INDUSTRY AS A FACILITATOR OF CLEAN ENERGY AND CARBON- NEUTRAL FEEDSTOCK

Transcription

1 INDUSTRY AS A FACILITATOR OF CLEAN ENERGY AND CARBON- NEUTRAL FEEDSTOCK What demonstrations and pilots are needed now for 2050? Johann Prammer, Strategic Environmental Management

2 voestalpine GROUP OVERVIEW voestalpine is» a leading global partner» to the mobility and energy sectors» developing and providing highlyadvanced products and applications. Revenue: EUR 13 billion Annual R&D budget: > EUR 170 million Employees: 51,600 worldwide Environmental expenditures: > EUR 2 bn over the past 10 years 2

3 MY SUMMARY RIGHT AT THE BEGINNING Low-carbon economy is not only a challenge for R&I» Development of breakthrough technologies requires» public support in funding large scale innovation programs for R&D and industrial upscaling» Implementation of breakthrough technologies requires» cross-sectoral European innovation for establishing the future energy system» efficient, reliable and cost-effective infrastructure innovative generation, supply, storage, and transmission of energy 3

4 BASIC REQUIREMENTS OVERVIEW Requirements Description What to do? Innovation Public support for the development of most cost-efficient and CO 2 -effective technologies for manufacturing and energy supply» Large- scale public innovation programs providing support up to (and including) successful deployment Infrastructure Establishing the infrastructure required for the most cost-efficient supply, storage and transportation of energy (including H 2 )» Large scale public and EU-wide investment initiative» State aid review Investment Public support for industry investment in breakthrough technologies and processes (CAPEX)» Mobilisation of finance sector and public funds» State aid review 4

5 CURRENT SITUATION ENERGY IS NOT THE KEY ISSUE Highly self-sufficient with electricity and independent from the external grid» Integrated energy cycles on fossil basis via own power plants» Global raw material sourcing» Potentials (e.g. heat recovery, delivery of district heat on various locations) 5

6 DECARBONISATION ENERGY WILL BECOME THE KEY ISSUE» Commitment of EU steel industry to climate protection» Problem: Not possible with existing (coal-based) production techniques» Solution:» Development and implementation of new breakthrough technologies, supportive energy infrastructure and services» Intensive exploration of various approaches for emission reduction ongoing» Their effectiveness will depend on competitive commercialization» Key to success:» Coordinated and comprehensive energy and funding strategy on EU level» Cross-sectoral cooperation and partnerships 6

7 DECARBONISATION MAIN APPROACHES» CDA (Carbon Direct Avoidance): Directly avoiding CO 2 emissions through an increased use of renewable electrical power in basic steelmaking (e.g. hydrogen replacing carbon in metallurgical processes)» CCU (Carbon Capture and Usage): Chemical conversion of CO 2 captured from industrial processes, using CO 2 as a raw material Hbased on the utilisation 2 of green hydrogen» CCS: Process integration with reduced use of carbon and with or without Carbon Capture and Storage 7

8 MAIN TECHNOLOGY OPTIONS CARBON, NG* AND H 2 IN STEEL PRODUCTION * NG = natural gas 8

9 voestalpine DECARBONISATION CONCEPT HYDROGEN STEELMAKING» Bridge technology: Direct reduction plant in Texas (USA); using natural gas as reducing agent in direct reduction plants; potential for gradual introduction of green hydrogen generated using renewables.» Renewable hydrogen generation: H2FUTURE project at Linz site (Austria); investigating hydrogen electrolysis technology on an industrial scale.» Breakthrough technology: SuSteel ( Sustainable Steelmaking ); smelting reduction of iron ore using hydrogen plasma, ongoing research with pilot plant at the Donawitz site (Austria). 9

10 DECARBONISATION SCENARIO POTENTIAL OF CO 2 REDUCTION 100 CARBON CO 2 emissions (%) HYDROGEN 75 Existing technology: BF/BOF route with limited potential for CO 2 reduction Breakthrough technologies: Implementation of steelmaking technologies based on hydrogen (DR/EAF route, smelting reduction) Bridge technologies: BF/BOF/DR route, increased use of hydrogen as NG/ COG/H 2 and integration of EAF technology for flexible raw material use in iron and steelmaking with HM/ Scrap/HBI depending on economical/co 2 conditions Technology development: H2FUTURE, SuSteel

11 DECARBONISATION SCENARIO ACCORDING ENERGY DEMAND 100 CARBON CO 2 emissions (%) HYDROGEN Energy demand (indicative): 75 based on natural gas (%) based on H 2 (%) 50 external elecricity (%) /20/2018 SET-Plan Conference 2018

12 DECARBONISATION SCENARIO FINANCING REQUIREMENTS 17 m 3 m 12 Technology development, R&D H2FUTURE (Hydrogen electrolysis) 30 m SuSteel (Hydrogen Plasma Smelting Reduction 20 m Raw material advancements (Refinement, Pre-treatment, ) 10 m Sub-step metallurgy EAF 500 m

13 Industrial Upscaling DECARBONISATION SCENARIO FINANCING REQUIREMENTS Technology development, R&D Technology change 17 m 3 m H2FUTURE (Hydrogen electrolysis) 30 m SuSteel (Hydrogen Plasma Smelting Reduction 20 m Raw material advancements (Refinement, Pre-treatment, ) 10 m Sub-step metallurgy EAF 500 m 1 bn

14 Industrial Upscaling Investments : Outflow of funds due to ETS in the amount of > 800 m to 1,3 bn (price ) purpose-related return to companies instead DECARBONISATION SCENARIO FINANCING REQUIREMENTS Technology development, R&D Technology change & implementation 17 m 3 m H2FUTURE (Hydrogen electrolysis) 30 m SuSteel (Hydrogen Plasma Smelting Reduction 20 m Raw material advancements (Refinement, Pre-treatment, ) 10 m Sub-step metallurgy EAF 500 m 1 bn 6-7 bn

15 DECARBONISATION SCENARIO PRODUCTION COSTS % Current technology BF/BOF 15 Breakthrough technology DRI-H2-EAF Energy Raw materials Others Depreciation» Besides investments in R&D, Upscaling and technology change (CAPEX), the production costs (OPEX) of breakthrough technologies have to be brought to a competitive level.» From today s perspective, fully renewable transformation would nearly result in a doubling of production costs.

16 KEY CHALLENGES AND BARRIERS Success factors» Demand for renewable electricity and H 2 in all sectors» Costs (CAPEX, OPEX) and competitiveness energy as key factor» Technology development (R&D, upscaling, ) 16

17 KEY CHALLENGES AND BARRIERS (2) Other critical issues to be discussed» Who pays for energy transition, who will profit?» Carbon pricing?» EU-wide integration of energy infrastructure, systems, and policies» Coordination and funding of innovation mechanisms» 17

18 MY FINAL SUMMARY HOW CAN DECARBONISATION WORK?» Low-carbon technologies are not only a challenge for the steel industry» Precondition: Fundamental transformation of energy management (generation, supply, infrastructure, )» Competitiveness at least on European, if not on global level» Additional electricity demand from renewable sources has to be available not only for steel, but also for other energy-intensive industries, e-mobility etc. ambitious, but realistic expansion scenarios 18

19 MY FINAL SUMMARY HOW CAN DECARBONISATION WORK? (2)» Renewables are not always reliable» Grid stability is essential ( ): Considering purely the annual output is not enough availability of supply has to be secured constantly» R&D and investments in storage, transmission, and infrastructure technologies necessary» Cross-sectoral approach (energy-intensive industries and energy suppliers) broad cooperation with all stakeholders» A reliable framework for long-term investment decisions we are an integral part of the solution! 19

20 IT IS NOT ONLY ABOUT OUR PRODUCTION, BUT ALSO ABOUT OUR PRODUCTS from two perspectives: Production/processing AND Products/materials 20