Energy Technology Perspectives for the Iron and Steel Industry

Eric Masanet, Head, Energy Demand Technology Unit

World Steel 50, Dubai, United Arab Emirates, 10-Oct-2016

© IEA 2016

• First clear signs of decoupling of CO2 emissions and GDP Global energy-related CO2 emissions remained flat in 2015 for

the second year in a row • Unprecedented cuts in upstream oil and gas investments,

and shifts to investments in low carbon and energy efficiency Renewable power capacity at record high with over 150 GW

installed in 2015 Rapid decreases in the costs of solar PV and wind

• Paris Agreement provided a historic push for clean energy New goals put forward to limit long-term global temperature

rise to “well below 2 degrees Celsius” Growing recognition that greater innovation is essential to meet

ambitious climate goals

Context

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The carbon intensity of the global economy can be cut by two-thirds through a diversified energy technology mix

Contribution of technology area to global cumulative CO2 reductions

The scale of the challenge

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5

10

15

20

25

30

35

40

45

2013 2020 2030 2040 2050

GtCO

2 Renewables 32%

Energy efficiency 32%

Fuel switching 10%

Nuclear 11%

CCS 15%2DS

4DS

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Other renewable power

Buildings

Nuclear

Transport

Appliances and lighting Energy storage

Industry

Biofuels Carbon capture and storage

More efficient coal-fired power

Electric vehicles Solar PV and onshore wind

Technology Status today against 2DS targets

●Not on track ●Accelerated improvement needed ●On track

Global clean energy deployment is still overall behind what is required to meet the 2°C goal, but recent progress on electric vehicles, solar PV and wind is promising

Global progress in clean energy needs to accelerate

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Mission Innovation

Leaders of 20 countries representing: 67% of global greenhouse gas emissions 70% of global GDP 80% of global clean energy R&D investments

Each doubling its clean energy R&D investments over next 5 years Complemented by the private sector Breakthrough Energy Coalition

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World Energy Investment: a new annual report that measures energy investment and implications

© OECD/IEA 2015

Mtoe

-300

0

300

600

900

1 200

Demand growth led by Asia

By 2040, India’s energy demand closes in on that of the United States, even though demand per capita remains 40% below the world average

European Union

United States

Japan Latin America

Middle East

Southeast Asia

Africa China India

Change in energy demand in selected regions, 2014-2040

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Primary energy demand growth

Primary energy demand by fuel in the New Policies Scenario

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Power is leading the transformation of the energy system

Global electricity generation by source

Driven by continued policy support, renewables account for half of additional global generation, overtaking coal around 2030 to become the largest power source

3 000 12 000 15 000 TWh

Change to 2040

2014 Renewables

Coal

Gas

Nuclear

Oil

Hydro

Wind

Solar

Other renewables

Of which:

6 000 9 000

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The 2DS requires significant carbon emissions reductions to be achieved in all end-use and transformation sectors.

Industry’s critical role

Global CO2 reductions between the 6DS and 2DS by sector

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20

30

40

50

60

2013 2020 2025 2030 2035 2040 2045 2050

GtC

O2

Other transformation6%

Buildings 14%

Transport 18%

Industry 23%

Power generation39%

6DS

2DS

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Iron and steel associated with the largest reduction in direct emissions, but CO2 emissions and energy use must be decoupled

The role of iron and steel

Direct industrial CO2 emissions and final energy reductions in the 2DS compared with the 6DS

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2

4

6

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2013 2020 2030 2040 2050

GtC

O2

CO2 emissions

Cement Iron and steel Pulp and paperAluminium Chemicals and petrochemicals Other industries

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50

100

150

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2013 2020 2030 2040 2050

EJ

Final energy

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Main innovative options for low-carbon steel Upgraded smelting reduction (SR). Maximises the CO2 content of the off-gases through

pure oxygen operation, making CO2 capture more straightforward. A 90-day pilot plant trial is planned for 2016. Avoids the need for coke or sinter.

Oxy blast furnace and top gas recycle: The CO2 content of the top gas is raised by replacing the air in the blast furnace with oxygen and recycling the top gas. Lowers coke requirements.

Coke oven gas (COG) reforming: Increasing the hydrogen concentration of COG through reforming tar to reduce net energy consumption. Through integration with oxy blast furnaces, CO2 capture can be added.

An upgraded DRI process that reuses off-gases from the shaft as a reducing agent after CO2 capture. Avoids the need for coke or sinter.

CO2 capture applied to on-site utilities and general combustion equipment. Addition of a post-combustion CO2 capture unit to: hot stoves, steam generation plant, coke oven batteries and/or lime kiln.

…Each of these options requires CCS for low-carbon production

Plus in a longer-term, molten oxide electrolysis relying on renewable electricity

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Progress with CO2 capture in the iron and steel sector

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Globally, 6% of the final energy use in iron&steel making could be technically recovered

2 EJ (or 1.3 GJ/t crude steel) could be technically recovered globally in I&S BOF off-gas recovery is the greatest overall energy savings opportunity in

the analysis Around 74% of the IEH recovery potential in I&S is based on non-OECD

countries

NOTE: Only medium and high temperature IEH sources (>100 degC) and commercial recovery technologies included. SOURCE: Energy Technology Perspectives 2016

Global excess heat recovery technical potential – Iron & Steel

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0.8

1.2

1.6

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0.4

0.6

0.8

BOF off-gasrecovery

EAF off-gas thermalrecovery

CDQ

GJ/t

cru

de s

teel

EJ

China India Other Asia Africa and Middle East Non-OECD Latin America Other non-OECD OECD Specific EH recovery potential

0.00

0.05

0.10

0.15

0.00

0.04

0.08

0.12

0.16

Sinter cooler exhaustthermal recovery

GJ/t

cru

de s

teel

EJ

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Sustainable transport systems: implications for materials demand

Urban transport investments

In the 2DS, by 2050 one billion cars are electric vehicles while public transport travel activity more than doubles

0

1

2

3

4

5

6

7

8

4DS 2DS

2015 2050

USD

tril

lion

Internal combustion engine

Electrified

Parking and road

Metro and light rail

Infrastructure

Vehicles

© OECD/IEA 2013

Energy technology roadmaps

Overview of IEA roadmap process

• Engage cross-section of stakeholders 1. Identify a baseline:

– Where is technology today?

2. Establish a vision: – What is the deployment path needed to achieve 2050 goals?

3. Identify technical, regulatory, policy, financial, public acceptance barriers – What are the near term action items?

4. Develop implementation action items for stakeholders

© OECD/IEA 2012

Energy technology roadmaps

IEA roadmaps: a living library

2009 2011 2010 2012 2013 2014 2015

32 publications, 21 different technology areas

© IEA 2016

23% 28%

11%

3%

1% 4% 2% 5% 4%

1% 1%

2%

15%

Final industrial energy use , 2014 (154 EJ) Iron and steel

Chemical and petrochemical

Non-metallic minerals

Non-ferrous metals

Transport equipment

Machinery

Mining and quarrying

Food and tobacco

Paper, pulp and print

Wood and wood products

Construction

Textile and leather

Non-specified (industry)

Global, 2009

SOURCE: IEA Energy Balance. Note: Iron & Steel includes blast furnaces and coke ovens. Chemicals & Petrochemicals includes petrochemicals feedstocks.

Global, 2013

Regional, 2013 CEMENT

CHEMICALS

IRON & STEEL

Workshop 2Q2017?

A global iron and steel industry roadmap?

© IEA 2016

Conclusions

• The steel industry has reduced its energy consumption substantially and continues to do, but the marginal gains in existing processes are diminishing

• The close link between the steel industry and coal, makes integrated steel mills (and steel demand?) vulnerable to climate policy and pro-climate action (shareholders, investors etc.)

• The steel industry is not under immediate pressure to reduce emissions and innovative processes are under development

• Downside: they are over a decade from widespread adoption and they require integration of CO2 capture (which probably requires a CO2 storage business)

• Way forward (a roadmap for steel in a low carbon future): • Identify the benefits of innovative processes for environment and export reasons • Promote technology development projects to improve novel processes, e.g. more

pilots • Collaborate on other relevant R&D/projects: oxygen production, hydrogen

production, CO2 storage, enhanced oil recovery

© OECD/IEA 2016

Thank you