ULCOS
2
. .
Up to 2010, the EU climate governance for steel was
focussed on short-term marginal reductions via
energy efficiency and protecting against carbon
leakage. This policy response was conserving
existing industrial structures rather than supporting
innovation and change [10]. However, since the
adoption of an indicative reduction target for 2050
[11] the focus of EU climate governance for the steel
industry has changed towards innovation and
technology support instead. The EU 2050 ambition
introduces a strict timeline of when steel production
has to be decarbonised in the EU. Recently, the
Commission has even adopted a more ambitious
target, which is more in line with the Paris Agreement
and aims at net-zero emissions by 2050 [12].
However, even if the basic policy framework is in
place including carbon pricing and ample funding for
both R&D and demonstration projects, what is still
missing is a demand pull policy for creating an early
niche market for climate-neutral steel. A stable
demand for green steel is crucial for lowering the
risks of the first large investments into breakthrough
technologies [8, 9].
The new 2050 ambition reduces the long-term
uncertainty and narrows down the technological
options to only a few capable of reaching net-zero
emissions. Effective business investment decisions
and public support for the steel industry needs to
support projects that are aligned with this target and
2
The EU recently also launched the Innovation Fund for
financing commercial-scale demonstration projects for
industry
must avoid inducing carbon lock-in [13]. The aim of
this study is thus to analyse the implications of a net-
zero 2050 target for future investments in the EU
steel industry. The methodology presented can be
used as a decision tool for strategic investment by
industry but also for defining what “green steel” is and
what should be supported by policy in order to be
compliant with climate targets. The methodology is
built on a life cycle perspective and connects the
2050 targets and the possible technical pathways for
the steel industry.
We start our article by summarising different
pathways the steel sector can take towards 2050. In
section 3, we outline a life cycle perspective that also
serves a long-term climate purpose. In section 4, we
design a robust and workable methodology and
decision tool that can be used to support climate-
compatible investments. Finally, we discuss the
potential contribution of the tool for both industry and
policy for creating a demand pull for green steel.
2. The steel transition in the EU
The European steel sector produced 168 million
tonnes of steel in 2017 and emitted 128 million
tonnes of CO2 [14, 15]. The blast furnace basic
oxygen furnace route accounts for 60% of steel and
the rest from recycling of scrap (67 million tonnes).
On top, there is one direct reduction plant in the EU.
Due to the saturation of demand the EU steel
demand is projected to be similar or slightly below
current levels in 2050 [16, 17]. However, scrap
3
availability will increase and may reach 136 Mt by
2050 [18]. Consequently, production volumes from
primary and secondary steelmaking might more than
reverse and secondary steelmaking might become
the new dominant production route by 2050. This
shift towards more secondary steel is not only due to
increased scrap availability but will also be driven by
EU circular economy policy. Following the trend of a
declining share of primary production in the EU,
several of European primary steelmaking sites would
be converted to secondary steelmaking, or that new
mini-mills open up and some integrated plants close.
However, primary steelmaking would still be
responsible for about 60 million tonnes CO2 in 2050
assuming with today’s production technologies and
the direct emissions from secondary steel would
amount to 7 million tonnes with current practice.
3
This includes also scrap from production and
manufacturing.
2.1 Anticipated pathways for steelmaking
The deep decarbonisation of steelmaking requires
the roll-out of several different strategies including
material efficiency, dematerialisation and maximised
recycling. Large potentials are yet untapped when it
comes to the materially efficient production and use
of steel [19, 20]. However, as long as global demand
for steel keeps increasing primary production will be
needed to supply additional primary steel to the
societal stock. The blast furnace is the largest
emission source in the steel value chain and further
efficiency potentials are small [21]. Net-zero
emissions means the steel industry must replace
current primary production processes, namely the
blast furnace route, with low-, or preferably zero-
emission production processes.
Production route
Emission
intensity
Relative
emissions vs. BF
BF[22]
1682
100%
NG-DR[23]
1020
61%
scrap EAF without
fossil fuels [22, 23]
<100
<6%
H-DR[24]
<100
<6%
Electrowinning
<100
<6%
BF CCS[25, 26]
673
40%
BF CCU
673 -1682
40-100%
BF Bio[27]
1009
60%
BF BioCCS[28]
<100
<6%
Table 1: The emission intensity of different
steelmaking technologies. Indirect emissions are
excluded and the emission backpack of scrap is
considered zero, as explained in section 3 (unit
[kgCO2eq / t steel]).
Table 1 lists the emission levels of possible steel
production processes according to the literature.
Keeping the blast furnace means that in order to
eliminate greenhouse gas emissions CCS must be
installed and a part of the coal injection needs to be
done with biogenic carbon with a net-zero carbon
footprint (BF CCS/CCU; BF Bio, BF BioCCS). In
theory it is possible to reach zero emission with a
blast furnace by using both biomass that can replace
up to 40% of coal use [27] and complementing this
with CCS on the major point sources. Direct
reduction with natural gas (NG-DR) complemented
with an EAF has a substantially smaller carbon
footprint compared to current blast furnaces. A zero
emission option for the direct reduction plant is to use
renewable hydrogen (H-DR). The only residual
emissions arise in the EAF due to the consumption of
graphite electrodes, as well as the use of lime and
natural gas. The mitigation of these emissions will
require some research into new electrode materials
and slag foaming, but the innovation challenge can
be regarded significantly smaller than the one for
primary steelmaking. Producing secondary steel from
scrap in an EAF is substantially less carbon intensive
if the indirect emission from the electricity is excluded
and if natural gas is replaced with a renewable heat
source. Another way of making iron is electrowinning,
which can be used to produce iron directly in an
electrolytic process and must be integrated with an
electric arc furnace for producing steel.
Electrowinning uses electricity and is thus another
option that could also reach zero emissions, but it
has yet to be demonstrated on full scale and in an
integrated production system. Currently, one pilot
plant is operated in Europe and one further project in
the US has entered the demonstration phase [29].
In Figure 1, we outline different paths that can lead
from the blast furnace route to different steelmaking
processes with low emissions. In a first step, the blast
furnace can be either complemented with carbon
capture or the site can be converted into an EAF mill.
A change from current production to fossil-free
steelmaking does not need to be a single big step-
change, but can be gradual through introducing
bridging technologies such as switching to arc
furnaces or natural gas direct reduction, or
alternatively CCU, top-gas recycling or injections of
biomass into the blast furnace. The range of possible
low-emission processes becomes narrower once an
investment in a bridging technology has been
undertaken, as this investment will create some path
dependency and make some later options more
suitable than others. Thus, it is likely this first
investment step will decide if the blast furnace shall
stay or go. In the case of scrap steelmaking,
operators have a larger flexibility later on as several
iron making processes can be combined with electric
arc furnaces. On the other hand, if a site invests in a
carbon capture facility, a later reorientation away
Figure 1: Technical emission reduction pathways for
primary steelmaking. Abbreviations: BF: blast furnace;
EAF: electric arc furnace; NG-DR: natural gas direct
reduction; CCU: carbon capture and utilisation; CCS:
carbon capture and storage; Bio: use of biomass; HBI:
hot-briquetted iron; H-DR: hydrogen direct reduction.
from the blast furnace becomes more difficult due to
sunk costs, infrastructure and the gained experience
with the process. Such a site will thus more probably
go on with CCS and use biomass.
3. Steel from a life cycle perspective
Different life cycle assessment (LCA) tools can be
used to assess the carbon footprint of steel
production. The Life Cycle Inventory (LCI) describes
the collection of data on emissions regarding their
source and forms the basis of a LCA. An LCI
database for several steel products has been
compiled by the World Steel Association [30]. LCA is
the interpretation of LCI data at a systemic level and
involves a number of choices on system boundaries
and the allocation of emissions to various parts of the
system. Thus, interpretations of the same LCI data
can result in very different LCAs.
Two principle streams of thought in LCA have
emerged the last 20 years: attributional or
consequential LCA [31]. Attributional LCA can be
seen as a book-keeping instrument where the actual
emission from a specific value chain is allocated to
end-user products. Consequential LCA, on the other
hand, interprets the consequences from a change in
a value chain or the emergence of a new value chain.
Consequential LCA is a forward-looking instrument
that is better used for strategic decision making (e.g.
comparing future investments). Below we discuss
three methodological issues that arise in determining
the carbon footprint of the alternative steelmaking
routes reviewed in section 2: indirect emissions from
electricity use, the emissions backpack of end-of-life
scrap, and how to calculate embodied emissions of
the CO2 used as a feedstock for the chemical
industry via CCU. Furthermore, we analyse how
suitable these approaches with regards to
incentivising a decarbonised and more circular steel
system.
3.1 Indirect emissions from electricity use
Attributional LCA considers the CO2 emissions from
electricity based upon actual emissions at the time of
analysis. In the methodology practiced by the World
Steel Association this is done by calculating
emissions from electricity use drawing on the grid
emission factor within the relevant region or country
[32]. Consequently, the location of a plant matters.
For the whole of EU, the grid factor was 296 grams
CO2 per kWh but with great variation across the
Member States. The current Polish grid factor is more
twice the EU average, whereas Sweden’s is close to
zero [33]. However, when the aim is to analyse
change, using attributional LCA will only provide a
static view.
A consequential LCA offers two main approaches to
analysing the changing electricity system: using the
short-term marginal production or the long-term
marginal production. The difference between these
two methods is vast. The short-term marginal effect
represents the immediate change in the system
where the response to an increasing load is based on
the margin with dispatchable electricity supply of high
OPEX/medium CAPEX power facilities. The way the
electricity market regime is designed and the way the
grid operates today, short-term marginal electricity
production is almost exclusively based on either coal
or natural gas with relatively high emission factors.
The short-term marginal view assumes that the
electricity system does not change (e.g. no new
investments), but that the increasing electricity is
merely an operational adaptation for keeping the
system in balance.
The short-term marginal electricity production is not
useful when analysing long-term trends where we
can assume that (i) the increase in electricity demand
will influence the system calling for more investments
and (ii) that the electricity system in itself changes
due to other factor such as the EU ETS and the EUs
climate and energy policies. Currently, the new
investments made in electricity production in the EU
are dominated by renewables such as wind and solar
PV. Taking a look at the added capacity during the
last years, one can get a glimpse on what the
dynamic effects of increasing electricity demand will
be. On top of this, taking into account climate policy
targets and the rapidly decreasing cost of renewables
vis-a-vis large-scale thermal power plants (with or
without CCS), the electricity system will become ever
more renewable and eventually be decarbonised by
2050, at latest. This suggests that a long-term
dynamic marginal production approach is more
suitable for analysing emissions from electricity
production in steelmaking. This approach then
assumes that all new investments in electricity will be
renewable.
3.2 Emissions from recycled steel and the
benefits of CCU
For end-of-life (EoL) scrap, the main question is if it
should carry an emission backpack” from previous
life cycles or not. In an attributional LCA, the
calculation of embodied emissions in recycled steel
follows either the “recycled content approach” (or cut-
off, 100-0) or the “avoided burden approach” (or EoL,
0-100). The recycled content approach allocates all
emissions to the primary steelmaking process (hence
“100-0”) whereas in the avoided burden approach,
the recycled scrap carries a part or the full burden
from earlier life cycles. The exact share and how to
calculate the footprint for a product system depends
on the method used [30]. The World Steel
Association’s “net-scrap” method builds on the
avoided burden approach. In the net-scrap method
the size of the burden depends if products increase
or deplete society’s scrap pool [30]. Taking a
consequential perspective on the net scrap approach
shows that if external parameters are held constant
the method incentivises products that “produce” (i.e.
make available) more scrap than is used in their
production. The net-scrap approach is thus not
suitable for incentivising increased use of recycled
content in products, or at least only up to a certain
limit. The recycled content approach gives incentives
to increased use of recycled content in steel
products, which fits better with circular economy
objectives and the barriers facing the increase of
secondary steel use. However, there is no optimal
allocation here and the recycled content approach
hinges on supplementary policies for better scrap
availability e.g. through ensuring the quality and
economy of good scrap.
The large amount of CO2 represents a major waste
stream in steelmaking. Instead of avoiding emitting
CO2 to the air altogether, CO2 can be captured and
used as a feedstock for further processing into
chemicals thus replacing fossil feedstock. The steel
and chemicals industries are collaborating in several
respective innovation projects in the EU (e.g.
Carbon2Chem, Steelanol, FresMe, Carbon4PUR
etc.). In a consequential LCA with a long-term focus,
understanding changes in the surrounding systems is
key and has several implications on how to best
allocate emissions for by-products and end-of-life
waste. In a transition to a low carbon economy, steel
will have several relevant by-products that need to be
accounted for but whose usefulness/value will
change due to climate policy over the years.
Following this logic the value of using waste CO2
from blast furnaces for replacing fossil feedstock will
decrease for the chemicals industry, as this industry
will face increasing pressure to use non-fossil
feedstock in the future. The same goes for e.g. waste
heat if the origin is a process operated with fossil or
non-CCS fuels.
4. A strategic decision making tool for
decarbonising steel
In this section, we outline a methodology to identify
steel production pathways that are in line with long-
term climate targets. The methodology is simple and
builds on the carbon intensities of various steel
production routes and an emission trajectory in line
with the goal of net-zero emissions by 2050. Special
consideration needs to be taken to the long
investment cycles in the steel industry of around 15
to 20 years between major rebuilding opportunities
that limit the flexibility of steel producers. Timing of
large investments is thus of great significance for the
decarbonisation of the steel industry. Endorsing the
wrong options will lock in carbon-intensive
investments for 15 to 20 years with the risk of sites
being prematurely closed as they cannot meet future
climate requirements and face high carbon costs or
might lose their social license to operate.
As we showed in the previous section, calculating the
carbon footprint from electricity, the scrap use and
the use of CO2 as a feedstock can be done in several
ways from a life cycle perspective. For the purpose in
this paper, we adopt a consequential LCA
perspective where we assume that the surrounding
systems will both (i) decarbonise and (ii) substantially
increase recycling and material efficiency. Hereby,
we treat electricity as renewable, scrap as carrying
no backpack from previous cycles, and the benefits
from using fossil CO2 as feedstock as declining over
time.
In Figure 2, we illustrate the emission trajectory for
the carbon footprint of steel production that is in line
with the net-zero goal as proposed by the European
Commission. The starting point in 2020 is the current
EU ETS benchmark level, which reflects the LCI-data
for best performing installations for primary
steelmaking in the EU. Proceeding from this level the
threshold decreases linearly until it reaches zero in
2050. Steel production with a carbon footprint below
the limit in a certain year is in line with climate targets
(within the grey area). Natural gas direct reduction
thus represents a sufficient improvement from current
emission levels up to 2032, and a blast furnace with
CCS and savings of 60% is sufficient up to 2038.
Following our logic, steel from these production
routes should thus not be eligible for public support
after 2032 and 2038, respectively. Considering the
previous example of a BF CCS investment, the
technical operating space is strongly restricted by
taking the long investment cycles into account. For
example, assuming a 15-year lifetime for BF/CCS,
the last year to invest in this option is 2023.
The emission intensity of a new investment is not
necessarily constant over its whole lifetime. Existing
production routes can be improved gradually in order
to stay in line with the declining emission trajectory,
as shown in Figure 3. By introducing renewable
hydrogen or bio-based fuels the emissions
trajectories can be bent downwards. Blending in
hydrogen can replace natural gas in the direct
reduction process [34], a strategy which for example
the SALCOS project is set out to pursue.
Alternatively, a higher share of scrap can be used in
EAFs, which would also reduce the emissions per
tonne of steel (cf. [24]). Alternatively, up to 40% of
biomass might be injected into the blast furnace,
which could be phased in over time but would
depend on the availability of large amounts of
sustainably sourced bio-energy [28]. Natural gas
could also be incrementally replaced by renewable
hydrogen or bio-methane, respectively. For carbon
capture and utilisation (CCU) on the blast furnace,
our analysis shows a contrary long-term trend, which
we schematically indicate in Figure 3. Initially, off-
gases will replace virgin fossil feedstock in the
chemicals sector and thus have a climate benefit. In
the long-run, however, the chemicals sector too faces
increasing pressure to meet climate targets and
cannot rely on recycled fossil feedstock from steel
production but will have to inherently cleaner
feedstock such as biomass or hydrogen combined
with biogenic CO2.
Notably, we start our analysis from the emission
levels of the EU ETS benchmarks for hot metal,
which relate to primary steelmaking. This implies that
we regard steel made from scrap in EAFs as green
up to 2049. This is justified by the increasing
importance of the secondary production route in
Europe as pointed out in many scenarios. However,
zero-emission recycling in line with the Paris
agreement in 2050 would eventually also require
technical solutions for emissions arising from both the
EAF electrode consumption and the lime calcination
with a fuel switch from natural gas to either bio-based
fuels or electricity.
4.1 Climate-proof steel investments
Climate targets will be met most effectively if the
path to zero emissions is considered already in the
planning stage of decarbonisation projects. If this is
not the case then investments risk leading to
technological dead ends and carbon lock-in. Instead,
project developers should engrain the zero-emission
into project plans logic up-front. First, investments
should make sure to be below the suggested
trajectory for their whole lifetime. Second, it must be
possible to increase ambition after the end of the life
of a decarbonisation project. Public support for such
projects could be made contingent on these
requirements. This could be done by including a
“stress test” into the grant application process to
check if projects are aligned with climate targets. The
basis for such a test is a transparent communication
of the mitigation potential of different projects, which
allows for comparisons between contenders.
The outlined logic in this paper is useful to decision
makers in industry in the planning and evaluation of
investment projects. Most importantly, the emission
trajectory in Figure 2 and 3 suggests that when the
next investment window arises, business-as-usual as
in solely relining the blast furnace puts the investment
at risk of being prematurely closed for not meeting
climate targets. Instead, steelmakers should factor in
the emissions limits sketched out here into their
investment projects, which effectively limits their
decision space. Decarbonising the sector within 30
years renders unambitious and inflexible projects
irrelevant. CCS projects reducing emissions by 50%
versus the ETS benchmark are not in line with
climate targets without partially substituting coal with
biomass. The same goes for natural gas DRI
projects, which should contain provisions for blending
in increasing shares of renewable hydrogen or scrap.
A switch from primary to secondary steelmaking
would reduce a plant’s climate impact tremendously.
While the potential for this switch is limited, the
indicated increase in secondary steelmaking in the
Figure 3: Bending emissions trajectories by injecting
hydrogen (direct reduction) or biomass (blast furnace),
and declining benefits from CCU over time.
future suggests that this could be a viable path for
some companies.
4.2 Demand-pull for green steel
The required rapid decarbonisation requires public
support via both supply-push and demand-pull policy
interventions. While significant support is provided in
the EU via programmes such as H2020 and the
upcoming Innovation Fund, the policy-driven creation
of markets for green materials has not yet received
significant attention. For renewables, the large cost
reductions of wind and solar power were a
consequence of strong policy intervention via
technology-specific feed-in tariffs and renewable
portfolio standards, which have been implemented on
top of the carbon price. This apparent success of
demand-pull policy in renewables along with ample
evidence for the importance of a demand pull from
innovation literature calls for the creation of green
markets to accelerate the steel transition. However,
steel is sold on a complex market with many qualities
and variations so comparing with the success of
demand pull policies for renewable electricity is
difficult. The point of intervention in the steel product
value chain needs to be carefully analysed to de-risk
investment by creating a first mover steel market.
Taking inspiration from other sectors reveals that
several policy instruments for demand pull policy
already exist. An early voluntary policy such as
voluntary labels or certificates can prepare the
ground for more elaborate schemes later on, such as
granting feed-in premiums or tendering on a project-
basis. Green public procurement targets on the basis
of the presented carbon footprint trajectory could
increase the use of green steel in infrastructure and
buildings. Standards could be employed to regulate
the maximum allowed footprint of vehicles or
buildings. In order to endorse green products, a
distinction between green and non-green has to be
made. The method presented in this article can be
useful to reach this distinction. Existing footprint
accounting schemes such as environmental product
declarations (EPD) can be useful and build the basis
of a demand pull policy for green steel. Although in
theory it would be preferential to have a universal
product footprint system, the short time left to act on
climate change calls for a pragmatic, simple-to-use
scheme.
5. Conclusions
Climate change requires a fast-paced transformation
of the global steel industry. In Europe, a recently
proposed target of net-zero emissions in 2050 leaves
us with 30 years to fully decarbonise the sector. The
role of governments and the European Union is not
bound to handing out research funding, but must
include providing directionality, nurturing early green
markets and phasing-out fossil industries. In order to
transform heavy industry, thinking needs to move
away from comparing breakthrough technologies
towards analysing pathways and stepwise changes
that take into account industry characteristics.
In this paper we sketch a methodology that can be
used to evaluate if a decarbonisation project is in line
with the 2050 target. For the steel industry, the timing
of new investments need to take into consideration
the long investment cycles and the declining
emission trajectory. The proposed method is simple
and builds on a linear trajectory, pointing from current
best performers towards zero emissions by 2050. A
life cycle perspective is used for determining whether
a steel process is below the threshold or not. We use
a consequential LCA approach that builds on existing
LCIs with minimal allocation and “gate-to-gate”
system boundaries. This makes the calculation
simple, understandable and puts the focus on the
major emitters in the steel value chain.
Drawing on the available technical options for
decarbonising steel, some robust observations can
be made. The short time horizon and the long
investment cycles of the industry restrict the available
technological options. For example, if a project has a
lifetime of 15 years, it has to bring about an emission
reduction of at least 50% compared to current
emission levels. At their respective next investments
windows a first step away from conventional blast
furnace steelmaking must be made. Due to the ever
increasing role of scrap in Europe, not all of today’s
primary production will be needed in 2050. Above all,
public support should go to projects that are in line
with climate targets.
The challenge for industry is large and risks are high,
which suggests that large-scale public support will be
necessary to decarbonise the sector. Policy makers
can draw upon the presented method to determine
which projects to support to avoid carbon lock-in and
avoid putting climate targets at risk. Furthermore,
demand pull policy for the steel sector can draw on
the distinction between green and non-green steel
made in this paper. The creation of markets where a
green premium can be earned can create additional
incentive for steel companies to invest in alternative
steelmaking technologies.
Abbreviations
RD&D
research, development & demonstration
CBDR
common but differentiated responsibilities
UNFCCC
United Nations Framework Convention on
Climate Change
ETS
emissions trading system
BF/BOF
blast furnace/ basic oxygen furnace
EAF
electric arc furnace
NG-DR
natural gas direct reduction
H-DR
hydrogen direct reduction
CCS
carbon capture and storage
CCU
carbon capture and utilisation
LCI
lyfe cycle inventory
LCA
life cycle assessment
IPCC
Intergovernmental Panel on Climate
Change
PEF
product environmental footprint
EPD
environmental product declaration
CAPEX
capital expenditures
OPEX
operational expenditures
DRI
direct reduced iron
ETS
emissions trading system
EoL
end of life
EPD
environmental product declaration
Acknowledgments
Our work was supported by the Swedish Energy
Agency under the HYBRIT-RP1 project and the
European Commission under H2020 Project 730053
REINVENT.
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