eurofer low carbon steel roadmap 2050
TRANSCRIPT
A Steel Roadmap for a Low Carbon Europe 2050
Dr.-Ing. Jean Theo Ghenda
Steel Institute VDEh
IEA Global Industry Dialogue and Expert Review Workshop
Paris, 7 October 2013
Agenda
2
1. Objectives and Phases of the project
2. Steel’s Contribution to a Low Carbon Europe 2050
2.1. Steel industry overview and technology development
2.2. Baselining
2.3. Technology assessment
2.4. Steel and Scrap forecast
2.5. Steels’own impact – Abatement scenarios for 2050
2.6. Steel as mitigation enabler
3. Steel Roadmap for a Low Carbon Europe 2050
3.1. CO2 intensity pathways up to 2050
3.2. Challenges for an adequate set of climate policies for steel
3.3. Policy recommendations
A Steel Roadmap for a Low Carbon Europe 2050
3
Respond to the Commission Roadmap with a sound and credible alternative in order to engage constructively with stakeholders
Assess the technical-economical options over the mid and long-term. Knowing what our sector can do and at which cost will enable companies to make informed investment decisions
Demonstrate that stack emissions are just one side of the problem: steel is a strategic and sustainable material which will be instrumental in achieving the EU’s climate and resource efficiency objectives
Objectives of the project
A Steel Roadmap for a Low Carbon Europe 2050
4
First phase: technical-economical assessment contracted to the Boston Consulting Group in collaboration with the Steel Institute VDEh: ‘Steel’s Contribution to a Low Carbon Europe 2050’
Second phase: ‘EUROFER Steel roadmap’ built on BCG/VDEh’s findings but scope broadened to
options for deeper cuts (HIsarna, Ulcored, electricity and hydrogen- based reduction,…)
main challenges of the various options
competitiveness issues
policy recommendations
Project Phases
Agenda
5
1. Objectives and Phases of the project
2. Steel’s Contribution to a Low Carbon Europe 2050
2.1. Steel industry overview and technology development
2.2. Baselining
2.3. Technology assessment
2.4. Steel and Scrap forecast
2.5. Steels’own impact – Abatement scenarios for 2050
2.6. Steel as mitigation enabler
3. Steel Roadmap for a Low Carbon Europe 2050
3.1. CO2 intensity pathways up to 2050
3.2. Challenges for an adequate set of climate policies for steel
3.3. Policy recommendations
Work divided in two workstreams
Workstream 2:Steel roadmap
low carbon Europe 2050
Workstream 1:Baselining and
technology assessment
2
1
Emission baselining
Techno- logy
profiles
Steel's own impact
Steel as mitigation enabler
Argumentation logic Content
Starting point for discussion: What has the steel industry achieved so far?
By how much can individual technologies reduce emissions and how much do they cost?
How can emissions be reduced until 2050 considering different technology scenarios?
CO2 balance: What role does steel play in other industries in enabling mitigation?
Baselining within defined system boundaries
Assessment of technologies based on abatement potential, costs, possible time of introduction as well as possible penetration rate
Construction of emission model based on projected steel production and scenarios derived from technology profiles
CO2 balance for selected use cases where only steel as a material is making mitigation possible in other industries
Steel’s Contribution to a Low Carbon Europe 2050
Smelting reductionIntegrated route Direct reduction Scrap
Overview of iron- and steel-making routes
Rawmaterialpreparation
Ironmaking
Steelmaking
Raw material
Scrap
Lump ore
CoalO2, coal
Shaft pre-reduction
Hot metal
Melter-gasifier
Pellets
Lump ore
Natural gas
DRI
Scrap
Pellets
Lump ore Fine ore
Pellets
Sinter
Blast
O2
Coal, oil or natural gas
Scrap Hot metal
Blastfurnace
Coke
Scrap
Fluidizedbed
HCI
HBIHBI
Fluidizedbed
Shaftfurnace
Fine oreFine ore
EAF steelBOF steel
Source: Steel Institute VDEh; WV Stahl; WSA; BCG
Coal
Casting
Rolling / processing
O2 O2
EAF EAFBOF BOF
Liquid steel Liquid steel Liquid steelLiquid steel
Crude steel
Finished products (flat & long)
Natural gas
Redu-cinggas
Baselining: system boundaries
xx g CO2 /t
xx g CO2 /t
xx g CO2 /t
xx g CO2 /t
xx g CO2 /t
xx g CO2 /tBOF
EAFScrap
Iron- makingPelletizing
Coke- making
Sintering
Steel- making
Casting +
hot rolling
Cold rolling +
further processing
Scope I—direct CO2 emissions from the following facilities:
not included
Scope II—indirect CO2 emissions from purchased electricity
Oxygen
Pig iron
Burnt lime
Graphite electrodes
Credits for by-product gases1
Credits for slag2
Pellets
Steam
Scope III—indirect CO2 emissions from purchased materials (produced in EU27):
DRI
CokeSystem boundaries for base line
1. The utilization of by-products, such as process gases or waste heat is not counted as a credit, since such use helps to reduce the energy consumption of aggregates. Only by- product gases that are sold to a second party can be counted as a credit, since they help to reduce emissions of a different sector. 2. Emission factors for BF and BOF to cement industry not finalized yet Source: worldsteel; Project team analysis
Scope investigated: Primary/secondary steelmaking to hot rolling
Reduction of CO2 emission from 1990 to 2010
Mt CO2
300
200
100
0Total
emissions 2010
223
OHF route effect
3
EAF route efficiency
gain
15
EAF route volume effect
11
BF-BOF route
efficiency gain
8
BF-BOF route volume
effect
59
Total emissions
1990
298
BF-BOF route EAF route
BF-BOF efficiency gain -80kg CO2 /t CS• 1990: 1,968 kg CO2 /t CS• 2010: 1,888 kg CO2 /t CS
EAF production +16 Mt• 1990: 55 Mt CS• 2010: 71 Mt CS
EAF efficiency gain -212 kg CO2 /t CS• 1990: 667 kg CO2 /t CS• 2010: 455 kg CO2 /t CS• Effect of better indirect emission
(electricity) only minor (~10%)
Note: Includes all direct and upstream emissions as well as casting and hot rolling; OHF route volume 1990: 11 M CS = crude steelSource: EUROFER Benchmark 2007/08; VDEh data exchange 1990/2010; Project team analysis
BF-BOF production -30 Mt• 1990: 131 Mt CS• 2010: 101 Mt CS
197.4 Mt
172.8 Mt
EU27’s specific CO2 intensity decreased by 15%;EU27’s absolute CO2 emissions dropped by 25%; Drivers: mainly Volume changes, Shift from BF-BOF to EAF route, efficiency gains, improved CO2 emission of electric generation (minor effect)
Steel intensity (SI) curves used to forecast finished steel consumption (FSC) per country
0
GDP/Capita (k$ PPP)
706050403020100
Steel/GDP (kg/k$)
50
40
30
20
10
Steel Intensity (SI) curve Finished steel consumptionCrude steel production
2012-2050
Plot historical data
Steel Intensity
curve
Assess future industry
development
Sources: World Steel Association; EIU; BCG analysis.
Use of SI curves accounting for industrial structure of individual countries
SI curves calculated for each country by using historical data for FSC in relation to GDP per Capita and population
FSC forecasts calculated based on population and GDP forecasts by EIU
Assessed parameter for industry development 2012 – 2050
Industrialization• Share of industrial production of total
economy• Assumption: No deindustrialization in EU
Industry structure• Development of steel-intensive industries• Assumption: Stable industry structure
Steel efficiency gains• Efficiency gains in steel application• Assumption: Certain efficiency gains
EU27
20402020 2030
1.5
0.5
1.0
20102000 2050
Methodology to compute crude steel production from finished steel consumption
205020402010 203020202000
204020302020
95%
90%
85%
EU27
205020102000
100%
Sources: World Steel Association; EIU; BCG analysis.
Crude steel production
Finished steel
production
Finished steel
consumption
Self sufficiency
rate
Conversionrate (yield)
Steel/GDP
GDP/Capita
Net importer
Net exporter
Use Crude steel Production and Finished Steel Production are calculated from Finished Steel Consumption using Self-sufficiency rate and Conversion Rate
Assumptions: 1) EU27 Self-sufficiency by 2030 (FSC=FSP);
2) EU27 Conversion Rate rises to 95% in 2030 and remain constant until 2050
Moderate annual crude steel production growth of 0.8% from 2010 until 2050 expected
150
100
50
02011
17826
2010
173
148
25
152
Mt
250
200
2009
139
118
21
2007
210
176
35
2000
193
163
30
1990
197
154
43
1980
210
160
50
Historically, crude steel production stable in EU15 but declining in Eastern Europe
Note: e = estimate.Sources: World Steel Association; BCG analysis.
EU15Oth. EU
Going forward, slow growth expected for EU27, 2007 production level will be reached
in 2032
Mt
15250
150
250
200
100
0
0.8%
2050e
236
2040e
222
2030e
204
2020e
191
2011
178
2010
173
148
2625
Oth. EU EU27EU15
<
26
12
2030e
113
77
25
10
2011
99
17
16
65
100
50
0
0.9%
2050e
136
2010
96
62
16
18
2009
84
58
1313
2007
111
66
25
20
2005
94
54
22
18
1990
102
41
19
43
98
150
Scrap availability forecasted to grow by 0.9% annually until 2050, mainly driven by obsolete scrap
Obsolete scrap(adj. for trade)
New scrapHome scrap
Source: BCG analysis.
Total available scrap in EU27 (in Mt)Scrap availability driven by three scrap
types
Obsolete / old scrap
Home scrap
New / prompt scrap
Crude steel production
Scrap rate(%)
×
Lifetime (y)
• Production waste and errors in conversion of crude to finished
• Depending on efficiency of production process
• Production waste and errors in steel-using sectors
• Depending on industry sector
• Steel in products at the end of their life cycle
• Depending on scrap recovery rate and life cycle per sector
Finished steel cons.per sector
Scrap rate(%)
×
Finished steel cons.
per sector
Recycling rate (%)× ÷
CO2 emission projections
1. Includes the potential use of coke oven gas as reductant 2. E.g., use of coke oven gas for DR, BF+Corex/Finex+DR, use of Corex/Finex gas for DR 3. BF: CCS after power plant, TGR with CCS, Corex/Finex with CCS, HIsarna with CCS EAF: gas based DR with CCS, Ulcored with CCS
Incremental
Breakthrough
Substitution
Agglomeration Integrated route EAF route
• Sinter plant cooler heat recovery
• Coke dry quenching (CDQ)
• Injection of H2 rich reductants1
• Injection of H2 into shaft• Optimization of Pellet
ratio to Blast Furnace • Top gas recovery
turbine (TRT)• Waste gas recovery
• Corex• Finex• HIsarna
• Midrex / HyL based on natural gas
• Finmet / Ulcored based on natural gas + fine ores
Synergies between different technologies2
Combination of technologies with CCS3
• Heat recovery• Optimization
• Top gas recovery (TGR)
Technology review
CO2 emission projections
Likely outcomes analyzed using 2-step logic:
1. Determination of economic feasibility under different price scenarios.
2. Gradual implementation of the economically feasible technologies on the basis of varying adaptation curves for different scenarios
Economic feasibility was computed by comparing costs (CAPEX et OPEX) with the potential savings over considered investment period, depending on different price scenarios
The price scenarios included a reference-price scenario (inflation only), medium-price scenario (doubling of real input factor costs) and high- price scenario (fivefold increase of input factor costs)
Economic feasibility assessment of the technologies
BF-TGR (top gas recycling)
Gas cleaning
CO2 400 Nm3/tCO2
scrubber
Oxygen
PCI
Gas heater
Coke Top gas (CO, CO2, H2, N2)
Re-injection
Gas net(N2 purge)
CO, H2, N2V4900 °C
1250 °C
V3
1250 °C
XV1900 °C
25 °C
Expected C-savings
25 % 24 % 21 %
Gas cleaning
CO2 400 Nm3/tCO2
scrubber
Oxygen
PCI
Gas heater
Coke Top gas (CO, CO2, H2, N2)
Re-injection
Gas net(N2 purge)
CO, H2, N2V4900 °C
1250 °C
V4900 °C
1250 °C
V3
1250 °C
XV3
1250 °C
XV1900 °C
25 °C
V1900 °C
25 °C
Expected C-savings
25 % 24 % 21 %
Expected C-savings
25 % 24 % 21 %
Ulcos-BF concept:-Retro-fit to existing BF-Lower coke consumption-Higher productivity-But a lot of technical challenges to overcome
Comparison of the Operating Expenses (OPEX) of Alternative Steelmaking Technologies
OPEX2010
(€ / t CS)
Sources: Steel Institute VDEh; project team analysis.Note: CS = crude steel1. Based on Midrex direct reduction technology. 2. Based on Finex smelting reduction technology
48912%440
88%
13%572
87%
18%
82%
24%
76%
429
+33% +3% +14%
Scrap-EAFBF-BOF Smelting reductionDRI-EAF
Other OPEXOPEX - input factor costs
Source: BCG/VDEh
OPEX
Costs are normalized to BF-BOF = 100
DRI-EAF
133
BF-BOF
100
Smelting reduction 2
103
Scrap-EAF
1142010
Comparison of Capital Expenditures (CAPEX) for Alternative steelmaking technologiesSource: BCG/VDEh
CAPEX2010
(€ / t CS)
1. BOF: 50% of Greenfield investment 2. BF: 50% of Greenfield investment 3. Sinter: 30% of Greenfield investment 4. Coke: 15% of Greenfield investment Note: CS = crude steelSources: Steel Institue VDEh; Project team analysis
+143% +131%+8%
149641
742265
114
441
51153
393128
128
230
184184
414
171
174
BOF Sinter plantBFCorex/FinexDRI Coke plantEAF
BF-BOFretrofit
Smelting reductionDRI-EAFScrap-EAF BF-BOF
greenfield
2010
CAPEX BF-BOFretrofit
Smelting reduction
100
DRI-EAF
231 242
Scrap-EAF
108
BF-BOFgreenfield
259
Cost are normalized BF-BOF retrofit = 100
-9%
Crude steel production
[Mt crude steel]
Sources: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/2010; Project team analysis.1. 2009 crude-steel production with 2010 CO2 intensity and 2010 Scrap-EAF share.
1,508
197.4
1,293
172.8 204139.3 236
A
1,046 778
1,219 1,145 BC
Upper boundary
• Crude steel production forecast & CO2 intensity on 2010 level
• Increased EAF-share on the basis of scrap availability & best-practice sharing
Economic scenarios
Lower theoretical boundary without CCS
• 44% Scrap-EAF, 45% DRI- EAF, 11% BF-BOF; increased improvements, especially for BF-BOF
Lower theoretical boundary with CCS
• 44% Scrap-EAF, 56% BF- BOF+TGR, DRI-EAF, or SR-BOF
A
B
C
D
~550 D
100
50
-80% compared
to 1990
0
350
Mt CO2
300
250
200
150
1990
223
180
20091 2050
298
20302010
Economically viable
Not economically viable
264
213
239
249
A
B
C
D-56%
-38%
Specific CO2 intensity
[kg CO2 / t crude steel]
Absolute CO2 emissions in 2050 only 56% lower than 1990’s if CCS fully implemented in 2050
Abatement cost of moving from existing BF-BOF to DRI-EAF: 260 to 700€/tCO2
~130
305
271
184
258
Abatement potential up to 2050
20
Commission Roadmap for a Competitive Low Carbon Economy 2050 (table 9, source: PRIMES, GAINS)
Abatement potential compared to 2010 (intensity)
Reference year 2010 (specific emissions) 2030 2050Economic scenario -9% -15%Maximum theoretical abatement without CCS -19% -40%Maximum theoretical abatement with CCS -9% -57%
Reference year 2005 (absolute emissions) 2030 2050Overall -35% to -40% -77% to -81%
ETS -43% to -48% -88% to -92%non-ETS -24% to -36% -66% to -71%
Steel as a mitigation enabler
• Inland water transport
• CCS
<
Initial list• Weight reduction-cars
• Onshore/offsho re wind power
• Leaf springs• Rubber- enforcing steel structures for tires
• Motor systems• Assembled camshafts
• CCS• Structural steel• …
Focus onEU-27
Relevantpotentialby 2030
Cases with abatement
≥
5 MtCO2 / year
8 case studies with
distinct potential
Geo
grap
hy
Pote
ntia
l im
pact
vs.
201
0
Subs
titut
ion
of m
ater
ials
Abs
olut
e po
tent
ial
23
4
1
• Nuclear power plants
• Solar power • Bridges• Onshore wind
mills• Rail• Jet engines
No comparative examination of
alternatives
Sources: VDEh; BCG analysis.
Innovative steel-based emission-saving applications may help reduce CO2 emissions
Only saving that are 100% attributable to steel are taken into account
Stringent 4-step logic applied to isolate the case studies for evaluating steel’s own mitigation potential
Case studies for EU27 result in annual CO2 savings of about 440 Mt while emitting only 70 Mt of extra CO2
1. Bioenergy . 2. Net reduction refers to reduction attributable to steel.Note: PP = power plantSource: BCG analysis
Mt CO2 / yr.451050
5.3
14.0
42.1
3.2
1.2
0.16
3.0
0.7
~ 4:1
~ 17:1
< 1
Efficient fossil fuel PPs
Offshore wind power
Other renewables1
Efficient transformers
Efficient e-motors
Weight reduction cars
Weight reduction trucks
Combined heat / power
Energyindustry
Traffic
Household / industry
3
5
1
2
4
6
7
8
~ 2:1
~ 155:1
~ 23:1
~ 9:1
∑ ~ 443 ∑ ~ 70
~ 148:1
~ 6:1
Mt CO2 / yr.200100500
49.6
6.3
165.9
6.9
19.6
22.2
69.7
103.0
Case studyCase studyEmissions in the steel production Emissions in the steel production
Net CO2 reduction potential2
Net CO2 reduction potential2
Ratio between CO2 reduction / emission Ratio between CO2
reduction / emission
Energyindustry
Agenda
23
1. Objectives and Phases of the project
2. Steel’s Contribution to a Low Carbon Europe 2050
2.1. Steel industry overview and technology development
2.2. Baselining
2.3. Technology assessment
2.4. Steel and Scrap forecast
2.5. Steels’own impact – Abatement scenarios for 2050
2.6. Steel as mitigation enabler
3. Steel Roadmap for a Low Carbon Europe 2050
3.1. CO2 intensity pathways up to 2050
3.2. An adequate set of climate policies for steel
3.3. Policy recommendations
Steel Roadmap for a Low Carbon Europe
24
Base on findings of the BCG/VDEh study
Broader scope:
options for deeper cuts (HIsarna, Ulcored, electricity and hydrogen-based reduction,…)
deeper look into CCS
main challenges of the various options
competitiveness issues
policy recommendations (role of the ETS)
Steel Low C Roadmap published in July 2013 but the work doesn’t stop there.
25
CO2 intensity pathways up to 2050
What?
26
CO2 intensity pathways up to 2050
How?
27
Conditions for success
CO2 intensity pathways up to 2050
economic CO2 reduction potential
maximum theoretical abatement without CCS: -40%
maximum theoretical abatement with CCS: -57%
hypothetic breakthrough technologies in combination with CCS
• continued decarbonisation of the power sector
• increased scrap availability• best practice sharing• implementation of cost-effective
incremental technologies
• access to scrap and energy at competitive prices
• incentives through e.g. sectoral energy efficiency programmes
• full offset of distortive CO2 costs until level- playing field is restored
partial shift from BF-BOF to DRI- EAF
BF-TGR, ULCORED/HIsarnaCCS on all emission sourceselectricification of heatinghydrogen-based reductionelectrolysis,…
use of BF-TGR technology in combination with CCS
support for R&D, demonstration and deployment of breakthrough technologies
support for demonstration and deployment of BF-TGR, access to CCS widespread at competitive prices
NG and electricity prices such that natural gas-based DRI becomes competitive in Europe
What? Conditions for successHow?
+
+
+
An adequate set of climate policies for steel
29
The CO2 reduction potential in the EU steel industry estimated to be about 10% between 2010 and 2030 (specific emissions).
Steel will not be able to come anywhere near the interim reduction objectives suggested in the Commission Low Carbon Roadmap of 43-48% for the ETS sector between 2005 and 2030.
Going beyond the 10% mark would require having recourse to yet unproven technologies, as well from a technical point of view as in terms of cost- effectiveness.
These technologies need further research and funding for pilot and demonstration tests.
Their implementation will be costly, not only because of the investments involved but also because of the higher operating costs stemming a.o. from the use of CCS and the problems stemming from it.
In a long-term perspective, the EU ETS carbon price signal alone will not to put steelmaking breakthrough technologies on-stream.
Breakthrough technologies can only be put on-stream via adequate funding in R&D, pilot, demonstration and deployment.
What’s wrong with the projected policy framework
An adequate set of climate policies for steel
30
The 2030 Climate and Energy Framework has therefore to acknowledge that steel cannot move at the same pace than other sectors. Leading principles for the 2030 policy framework:
Policies have to make industry more competitive by securing globally competitive energy prices (NG, electricity) instead of increasing (carbon) costs.
Emission reduction pathways for the steel industry have to be built ‘bottom-up’, based on the technical and economic abatement potentials of the sectors (sectoral approaches).
Climate goals should be dependent upon comparable reduction effort by other major economies.
In the context of cap and trade, best performers need 100% of their allowances for free (no correction factor should apply) and their indirect CO2 costs must be fully and consistently offset through a truly effective EU mechanism (based on realistic benchmarks) at least until international distortions to competition are removed.
The continuation and generalization of exemptions from energy taxation, levies and tariffs stemming from support for renewables and other climate-related initiatives (CCS).
Funding in research, demonstration and deployment of potential new technologies is therefore key to success. In this regard, ambitious climate objectives require public funding commitment that is consistent with the level of effort envisaged.
Policy recommendations
Thank you
31