Climate change is now affecting our daily life. Most recently, political measures have been initiated to slow advancing temperature increases. One of the results of this political activity is the Paris Agreement, which stipulates climate goals for the first time. The aim is to achieve these goals through green industry transformation, among other measures.
Paris: political guidelines as incentives to action
A political consensus and drive to shape affairs are basic requirements for transformation. These are accompanied by scientific findings gained by measuring changes in climate for longer periods of time which also furnish evidence for these changes. On 12 December 2015, the political drive to shape affairs was demonstrated in Paris when 197 states and the EU signed a binding agreement under international law, the Paris Agreement. Its aim is to slow climate change and act as a buffer for its effects.
The Paris Agreement is intended to ensure that global warming is limited to well below 2°C above pre-industrial levels; in fact, the signatory states wanted to further limit the temperature increase to 1.5°C. Since its adoption, this goal has been a benchmark for all measures related to the climate. However, it became apparent in 2023 that the 1.5°C goal is virtually impossible to achieve.
The agreement includes the following key points:
Reducing emissions Limiting global warming to 1.5°C is intended to mitigate the risks and consequences of climate change. The aim is for global emissions to peak as soon as possible and then decline. Developing nations have a longer time frame for their efforts.
Transparency and global footprint The states intend to jointly define stricter guidelines every five years if this becomes necessary in light of scientific findings. They plan to report on any progress and the achievement of goals.
Adaptability The ability to adapt to climate change must be improved. Accordingly, developing nations are to receive international support for climate change adaptation.
Loss and damage Loss and damage caused by the effects of climate change are to be prevented, minimised and, if necessary, compensated for. To do this, there must be closer cooperation in terms of early warning systems, emergency preparedness and risk insurance, for example.
Role of other stakeholders There is a consensus that other stakeholders must be involved in combating climate change. These include cities, public authorities at the regional and municipal levels, civil society and the private sector. The Agreement calls upon these stakeholders to accelerate the reduction of emissions, increase their resilience and reduce their vulnerability.
Support The EU and other industrialised countries will continue to support climate action in future in order to reduce emissions and increase resilience in developing nations.
The Agreement covers these key points, which are still quite abstract. Since its adoption, officials have struggled to develop its provisions for implementation as practical measures. The transformation in question must therefore be defined in a more precise and tangible manner. This already hints at the fact that the private sector is also being called upon to take action against the effects of climate change.
What does this mean for the steel industry?
It’s clear that emissions must be reduced, but where to start? If we look at the composition of emissions by country, the industrial sector stands out immediately. In Germany, the proportion of industrial greenhouse gas emissions made up 22 percent of the total CO2 equivalent value of 907 million tonnes in 2019. The steel industry was responsible for 28 percent of this proportion (total CO2 equivalent value of 200 million tonnes).
This means that steel production affects the climate and reducing emissions in this sector is seen as an effective measure. The steel industry emits around 55 million tonnes of CO2 per year. Thanks to its characteristics in terms of stability, plasticity and durability, steel is used in every building, household appliance and vehicle. The climate-intensive steel industry produced around 40 million tonnes of crude steel in 2019.
A significant proportion of the sector’s carbon dioxide emissions is process-related and caused by coke combustion. Other relevant emissions are due to the usage of electricity that stems from fossil fuels, since the steel industry requires a great deal of energy.
The GrInHy facility in the Salzgitter steelworks (photo: Salzgitter AG)
Main levers of the steel industry
In order to reduce emissions, the steel production process must be transformed. The result is CO2-reduced2-reduced “green” steel. Despite all the effort, plans and guidelines on the topic, it must be noted that steel production will always generate some amount of CO2, so it is impossible to completely eliminate emissions. Transformation aims to minimise emissions to close to zero.
The following main levers can help in this endeavour:
Technological shift away from the blast furnace route
One option is to stop using coke, which is employed to reduce and melt iron ore in the blast furnace (the ”blast furnace route”). A popular alternative is direct reduction which can use hydrogen as a reducing agent. As a transitional measure, natural gas or gas mixtures can also be used, as this results in a considerable reduction in CO2 emissions compared to the blast furnace route.
Increasing scrap reuse
The DR process produces sponge iron that is melted in an electric arc furnace (EAF) in the same way as scrap. The advantage of this process is that the product life cycle of steel does not end; instead, the steel is returned to the cycle in an example of pure circular economy. Steel has been proved to be the raw material with the highest recycling rate. If the electrical melting unit (the EAF) is powered with green electricity, the greenhouse gas emissions of raw steel production are minimised to nearly zero.
An emissions trading system which steel producers participate in has been established at the EU level (EU ETS). The system offers economic incentives for climate-friendly investments. With emissions certificates, the producers’ right to output specific emissions volumes are certified. Surplus certificates can be sold on to companies that are struggling to reduce their emissions.
Research and development
Research activities aim to optimise existing processes and technologies and to make process workflows more efficient. The joint research project GrInHy3.0 backed by Sunfire, Salzgitter AG and the technical university TU Bergakademie Freiberg is an example of this. The project partners integrate innovative technological processes in the hydrogen network of Salzgitter Flachstahl GmbH. You can find more information on the topic here.
Transformation is a lengthy process and requires a willingness to invest. Funds must be raised to ensure that future climate-friendly technologies can be researched and implemented. The aim is to tap into renewable energy sources and create the necessary infrastructure, for example for the hydrogen network. Steel producers are factoring in corresponding investment sums
but also pinning their hopes on politicians, for example in terms of creating a legal framework to provide security and facilitate investments. In addition, politicians have already promised or confirmed the funding of large projects. This relates to projects at almost all current furnace locations in Germany, including Bremen, Dillingen, Duisburg, Salzgitter and Eisenhüttenstadt.