IEAGHG INDUSTRY CCS WORKSHOP
Christopher Beauman
European Bank for Reconstruction and Development
9th November 2011
Challenges and Opportunities of CO2 Capture and Storage in the Iron and Steel Industry:
Understanding the Overall Perspective
CARBON CAPTURE AND STORAGE IN INDUSTRIAL APPLICATIONS
The additional investment needs for CCS over the 2010 to 2050 period are about USD 882 billion; total additional
costs are over USD 3 trillion.
Abatement costs range most widely between and within sectors
Source: IEA/UNIDO “Technology Roadmap, Carbon Capture & Storage in Industrial Applications (September 2011)
22 SITES OVER 2.0mt CO2 2008
13.5
11.3
10.7
8.96
7.6
6.9
6.9
6.8
6.45
6.4
6.4
6.2
5.5
5.4
4.6
4.5
4.4
4.2
4.15
3.2
2.3
2
TKS Duisberg/HKM Duisenberg
AM Dunquerque
Riva Taranto
USSteel Kosice
AM Galati
Tata Port Talbot
Tata Scunthorpe
AM Poland (inc. coke ovens)
AM Fos
Tata Ijmuiden
AM Ostrava
Teeside (now SSI)
Dillinger
AM Espana
VoestAlpine Linz (inc. coke ovens)
AM Gent
Rauturuuki
Salzgitter Glocke
AM Sollac Lorraine
Lucchini Piombino
SSAB Oxelosund
AM Bremen
m t C O 2 (T O T A L: 1 3 8.3)
Derived from EU CITL
Total Group Mt CO2
ArcelorMittal 57.7
Tata 20.2 (ex-Teesside SSI)
9
15
2
6
7
18
19 12
10
5
1
22 21
13
8
20
3
4
14
17
16
11
EU Locations
1 BREMEN
2 OXELOSUND
3 PIOBINO LIVORNO
4 SOLLAC LORRAINE
5 SALZGITTER GLOCKE
6 RAUTURUUKI
7 AM GENT
8 VOESTALPINE LINZ
9 AM ESPANA
10 DILLNGER
11 TEESIDE
12 AM OSTRAVA
13 TATA IJMUIDEN
14 AM FOS
15 AM POLAND
16 TATA SCUNTHORPE
17 TATA PORT TALBOT
18 AM GALATI
19 US STEEL KOSICE
20 RIVA TARANTO
21 AM DUNQUERQUE
22 TKS DUISBERG/HKM DUISBERG
GLOBAL COST CURVE WORLD STEEL DYNAMICS - 2011
Source: World Steel Dynamics, October 2011
ARCELOR MITTAL COMPETITIVE POSITION - 2010
Source: World Steel Dynamics (WSD) Structural Cost Curve (2010)
THE STEEL SECTOR Share Price Performance
(year to 4th November 2011)
0
50
100
150
200
250
300
350
04/1
1/20
10
04/1
2/20
10
04/0
1/20
11
04/0
2/20
11
04/0
3/20
11
04/0
4/20
11
04/0
5/20
11
04/0
6/20
11
04/0
7/20
11
04/0
8/20
11
04/0
9/20
11
04/1
0/20
11
04/1
1/20
11
BWIRON Index PX_LAST
Source: BLOOMBERG
THE EUROPEAN MARGIN SQUEEZE ARCELORMITTAL 2011 (9 months)
16
42
66
71
70
85
106
111
0 20 40 60 80 100 120
EBITDA pt $ Operating Income pt $
Flat Carbon Americas (includes Brazil, NAFTA)
AACIS (includes Kazakhstan, Ukraine, South Africa)
Long Carbon Americas and Europe (includes Brazil, NAFTA) Flat Carbon Europe
before US$4 pt closure costs
ADDRESSING THE MARGIN CHALLENGE IN EU
Asset Optimisation (ArcelorMittal)
Full utilisation of lowest cost plants
Focus on automotive (30% of AM LCE)
Long-Term Relocation (Voestalpine)
“Commodity grade(s)…likely to move to regions such as Russia, Ukraine, Turkey”
“Europe has to refocus on top, top quality”
PIG IRON PRODUCTION (2010) (mt)
590
94.5 82.247.9 38.6 35 30 27.3 26.8
0
100
200
300
400
500
600
China EU Japan Russia India S.Korea Brazil Ukraine US
TOTAL WORLD PIG IRON PRODUCTION 1,025mt
Source: WSA
EU EXPORT OF GOODS - 2009
41
54
75
90
141
202
210
39
110
111
113
116
161
Textiles & Clothing
Iron & Steel
Power generating machinery
Electrical machinery
Office & telecom equipment
Agriculture (inc. food)
Pharmaceuticals
Other semi manufactures
Fuels & Mining
Other manufactures
Chemicals, other than Pharmaceuticals
Transport equipment (incl. automotives)
Non-electrical machinery
Steel Non-Steel
US$ billion
Source WTO Trade Statistics
TACKLING CARBON LEAKAGE (UK Carbon Trust report 2010)*
Choose approach based on characteristics of sectors
for Steel:
* Transitional Free allowances
* Monitor potential leakage
* Work with other countries:
on mutual recognition of carbon leakage sectors and
on options for border levelling for specific steel products
* Objective to reflect full costs by 2020 by one of
- import levelling
- export adjustment by producer countries, or
- carbon-cost reflecting global sectoral agreement Source: by Michael Grubb and Thomas Counsell, cited in IEA/UNIDO 2011 report
STRATEGIC ISSUES
Investment Costs: financeability and profitability
Operating Costs: need for climate-related trade policy?
Implications for Location:
- Within EU: Clusters? North Sea?
- Outside EU: Challenge of lower cost locations for lower cost blast-furnace-based steels?
Challenge from DRI-based processes? (potential implications of lower-cost gas?)