Industry needs to accelerate efforts towards Decarbonisation, says report
By Kunal Bose
To the common man not aware of challenges of technology and issues of funding, the progress in production and procurement of low emission steel worldwide will appear to be excruciatingly slow. The global demand for low emission steel now at a measly 4 to 8 million tonnes could rise to 40 to 60 million tonnes by 2030. Metals, including steel, as they are made cause harm to the environment for being a major user of energy derived from fossil fuels and also raw materials with considerable gangue and impurities.
As steelmaking capacity in India is largely by way of BF-BOF (blast furnace-basic oxygen furnace) route owning a share of 46 to 48% of the total, ahead of coal based DRI-EAF (direct reduced iron-electric arc furnace) claiming a 32 to 34% industry slice, the sector is responsible for 12% CO2 (carbon dioxide) emissions in the country. The two other routes of steelmaking in the country are natural gas based DRI-EAF with capacity share of 7 to 9% and scrap-based EAF-EIF (electric induction furnace) where the built-up capacity constitutes 10 to 13% of the total.
The predominance of the first two ways of steelmaking in India where fossil fuel-based energy on a large scale is used is the reason why the overall emission intensity here at 2.6 tC02/tcs is a way higher than the global average of 1.9 tCO2/tcs. This is the situation as of now. But as a report by global consultancy Kearney in partnership with Indian Steel Association (ISA)says, driven by demand growth for the ferrous metal from sectors such as infrastructure, construction, automobiles and capital goods, Indian steel capacity will expectedly be 500 million tonnes by 2050 and then further to 790 million tonnes by 2070. The report says: “A business-as-usual (BAU) scenario emissions growth with capacity expansion is likely to contribute to 50+ giga tCO2 cumulatively up to 2070.” While not tinkering with steel capacity growth target, the industry will be required to “accelerate efforts towards decarbonising” in order to not breach its “fair share of India’s carbon budget.”
Whatever the technology and funding challenges, there remains an unwavering commitment for the industry to become net zero by 2070 in line with India’s overall pledge made at COP26 conference in Paris to become net zero emissions that year. According to ISA president Naveen Jindal, “breakthrough technologies” deployment to offset the major part of emissions in steelmaking are “still evolving.” In the short term, the focus will necessarily have to be in boosting “efficiency” of steel production leading to reduction in energy consumption and “economic savings.” Observations of Jindal will find immediate endorsement from scientists. For, transition to green hydrogen-based production as replacement of use of metallurgical coal as reductant will require considerable R&D work to develop technologies.
In the meantime, the industry will need pilots for injection of green hydrogen in BFs and DRI plants. Another important lever for decarbonisation is carbon capture and utilisation (CCU) for which too pilots will play a critical role. In all the pursuit of lowering emissions, significant investments will be required making it essential that steel companies operate in a profitable environment. At the same time, to make the industry’s decarbonisation mission successful, “strong policy support,” as underlined by Jindal will be needed. Policy support will hopefully include generous government subvention for decarbonisation programmes of steel companies.
In fact, in the European Union (EU) where carbon taxes have gone up significantly under the EU Emission Trading Scheme, mills producing steel through BF-BOF route and emitting considerable carbon are found keen to transition to making the metal by way of DRI and EAF with gas as feedstock, seek financial support from governments. The latest to secure funding promise from the Dutch government is Tata Steel Nederland which is to dismantle a 3.5 million tonne BF and instead have a DRI-EAF structure. Earlier, Tata Steel secured 500million pound grant from the UK government in support of transition from high carbon emitting BF-BOF operation to more environment friendly way of steelmaking by EAF at the Port Talbot steelworks in Wales.
ArcelorMittal, which made 31.2 million steel in Europe in 2024 in which the share of BF-BOF was as much as 25.7 million tonnes remains in regular dialogue with the European Commission and EU member states to underline the official support needed for transition to lower-carbon technologies and sustainability of steelmaking in Europe. As the India industry has begun its engagement with decarbonisation exploring the use of all the levers, it will be in order to have an idea of the challenges ArcelorMittal is facing in its attempt to achieve the 2030 carbon emissions intensity target.
In a recent communique, the company has said: “It is… well documented that there has been slower than expected progress on all aspects of the energy transition, including green hydrogen not yet being a viable fuel source and natural gas-based DRI production not being competitive as an interim solution. The global economy is not yet achieving the pace of change required to meet the Paris Agreement.” The European steel market experiencing high imports when demand is weak is also not helping the cause of decarbonisation.
The high dependence on fossil fuels make steel a hard to abate industry where carbon reduction will call for a number of corrective actions. These, says Kearney report, range from energy and process efficiency steps to substitution of fossil fuels with renewable energy, biocharcoal (biochar) to carbon capture, utilisation and storage (CCUS). For a number of years, mills here are continuously engaged in producing steel with improved levels of efficiency and economy in energy use. The report says energy efficiency measures could lead to an 8 to 10% reduction in carbon emissions from the current baseline. The saving will be in the range of 3 to 5% for coal based DRI-EAF, 1.5 to 3% for natural gas based DRI-EAF and 4 to 6% for scarp-based EAF/EIF.
Had supply not been a constraint, biochar could have been a good lever for decarbonisation of steelmaking. But not much biochar is available for the steel sector, after meeting the claims of competing industries such as bioethanol, thermal electricity and cement. There is much excitement about green hydrogen injection in BFs replacing coking coal and also of the use of the fuel in DRI making. But what will stand in the way of its application in the steel industry on some scale in at least in the near term is its price, thanks to the current high cost of electrolyser and compressor.
Levers such as energy and process efficiency could abate carbon emissions in steelmaking only to a limited extent. As a result, the industry will have to turn to carbon capture and its utilisation in areas, including biological, chemical, mineralisation and food and beverages. The report says technology is available for the use of captured carbon in making methanol and urea. What then logically follows, CCUS will become “a critical decarbonisation lever to achieve net zero emissions.” (IPA Service)
