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A global sector approach to CO2 emissions reduction for the steel industry
Jan 28, 2008
Steel is essential to economic growth
The modern world is built on steel. In developing and developed nations alike, steel has become an indispensable part of life.
Global steel production has been growing for the last 50 years. In the 1950s, world steel production was about 200 mmt. In the last five years, the pace of growth has accelerated and in 2006, the figure stood at 1,239.5 million metric tons (mmt).
The future growth in demand for steel will be driven mainly by the needs of the developing world. The steel industry must continue to grow by 3-5% worldwide and by 8-10% in China, India and Russia to satisfy these needs.
Steel as part of a climate change solution
According to the Intergovernmental Panel on Climate Change (IPCC), the steel industry accounts for between 3-4% of total world greenhouse gas emissions. On average, 1.7 tonnes of carbon dioxide are emitted for every tonne of steel produced. (For explanation please see ‘Sustainability Report of the World Steel Industry 2005’, on www.worldsteel.org).
Over 90% of steel industry emissions come from iron production in nine countries or regions: Brazil, China, EU-27, India, Japan, Korea, Russia, Ukraine and the USA.
Technological advancements over the past 25 years have enabled substantial reductions in CO
2 emissions from steel production. These advancements include:
- Enhanced energy efficiency in the steelmaking process
- Improved recycling of steel products, currently in excess of 60% in developed countries
- Improved use of by-products from steelmaking
- Better environmental protection techniques.
In the future the important role that steel will play in finding solutions to the challenges posed by climate change is demonstrated:
- Through our products - Across many different fields, new and technologically-advanced applications of steel are part of the solution to climate change. Steel is already indispensable to renewable energy industries, for example in wind turbines and solar power structures. Steel is also a key part of the construction of carbon neutral housing for the future and in a new generation of lightweight yet fuel efficient vehicles.
- Through technology transfer - The potential for greatest improvement in the medium term lies in some developing countries and CIS. The steel industry is involved in many programmes to help transfer efficient technologies to speed up the replacement of outdated steel plants. IISI is an important source of technology transfer information. Through our projects and working groups members regularly exchange information.
- Through long-term Breakthrough Technology – Today’s steelmaking processes have optimised the use of energy. Therefore to make a significant further reduction in CO
2 emissions, fundamentally new processes are required. IISI and its members are at the cutting edge of research and development into the next generation of steelmaking technology. The IISI CO
2 Breakthrough Programme is a long-term research project investigating new processes for steel production that will substantially decrease CO
2 emissions. As modern steelmaking is already highly energy and CO
2 efficient, ‘breakthrough’ refers to ‘new discoveries’ that will lead to significant changes in the way steel is made.
The current situation
A number of different national approaches to emissions reduction now exist.
The Japanese steel industry is engaged in a Voluntary Action Programme comprising a range of efforts from international technical cooperation to research and development into further by-products uses. The Japanese steel industry has set a 10% reduction in energy consumption as its goal for the year 2010 compared to 1990 levels. The United States steel industry is signed up to the voluntary Climate Vision programme with a commitment to improving energy intensity by 10% as a sector using a 2002 baseline. Many other countries are making similar efforts in this area.
The United States, Japanese, Korean, Australian and Canadian steel industries are also engaged in the Asia-Pacific Partnership on Clean Development and Climate which also involves India and China.
The EU’s emission trading scheme is the world’s largest international trading scheme for greenhouse gas emissions. It is a mandatory scheme for all 27 EU member countries.
Global steel sector approach
In considering the best approach to take from 1 January 2013 in the post-Kyoto period it is important to review the EU Cap and Trade System. The steel industry considers that, in its current form, the scheme will not lead to the desired goal of reducing the effect upon climate change. The system:
- Distorts competition in the EU - the allocation of emission caps and allowances by plant from member states is arbitrary and not related to individual plant performance. The end result is a loss of external competitiveness for the European steel industry and a distortion on competition within the EU.
- Fails to effectively reduce emissions - the most direct result of a national/regional scheme is a transfer of production to parts of the world where no such limits exist, resulting in an increase rather than a decrease in global greenhouse gas emissions.
- Fails to reward improvements - The system does not allow the most efficient steel companies to expand and the least efficient to decline.
- Leads to huge and unjustified inflation of electricity costs - electricity companies have passed on the equivalent costs of freely allocated CO
2 allowances to their customers generating windfall profits.
As a consequence IISI’s climate change policy takes a global perspective. It is aimed at reducing CO
2 emissions worldwide. This can be achieved through a global steel sector approach.
To kick start this process the world steel industry announced its new global steel sector approach at the annual IISI conference in Berlin in October 2007.
At the core of the new steel sector approach is the collection and reporting of carbon dioxide emissions data by steelplants in all the major steel producing countries. The information collection will lead to benchmarking improvements based on actual performance data and then reporting and setting of commitments on a national or regional basis for implementation during the post-Kyoto period. The key advantage of the IISI approach is that it is supported by its members in both the developed and developing countries including China which accounts for approximately 50% of total steelmaking CO
2 emissions.
IISI uses an intensity-based approach to measurement of carbon dioxide emissions, taking into account the CO
2 produced per tonne of steel rather than the total carbon dioxide emissions within a country or region. This globally consistent calculation methodology will allow production normalised CO
2 emission comparisons between regions that are not possible today.
IISI has put in place an expert group to oversee the collection of emissions data. This task force will develop a reporting methodology and specific approaches to reduce the steel industry’s global CO
2 emissions.
At the same time, IISI is working on the transfer of the best available steelmaking technologies to developing countries. One opportunity for this is through wide distribution of the Asia Pacific Partnership State of the Art Technology Handbook.
The aim of the steel industry’s new approach to climate change is a global improvement in carbon dioxide emissions for every unit of steel produced. By including all the major steel producing countries, worldwide competition will no longer be harmed in an industry where over 40% of products are already traded internationally.
The future post-Kyoto 2013
The global problem of climate change requires a global solution. Policies to encourage improved energy efficiency and reduced CO
2 emissions are important in all regions. The steel industry is asking for a new emissions regulatory regime that takes a global steel sector approach, is intensity based, verifiable and finally is technology driven. The industry is asking that:
- Governments should work closely with the steel industry on a global approach by adopting a sector specific framework which involves all major steel-producing countries.
- Any emission regulatory regimes should support the expansion of efficient steel companies and the decline of the least efficient companies based on an equal basis.
- Governments should work with IISI to adopt and support a new methodology that will measure and analyse emissions data from its member companies’ plants in all major steel producing countries.
- Governments should work with the steel industry to invest in the next generation of breakthrough technology CO
2 programmes, to bring about the next major advancement in steelmaking.
Source: IISI
In addition, make sure to read these articles:
IISI changes name to World Steel Association (worldsteel)
Steel industry appeals for governments to use life cycle thinking in environmental impact studies
Steel industry launches global CO2 emissions data collection programme
IISI short range outlook
A global sector approach to CO2 emissions reduction for the steel industry
World crude steel output increases by 7.5% in 2007
2007 will be another strong year for the steel industry
Global approach for steel to address climate change
Steel industry - key challenges
Steel industry commits to reduce CO2
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