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The steel sector is generally believed to be hard-to-abate, making it is difficult to decarbonise steel production. But a recent report by Agora Energiewende, a German think-tank, says it is not so.
“It is technically feasible for the global steel sector to reach net-zero greenhouse gas emissions by the early 2040s,” the study, which was done in collaboration with the Wuppertal Institute, says. “Our study shows that it is time to remove the ‘hard-to-abate’ label from the steel industry,“ says Frank Peter, Director of Agora. The technologies and strategies required to reach net zero are all there already—the only need to be deployed fast, he says.
The key levers to decarbonise the global steel sector are—higher material efficiency with a significant increase in scrap-based steelmaking, use of hydrogen in steelmaking and bioenergy in combination with carbon capture and storage.
The study provides two scenarios for 1.5-degree C-compatible steelmaking focusing on different technological pathways. One scenario applies a wide range of clean steelmaking technologies, and the other focuses on the accelerated rollout of the Direct Reduction of Iron (DRI) after 2030.
“Both scenarios are technically feasible if the governments and industry take rapid action,” the report says.
Government support includes removing the major technological bottlenecks such as engineering and construction capacities, ramping up key technologies and infrastructure and putting in place a targeted regulatory framework, it says.
DRI is a flexible steelmaking technology which enables the production of near-zero emissions steel. Agora estimates that with the current engineering and construction capacities, around 70 million tons of additional “H2-ready” DRI capacity could be built by 2030, which amounts to only about half the 120-150 million additional DRI capacity required by 2030 for a 1.5 Degree-compatible pathway.
“One key solution to address this DRI capacity bottleneck would be to re-train engineers and construction workers to build DRI plants. Another solution is to facilitate the entry of new players in the hydrogen-based DRI technology market, it says.
The cost of low-carbon hydrogen will have a major impact on the competitiveness of steelmakers, the report observes. “Due to various energy and conversion losses in the transport chain, importing liquid hydrogen or ammonia by ship will likely never be a competitive option for hydrogen-based steelmaking. For steelmakers eyeing overseas hydrogen imports, a significantly cheaper option will be to import embodied hydrogen in the form of green iron,” it says.
Many of today’s major iron-ore exporting countries, such as Brazil, South Africa, Australia and Canada, are projected to have comparatively low production costs for renewable hydrogen. Instead of exporting iron ore and hydrogen and its derivatives by ship for steelmaking, those countries could export green iron, which could create additional local jobs and increase value addition, the report says.
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