European Commission's reduction targets beyond reach of steel sector

The European Steel industry will be able to reduce its CO2 emissions by an estimated 15 per cent in an economically viable way until 2050 compared to 2010 levels. This is one of the main results of the Steel Roadmap for a Low Carbon Europe 2050 published today byEurofer. The document, produced by the European Steel Association in response to the European Commission's "Roadmap for moving to a low-carbon economy in 2050", pools the results of recent studies on technical and economical potentials for CO2 reduction in steel making. It also looks into possible breakthrough technologies and points out policies which would enable the sector to maintain production in Europe.

The Commission's Roadmap postulates a reduction of 80 to 95 per cent by 2050 compared to 1990 for European industry. The Eurofer Roadmap builds upon the results of a study conducted by the Boston Consulting Group earlier this year, which confirm that this target is far beyond the reach of the steel sector. The study draws several possible scenarios for CO2 abatement in steel making. In the economic scenario, only 10 per cent emissions reduction per tonne of steel are possible between 2010 and 2030 and 15 per cent between 2010 and 2050. This would be brought about by the use of best available technologies, process optimization and a greater use of steel scrap.

The most promising abatement scenario, theoretically resulting in 60 per cent emissions reductions per tonne of steel between 2010 and 2050, relies on the retrofitting of existing blast furnaces with top-gas recycling technology and full deployment of Carbon Capture and Storage (CCS) in Europe. However, this technology has yet to be proven as technically feasible at industrial scale. Moreover, to date the economic viability and the general applicability of CCS in Europe appear questionable. Public resistance to CCS in a growing number of Member States as well as the lack of a business case for such a technology make it doubtful that the technology will be applied throughout Europe in the foreseeable future.

Gordon Moffat, Director General of Eurofer: "The steel industry cannot stay in Europe if the Commission's targets are imposed on the sector without further adaptation. In fact, we will not even be able to meet the 2030 intermediate milestone of the EU Emissions Trading Scheme of 43 to 48 per cent reduction as suggested in the Commission's Roadmap. The technologies to do so are not there at present and if they will ever emerge, it will certainly not be on time for the Commission's schedule. It must be acknowledged that sectors like steel cannot follow the decarbonisation path at the same pace than others."

Potential breakthrough technologies

Deep CO2 cuts as postulated in the Commission's Roadmap might be achieved only with radically new and yet unproven breakthrough technologies. The ULCOS research programme (Ultra-Low CO2 Steelmaking), which started in 2004 already, has identified four potential breakthrough technologies. Two of these technologies have been tested on a pilot plant level; none has been demonstrated on an industrial scale yet.

Gordon Moffat: "The EU Emissions Trading Scheme, although some people regard it as a means to incentivise investments in low-carbon technology, will not help here. For making the ULCOS technologies an industrial reality it would take much more than just a high price on emissions allowances. The massive investments required for demonstration and deployment of these potential technologies clearly exceed our industry's investment capabilities. Therefore, financial support is needed which is consistent with the level of ambition of the EU's climate objectives. This issue should be an integral part of the 2030 Climate and Energy package."

Life-cycle thinking

Following a holistic approach, the Eurofer Roadmap not only looks into possible CO2 abatement in steel production. It also analyses the CO2 mitigation potential from innovative technologies in which steel cannot be replaced by any other material. This analysis was done by Boston Consulting Group, too.

According to case studies on eight selected steel applications, including weight reduced car parts, electric motors or efficiency-improved power plants, the yearly savings would amount to at least 443 million tonnes CO2 in 2030. The prognosis is limited to 2030 because this is a timespan for which the expansion of the technologies looked into can be forecast with sufficient probability.

The amount of 443 million tonnes has to be compared to the emissions released in the production of the steels applied, which amount to only 70 million tonnes. Another comparison: the total steel industry's emissions in 2010 were approximately 220 million tonnes; less than half of the savings potential of only the eight steel applications looked at in the study.

This indicates that European climate targets can hardly be reached without steel. It also calls for a change of perspective on the political level. Current climate policies focus on emissions from the production phase of materials. For steel, this overlooks the material's substantial contribution to climate protection when it is applied in relevant technologies. As yet, European climate policies have no room for this holistic approach, which would also have to integrate the recycling properties of materials.

Gordon Moffat: "Steel is as indispensable for European manufacturing value chains as it is essential for technologies protecting the climate. Unilateral climate action along the mitigation path suggested by the Commission has potentially devastating effects on the EU steel industry. Post-2020 policies should therefore be built bottom-up, taking into consideration technological development. They should also include effective protection against CO2-related costs which jeopardize global competitiveness of the EU industry. Only with a modern, innovative and profitable industry in Europe can the EU's targets for a sustainable, carbon-lean and competitive economy be met."

Represented by EUROFER, the European steel industry is a world leader in its sector with a turnover of 170 billion euro and direct employment of 360 thousand highly skilled people, producing on average 190 million tonnes of steel per year. More than 500 steel production and processing sites in 23 member states of the European Union provide direct and indirect employment and a living for millions of European citizens.

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