This is a partnership to build the first plant in Europe to use the waste gases from steelmaking to produce ethanol on a commercial basis. This fuel generates 84% fewer greenhouse gas emissions than fossil fuels, and the plant will produce enough every year to run half a million cars. Every tonne of ethanol produced will reduce overall CO2 emissions by 2.3 tonnes and displace eight barrels (1 tonne) of gasoline.
Read more >
Why this is important for ArcelorMittal
The world’s efforts to tackle climate change took an important step forward in December 2015, with the COP21 agreement signed in Paris. Secretary-General Ban Ki-Moon has emphasised that business has a leading contribution to make. As in other industrial sectors, the steel sector recognises the need to reduce its carbon footprint – whatever its size. But importantly, we must also continue to enable our customers to cut their own emissions through our product innovations and encourage end-users to buy products which are 100% recyclable at the end of their useful life – something that steel can firmly offer. It is clear that public policy needs to create the economic incentives to do all of this.
Steel’s contribution to a lower-carbon world
Steel can offer a lot to a low-carbon world. It’s not just that less CO2 is emitted in its production than alternative materials such as aluminium; it’s not only that it is infinitely recyclable unlike concrete; nor even simply that steel is used in the safe, efficient, durable everyday products that modern life demands. Today’s specialist steels are providing the solutions that make everything from construction to cars more carbon-efficient. Our electrical steels, for example, improve the efficiency of electric vehicles, and our high strength steels mean less is needed –making vehicles more fuel-efficient and buildings less carbon-intensive. So a critical advantage of steel is that, over its entire lifecycle, less CO2 is emitted than with other materials, such as concrete and aluminium1.
When we produce a tonne of steel in a blast furnace, it’s not just the metal product that we create, but also energy, heat and solid by-products for the local economy. Some of these are re-used within our steel mills; others are exported –such as slag for making concrete and roads, and heating for local communities. We’re not only a massive consumer of energy and resources, but we also recover and generate huge amounts too, as we explain below.
1 See, for example, the results of an LCA study of road bridges by Beco (part of Ernst & Young)
Steel’s carbon challenge
Making substantial reductions in the CO2 emitted during steel’s production is a very real challenge for the industry, since the coking coal used in steelmaking isn’t burned simply for energy: it is used to create a chemical reaction to reduce iron ore, and this process creates both carbon monoxide and carbon dioxide.. Primary steel simply can’t be made without coke. Developing truly transformational technology to reduce carbon emissions from this part of the steelmaking process – by switching to reductants other than coke – is both hugely difficult and costly. Nor will it significantly reduce the CO2 intensity of steel, since it involves losses both in energy efficiency and by-products recovery. So the creation of CO2 will continue to be an integral aspect of steelmaking in the future: what we are focussing our research on is how to avoid this CO2 being emitted. Carbon capture and storage has not proved to be as feasible as people had hoped, but there are new ideas coming through now, where we still capture the carbon and use it to create useful products like plastics and aviation fuel.
Given the importance of this outcome for our future, we have two co- sponsors who are championing it at group level – Armelle Jouet, head of energy in our chief technology office, and Carl de Mare, vice-president of emerging technology development.
We have two important challenges: firstly, to improve the energy and carbon performance of the steelmaking process; and secondly, to communicate better about what kind of public policy frameworks we need to make such carbon reductions in the steel industry feasible. Both were key areas for 2015 and will continue to be in 2016.
Improving our energy and carbon performance
Together with the industry as a whole, we have worked hard to improve the carbon performance of our steel plants. Having established a target in 2007 to cut our emissions by 8% for each tonne of steel by 2020, we have put huge efforts and investment into reducing carbon through our energy use, and into researching new technologies.
In practical terms, we continue to make our processes more energy efficient, and have R&D experts in every region dedicated to finding new ways to save energy - for example by finding the best ways to re-use our waste gases. Combining energy management systems with detailed plant-by-plant audits and site-level energy champions, we identify new ideas that can be shared by all our steel plants, especially opportunities to save energy at low or zero upfront cost. We involve our employees in these efforts, drawing on their direct experience on the shop floor.
In 2015 we undertook a number of projects that will improve the energy efficiency of our processes. For example, we introduced projects at our Gijon site in Spain and at Zenica in Bosnia & Herzegovina to optimise the use of our blast furnace gases, which should avoid the emission of 180,000 tonnes of CO2 per year. Most of our European steelmaking sites are certified to the ISO50001 energy management standard, and we’re extending this to the Americas. There’s more detail on our energy achievements in the regional segment reports.
We try to capture energy where it could otherwise be wasted. In 2015, whilst we consumed 2,205 million gigajoules (GJ) of primary energy, we recovered 25% of this through the reuse of our waste gases internally and exported 29,000GJ as heat, steam or electricity. A good example is at our plant in Tubarão in Brazil, which in 2015 generated 2,850 GWh electricity from its waste gases. This was enough both for its own consumption and to export 332 GWh to the grid –supplying the equivalent of about 150,000 homes a year.
We’re also investing in generating renewable energy. In Karnataka, India, we’re seeking permission for a solar power plant of up to 600MW, which would be our biggest renewable energy installation to date, and would also generate vital power for the surrounding region. To date we only have a small number of renewable energy installations on our sites, due to the constant load required at our steel plants. In 2015, we consumed 5,235GJ of electricity from renewable sources across our sites.
We have a state-of-the-art R&D facility at Maizières, France, where we run a low-impact steelmaking programme in collaboration with a number of leading research institutes, and with the support of the French Agency for Environment and Energy Mastering. As part of this programme, in 2015 we opened an advanced new testing plant at Dunkerque, France, alongside our existing steel plant.
This new test plant is unlike any other in the world. It’s exploring how to use a high-temperature gas, made from the waste gases we already generate in the steelmaking process, within the blast furnace infrastructure. The prize could be very substantial: it could turn a waste by-product into a partial replacement for coal, and at the same time create new ways to optimise the energy and electricity balance of our plants. But we are far from achieving a realistic industrial solution, and we are at very early stages, so neither its scalability nor its success can be guaranteed.
Other aspects of our low-impact steelmaking programme include a means of converting our waste carbon gases into products such as methanol, ethanol, acetate, as well as the possibility of injecting CO2 into minerals to create products for the construction industry. We are exploring ideas like these through our partnership with LanzaTech. We will review progress of the whole low-impact steelmaking programme by the end of 2016, in order to determine its future direction.
The CO2 intensity of our steel is influenced by a combination of factors, some of which are outlined above. In the end, however, the most significant influence is the share of our steel production from the blast furnace (BF) route vs the electric arc furnace (EAF) route. The EAF route is focused on long products, often destined for the construction industry, while the BF route is often integrated in large scale steel plants that make flat steels for use in automotives, appliances and other end-user products. Last year, due to the slowdown in the construction market, we made less EAF and more BF steel and as a result – despite improvements in the carbon efficiency of many BF plants - we saw our average emissions per tonne of steel increase slightly to 2.14 tonnes CO2. If we look at the steel plants we operated in 2007 and still operate today, the carbon intensity of the steel we make in those plants has followed a downward trajectory. In this way, we have achieved a 4.5% reduction in CO2/tonne steel since 2007, and are on track to meet our target of 8% by 2020. In 2016 we are developing a low-carbon roadmap – see towards a carbon strategy.
Our entire carbon footprint in 2015 across our steel and mining operations was 205 million tonnes. This is made up of our Scope 1, 2 and 3 emissions in accordance with Worldsteel Association methodology*.
Further information about how we calculate our carbon intensity, our carbon target, and our CO2 footprint by scope 1, 2 and 3, see our Basis of Reporting.
*See Worldsteel CO2 Emissions Data Collection, User Guide, Version 7 available here.
Building optimum public policy frameworks
Breakthrough technologies may hold some promising ideas, but they are in the very early stages. Their development and implementation can take more than a decade, and their adoption will only become a reality if the economics are right. The challenge is not only technical; it is also about having the right policies to ensure the technology is commercially viable. For policy frameworks to really work for climate change and economic growth, they need to facilitate rather than hamper industry’s contribution. We don’t believe that emerging policies in Europe will be able to do this.
Global not regional
For public policy to help drive a reduction in CO2 from steel production, we need a reliable carbon pricing system that is globally consistent and free from extensive regional variation. A regional price will not reduce global carbon emissions since the market will go to where the steel is cheaper, and so steel will simply be imported from other countries that apply a lower price on carbon – a process that is known among climate experts as ‘carbon leakage’. What the world needs is carbon reduction, not carbon leakage: this is, and will continue to be, our message to policy makers.
Working with stakeholders
In order to get public policy frameworks working to deliver substantial carbon reductions from the steel industry, it’s clear that there is a lot more to do to ensure our stakeholders have a full understanding of what’s involved, and that there is a balanced and objective debate. We need to move away from the defensive stance that’s often been taken in the past, to a more positive approach. We need to focus on what we can contribute through our products, and our innovation, and through what we can offer to the policy debate. We need to learn from other industries, such as renewable energy, what alternative policy intrustments other than a price on carbon could be used to finance the decarbonisation of an industry. We think this approach will create more constructive discussions and we’ll be able to achieve more in the long run.
In the run up to the COP21 climate change convention in Paris, we talked to investors, governments, and NGOs about the reality of steel’s carbon story, rather than the misconceptions, and our Chairman and CEO also wrote to key global investors on the subject.
Towards a carbon strategy
Since the end of the convention, our COP21 working group has been making plans for 2016. There are three key actions here. The first is to continue to talk and listen to our stakeholders about steel’s role in the low-carbon agenda and to ensure a balanced understanding of the issues at stake. The second is to draft a low-carbon roadmap for steel, identifying areas where CO2 emissions could be cut, using both existing and new technology. At the same time, the right regulatory frameworks need to be developed to support each step of the way. And finally, we will continue to publish more information about how we use, emit, re-use, and avoid carbon, as we shift to an ongoing narrative approach for our sustainable development reporting on our website in 2016.