CONTEXT AND SCOPE OF THE WORKSHOP

Transcription

1 Petten, 2 March 2010 ESE/JM/ (2010) Subject: Final Report of the SET-Plan workshop on Technology Innovations for Energy Efficiency and Greenhouse Gas (GHG) emissions reduction in the Iron and Steel Industries in the EU27 up to 2030 Participants: Stakeholders: Jean Claude CHARBONNIER, Bertrand de LAMBERTERIE, Bernhard KOHL, Gorän CARLSSON, Karl BUTTIENS, Guenter HARP, Alicia MASLEJOVA, Koen COPPENHOLLE, Nathalie TRUDEAU, Laurent LEVACHER European Commission: Philipp TROPPMANN, Elisa GRECO, Jeroen SCHUPPERS, Alan HAIGH, Mika LEVONEN, Jean-Luc DELPLANCKE, Claudia MARENCO, Santiago GONZALEZ HERRAIZ, Jean Marie BEMTGEN, Pavel PROKES, Arnaud MERCIER, José MOYA, Stathis PETEVES (Chair) Venue: Conference Centre Albert Borschette, Brussels, January 15, 2010 (14:00-17:30) 1. CONTEXT AND SCOPE OF THE WORKSHOP Meeting the ambition of the EU Energy and Climate Change Policy with its overriding goal of decarbonising the energy system by 80% by 2050 will require the reinvention of the European energy system from now to 2050 and have a profound effect on its technology mix. The EU Strategic Energy Technology Plan (SET-Plan) is the technology pillar of the EU s energy and climate policy. It has been adopted in 2008 by the European Council and Parliament as the EU response to accelerate the development of a worldclass portfolio of affordable, clean, efficient and low emission energy technologies through coordinated research efforts. The SET-Plan is currently in its implementation phase, moving towards the establishment of large scale programs such as the European Industrial Initiatives (EIIs) that bring together industry, the research community, the Member States and the Commission in risk-sharing, public-private partnerships on the development of key energy technologies at the European level. Six priority technologies have already been identified as the focal points of the first EIIs: wind, solar, electricity grids, bioenergy, carbon capture and storage and sustainable nuclear fission. European Commission, DG JRC-IE, Postbus Nr. 2, 1755 ZG Petten (N.-H.) The Netherlands. Office: RML 312 2/230. Telephone: direct line (31-224) Fax: (31-224) Estathios.Peteves@ec.europa.eu

2 So far, there does not exist such a comprehensive R&D, D technology master plan for the energy intensive industrial sector equivalent to the energy supply sector in the framework of the SET-Plan. However, in recent years, new public private partnerships have been set up in various fields that relates to energy intensive industries using different instruments and legal bases. For instance, under the European Economic Recovery Plan, publicprivate partnerships for green cars, energy-efficient buildings and factories of the future are being launched, that complements research, development and demonstration activities undertaken in the context of the Framework programmes and for the case of iron and steel, by the Research Fund for Coal and Steel (RFCS). Furthermore, a number of existing initiatives and legislation already provide incentives and stimulate markets for innovative products and services. Among the main instruments in place are the Emission Trading Scheme (ETS) directive, the REACH and cosmetics legislation, the Action Plan on Sustainable Consumption and Production and Sustainable Industrial Policy, the revised Eco-Design Directive, the Lead Market Initiative (LMI) etc. Recognising the importance of innovation as a precondition for the creation of a knowledge-based, low-carbon economy, the Commission proposed in its Communication on Reviewing Community Innovation policy in a changing world COM(2009) 442, to present to the Council in spring 2010 a European Innovation Act encompassing all the conditions for sustainable development to enhance the governance of the EU innovation system. This innovation framework provides a timely opportunity to investigate the added value for a European Action Plan on energy intensive industrial sector in the context of the SET-Plan. This responds also to the Council and Parliament recommendations expressed in the context of the adoption of the SET-Plan Communication in 2008 to investigate the possibilities to broaden the scope of technology priorities within the SET-Plan. Further Industrial Initiatives may be necessary, and therefore Council encourages the Commission to continue to examine areas with great potential such as marine energy, energy storage and energy efficiency for this purpose. European Council, April 2008 Calls on the Commission to add energy efficiency technologies, including co- and polygeneration, to the areas covered by the EIIs. Parliament, June 2008 This workshop, organised under the auspices of the Information System of the SET-Plan (SETIS) aims at exchanging with the stakeholders on the current role of technology innovation in the improvement of energy efficiency and reduction of CO 2 emissions in the Iron and Steel Industry, the anticipated technological development and market potential as well as to explore potential actions in the context of the SET-Plan. This 2

3 report summarises the discussions and exchange of information that occurred during the workshop. Additional information has been provided by the sector based on a questionnaire developed by SETIS. This response is annexed to this document. 2. CURRENT STATE OF PLAY OF THE IRON AND STEEL INDUSTRY IN EUROPE The steel and iron sector plays a key role in Europe's energy consumption both through the use of its products in end-use sectors such as the building or transport sector but also in its own manufacturing processes. There are the two main routes to produce steel: The first route called integrated route is based on the reduction of iron ore and relies on the use of coke, sinter, blast furnaces and Basic Oxygen Furnace (BOF) converters. The current energy consumption for this process route is estimated to lie between 17 and 23 GJ per ton of hot rolled product within the EU. The value of 17 GJ is considered by the sector as a good benchmarking value of an integrated plant and can be considered as a good benchmarking value even at a world level. Japan, Korea and some facilities in Brazil and USA and the last plants built in China are performing at that level. A consumption of 21 GJ per ton of hot rolled product is considered as an average value throughout the EU27. It is noted that part of the total energy consumption may be committed to processes downstream of the reduction of the iron ore (the gaseous fuels produced in coke ovens, blast furnace and BOF converters are used in other processes or to produce electricity through captive power plants). The average value of energy consumption in Europe (21 GJ/t) indicates a slightly predominating presence of facilities with higher consumption rates, and a potential for energy efficiency improvement. However, it is stressed that there is currently a lack of comprehensive and detailed information at facility level, which prevents a thorough assessment. Another difficulty for this assessment is the lack of a clear definition of the plant boundaries as part of the excess energy consumption of some installations may be allocated to supply external consumers (i.e. central heating ) but there is no information available yet to quantify these amounts. The second route, called recycling route uses scrap as raw material. The main energy requirement is linked to the electricity consumption for smelting the scrap material. A good reference value of energy consumption for this route is assumed to be 3.5 GJ/t hot rolled product. The average value within EU27 is around 4.5GJ/t. Prospective reductions by shifting from BOF to Electric Arc Furnace (EAF) is confined by the scrap availability and its quality. Consequently, the sector stressed the importance to take action for ensuring the quality and availability of future scrap. In the last 40 years the industry has decreased its energy consumption by about 50%. One of the main drivers of this steep decrease has been the increase of the recycling route at the expense of the integrated route (the share has increased from 20% in the 70 s to 3

4 around 40% nowadays). The other source of this steep decrease of energy consumption has been the improvement of the integrate route to lower specific consumption near to thermodynamic limits. This has been achieved thanks to a better understanding and mastering of the blast furnace, preparation of the iron coke and mastering of the gas flow. It is noted that the main driver for these results has been the important share of energy costs in the final product economics. With respect to CO 2 emissions, the industry has decreased its emissions to around 60% in the last 40 years. Most of this reduction has been correlated with the decrease of energy consumption of the integrated route and the shift towards the recycling route. Based on a recent assessment of CO 2 emissions per process activity developed by the sector 1, direct emissions from the integrated route (2.3 t CO 2 / t of rolled products) are around 10 times more than for the EAF route (0.21 t of CO 2 /t of rolled products). Accounting for the indirect emissions from electricity production, around 452 kg CO 2 /t of rolled products 2 should be added to the 210kg CO 2 /t reported, in the case of EAF route. The resulting amount remains well below the good references emitted for the Blast Furnace (BF)/BOF route (about 2300 kg CO 2 /t of rolled products), indicating one important strategic path for the sector to improve its energy and environmental performance. The sector estimates that the scrap market will increase to about 1% per year. Forecast predicts that the EAF route can reach up to a 60% of the production in the long run in Europe. A further assessment requires, similarly to the energy consumption, detailed information of the variability of CO 2 emissions at the plant level, which today is not available. Action: Joint work between SETIS and sector representatives to detail and consolidate further the mapping of current energy consumption and CO 2 emission levels in Europe. 3. LIKELY EVOLUTION OF THE IRON AND STEEL INDUSTRY IN EUROPE The current iron and steel production in the EU-27 amounted in 2008 to about 200 Mt/y. The financial crisis started to have a visible effect worldwide but also in the EU as of the fourth quarter of The figures are not yet available for 2009 but there is a clear indication that the production has been affected by the economic downturn (at least 1 2 Ecofys, Fraunhofer Institute for Systems and Innovation Research, Öko-Institut. Methodology for the free allocation of emission allowances in the EU ETS post Sector report for the iron and steel industry. November 2009 This value has been obtained using an average emission factor for electricity of tco 2 /MWh for the overall EU electrical production and the 3.5 GJ/t needed as a good reference value for the EAF production. (The average emission factor comes from the Model-based Analysis of the 2008 EU Policy Package on Climate Change and Renewables: climat_action/analysis.pdf) 4

5 minus 25% vs 2008). The full recovery of the sector is not expected before Nonetheless, the European market is considered very mature, to the exception of the east part of Europe where market developments both in terms of quantity and quality are expected. It is noted that the market for low carbon energy technologies is of great interest to the sector. For indication, a wind turbine of 2 MW requires about 75 t of steel per MW 3 ; taking into account the potential of development of wind farms, additional 170GW for 2020 (source EWEA), it represents a steel need of 12Million tons for this decade. The offshore projects offer, in addition, strong opportunities for steel in the structural part of the windmills. In power generation, the development of new steel grades will increase temperature and pressure and then contribute to the improvement of energy efficiency. In gas transportation the development of very high strength steels will contribute to safe and efficient transportation of Natural Gas, H 2, and CO 2 ( CCS technologies). Marginal improvement in terms of energy efficiency are expected in the short and medium term. The technologies used have already undergone significant improvements and developments. The best technologies are already operated close to their thermodynamic limits. The main driver in the short term for energy efficiency improvement will continue to remain the increase of the use of scrap material. Another important driver is the diffusion of best available technologies. It is mentioned that a full alignment of all plants to the best performers could result in an increase of about 10 to 15% of the global efficiency (in next 15 years). Additional incremental improvements are also expected due to learning effect and R&D that can result in a 2 to 5% efficiency gains with respect to the current best available plant. All these progresses will be driven by energy integration and optimization, and by the recovery of waste heat, including low temperature. It is stressed that the demand for new products have or will have little impact on the energy consumption in spite of the fact that their improved characteristics contribute to lower consumptions in the users of these new steels. The situation for radical CO 2 emission reduction differs significantly. Following a thorough assessment performed in the context of the EU FP funded project ULCOS, 3 main family of technologies have been identified that can provide significant reduction gains: Carbon Capture and Storage (CCS), decarbonization of steel production (electricity and hydrogen) and use of biomass. The CCS based route is considered to be the closest to commercialization. Within the CCS family, three main processes have been earmarked for further development: 3 European Steel Technology Platform. A Bridge to the Future. STEEL a key partner in the European low-carbon economy of tomorrow. March

6 The Top Gas Recycling Blast Furnace (TGR BF) (blast furnace with CCS). It is estimated that it could provide up to 50% CO 2 emission abatement at the plant level. This technology is considered to be the closest to market roll-out, hence the main focus of the next phase of the ULCOS project is large scale demonstration. The proposed work plan is based on a two stage scale-up process development to reduce industrial risks. The first step is to demonstrate the concept on a blast furnace of a capacity of 700 kt/y. The second step is to scale up the process to a blast furnace of 1.4 Mt/y and to couple the capture part to a CO 2 storage site. The tentative timeline is to complete this industrial demonstration programme in about 10 years, allowing further market roll-out post the ULCORED (advanced Direct Reduction with CCS). Direct-reduced iron is produced from direct reduction of iron ore (in form of lumps or pellets) by a reducing gas produced from natural gas. The reduced iron is in solid state and for melting the iron, electric energy is required. This is carried out in an Electric Arc Furnace (EAF). A demonstration facility is being planned with Market roll-out foreseen by and the HIsarna. This technology combines coal preheating and partial pyrolysis in a reactor, a melting cyclone for ore melting and a smelter vessel for final ore reduction and iron production. A pilot scale facility is under construction. This technology is considered to be less mature than the TGR-BF for a full-scale demonstration programme. The market roll-out is foreseen by The potential of reduction of CO 2 emissions of HIsarna and ULCORED technology is 70-80%. The more radical breakthroughs based on another reduction carrier such as electricity or hydrogen are considered still to be needed more up-stream research activities. It was expressed during the meeting the need to examine penetration scenarios in Europe of these breakthrough technologies in a detailed way (plant level) considering also the short term development pathways such as best available technologies deployment and scrap route. This assessment should enable an impact analysis of the effect of technology innovation on the energy and climate performance of the sector up to Action: Joint work between SETIS and sector representatives to define and assess deployment pathways of the European Iron and Steel Sector in Europe and the role of technology innovation for efficiency improvements and CO 2 reduction. 6

7 4. BARRIERS AND NEEDS One of the main barriers to the implementation of already available technologies for energy efficiency improvements is related to the profitability of such investments with respect to current energy prices. Appropriate market conditions are required to enhance their market uptake. It is reminded that the deployment of best available and emergent technologies, could result in a 10-15% energy savings in the next years. Beyond this, research is still required to further improve the cost-competitiveness of such best available technologies. It is considered that the cost of such incremental improvements for the EU in term of usual R&D fundings, is in the range of 20 M / year, and can be carried out with the instruments in place. It is further emphasized that with respect to the scrap route, a strategic development pathway of the sector, there is a strong need for policy support to stimulate further the recycling, hence augmenting the scrap availability and to ensure its quality. Ensuring the market roll-out of breakthrough technologies needed to radically curb CO 2 emissions will require a significant research and demonstration effort over the next 10 years as these technologies carry a high degree of industrial risk. In the context of the follow-up of ULCOS project, an implementation plan has been devised, with a first cost estimate of about 300 M to 500 M over 5 to 10 years. One of the main barriers of this programme is related to its financing. Consequently, it was stressed that the support of the Commission to consider the ULCOS II project as one of the 12 CCS demonstration projects is critical. 5. ACHIEVING THE VISION RECOMMENDED ACTIONS AT EU LEVEL Steel is an important building material to many end-use applications. Steel enters in the value chain of several proposed European Industrial Initiatives as pursued by the SETplan (e.g. Wind, Solar, Nuclear, CCS etc.). It is recommended that the Steel stakeholders participate fully in the on-going discussions on the preparation of the implementation plans of the EIIs. Regarding the sector development, a critical area for the sector is the successful demonstration of breakthrough technologies for CO 2 emission abatement. The sector emphasized the importance of support for R&D, D at community level considering the high risk entailed in the research and demonstration of such technologies. A work-plan for technology developments has been defined as a follow-up of the ULCOS project. So far, the financing of this proposal has not yet been secured and finalized. It is reminded to the stakeholders the importance for public support to have a programmatic approach that encompasses in a comprehensive way short-term and long-term needs including up- 7

8 stream research, supported by a long term vision and a detailed analysis of the impact of such R&D and D programme on the EU Policy Goals. It is stressed that maintaining and increasing the current R&D support scheme is critical to ensure the delivery of this incremental innovation (10% to 15% potential energy efficiency gains). In addition, to ensure an optimized integration of CO 2 abatement technologies the improvement of energy efficiency is critical, hence it is an integral part of the technology strategy of the sector. To fully grasp the potential of technology improvements, conducive market conditions are required, hence calling upon a coordinated approach between R&D, D programmes and market related measures. It was reminded that in the history of the iron and steel industry many innovative technologies or pilot and demonstrations studies have been carried out since the early sixties but have not reached the final scale up phase into large facilities. This unavoidable final phase is the necessary prerequisite which should be carefully considered now to develop competitive new breakthrough technologies for the future European low-carbon economy. Action: The sector agrees to define further the needs for research and demonstration that could eventually qualify for a SET-Plan action, that is based on a sector vision that goes beyond business as usual, clearly identifies the benefits to the EU energy and climate policy goals and the added-value to work at European level and that contains a risk analysis that justifies the public intervention. 8

9 January 14, Annex: ANSWERS PREPARED BY EUROFER AND ESTEP TO THE QUESTIONNAIRE TO ENERGY INTENSIVE INDUSTRIES IN SUPPORT OF THE SET-PLAN I. Current state of play of your sector in Europe 1. What is currently the energy consumption of your sector by ton of output? (by type of fuels and energy carriers, e.g. electricity, heat, process steam etc.) Preliminary comments. For the whole EU27 steel industry, currently no comprehensive and detailed data base on energy consumption of the different processes and their intermediate products (most of which are traded) exists. Partial data is collected by some technical associations. Partial data also exists in data collections for other purposes, e.g. for BREF making or the implementation of the revised ETS Directive. All this data is confidential, in non-comparable form and held by different institutions. The establishment of respective data and derived information would be a large project of its own. Whether a sufficiently large share of steel sector companies would be willing to engage in such a project currently is also not known. Nevertheless, Energy statistical data (e.g. UNFCCC, EUROSTAT) have provided informations so far, even if these data are aggregated on a sectoral level. The following data will give an order of magnitude for energy consumption of steel by ton of hot rolled products with the split between fossil energy (mainly from coal) and electricity. There are two main routes to produce steel: One from iron ore. The other reusing scraps from end of life products. For the first route, called integrated route using coke, sinter, blast furnaces and BOF converters, the energy consumption is between 17 and 23 GJ per ton of hot rolled products, depending on the plants within EU27. 17GJ is a good benchmarking value of an integrated plant and 21GJ is an average through EU 27. The major part of this consumption comes from the energy European Commission, DG JRC-IE, Postbus Nr. 2, 1755 ZG Petten (N.-H.) The Netherlands. Office: RML 312 2/230. Telephone: direct line (31-224) Fax: (31-224) Estathios.Peteves@ec.europa.eu

10 required for the chemical reduction of iron ores ( Fe2O3 + impurities) to produce iron (Fe), through the reaction with carbon in the Blast Furnace. The reaction is heavily endothermic. This carbon comes from coal used in two different ways: the coal transformed into coke, then loaded alternatively with sinter on the top of the blast furnace and the powered coal injected at tuyere level on the bottom part of the blast furnace. We can notice that coke ovens, blast furnaces and BOF generate in addition an excess of gaseous fuel. Part of this gaseous fuel is used in the integrated steelplant for the cokeplant itself, the hot stoves, the reheating furnaces. Gas in excess can produce electricity through captive power plants. Natural gas can be used as well as complement energy if necessary. Within the global consumption of 17GJ/t hot rolled product ( good reference value ), most of the energy comes from coal; fuel oil or natural gas can represent between 0.5 and 3 GJ/t; steam is around 300MJ/t ; electricity is around 250kwh/t, i.e. 900MJ/t with a direct conversion factor kwh/mj. It is important to understand, that these 17GJ/t hot rolled product partly and unavoidably are converted into process gases which are used to cover energy needs of the plant. The gas in excess is converted in electricity through a power plant. For the second route, called recycling route, we use scraps smelted into liquid steel in an EAF ( Electric Arc Furnace). The main energy requirement is electricity for scraps smelting. Other significant parts are fuel for EAF and reheating furnace and electricity for rolling. A good reference value is 3,5 GJ/t hot rolled product with a mill coupled with Continuous Caster ( ie thin slab or beam blank caster) when the recycling route average within EU 27 is around 4.5 GJ/t. Within 3,5GJ/t hot rolled a good reference for EAF electricity consumption is 450kwh/t and 80kwh/t for rolling. Complement of fossil energy is used in the EAF ( coal and natural gas) and of course for the reheating furnace ( natural gas) before hot rolling as explained before. For EU 27, the total production of crude steel is around 200Mt/ year ( average ) with 40% produced by EAF and 60% by BF/BOF. Remark: in these specific values of energy consumption, we don t take into account the conversion of electricity into primary energy to produce it ( usual efficiency at 33%). 10

11 2. What is the level of energy efficiency and carbon intensity improvements that was achieved during the last decade by your sector? What were the main markets and policy drivers that led to these efficiency gains and GHG emissions reduction? What were the key measures taken (e.g. fuel switch, process change, end-of-pipe, CHP, etc.)? What was the cost of implementation of these measures? 2.1 Energy efficiency. The figure below gives the decrease of specific energy consumption of the steel making industry compared to other sectors( source ADEME,France). Such results come from two sources: a. The relative increase of the recycling route as compared to the integrated routes (In Europe: from 20 % in the 70 s to around 40 % to day) b. The efforts made in the integrated route to lower the specific consumption, getting very close to the thermodynamic limit. The figure below shows the changes in the carbon input to produce one ton of liquid steel (before solidification and rolling) 11

12 Main drivers for such results were the important share of energy costs in the final products. The relative prices of the different fuels bringing carbon to the system are the main drivers for the switching of fuels that can be seen from Moreover, the energy crisis in 1973 was very efficient to suppress oil but most of the energy efficiency results were gained before that time. As explained above, one important effort has been the increase of the share of the recycling route. Nowadays, steel is one of the most recycled materials. Given the long time life of most equipments made of steel (buildings, bridges, etc..), it takes roughly 15 years on average to convert one ton of steel produced into scrap. So that the amount of scrap that is available is almost 90% of the production of some 15 years ago. Within EU27, 40% of the crude steel production is coming from scraps/eaf. And 15% of the BF/BOF crude steel is coming from scraps directly loaded in the converter. The other effort for the integrated route comes from a better understanding and mastering of the main process to produce pig iron: the blast furnace. The effect of resistance of coke, the preparation of the iron ore, the mastering of the gas flow, etc have considerably improved the carbon efficiency, bringing it very close to the thermodynamic value. Some noticeable progresses have been 12

13 made in other parts of the plant, especially the solidification part, but the blast furnace is responsible for the largest effort. The cost of improving the blast furnace efficiency has been mainly the introduction in the 60 s of a special shop for preparing the iron ore; the sintering plant. Nowadays, all plants have such equipment. Pellets can be an alternative to sinter with similar properties in the blast furnace. Since then, the most significant improvement has been the continuous casting technology, which spreads all over the world in the 80 s. Nowadays, 90% of all plants in the world are using this technology as well. 2-2 GHG emissions In the case of steelmaking industry, is it admitted that the main GHG emissions are CO2. As for energy consumption, most of the CO2 emissions come from the Blast Furnace route, because carbon is used as reducing agent ( as CO) for the chemical reduction of iron ore. Nevertheless, it is of utmost importance to understand that in steel making fuel use, energy consumption and CO2-emissions are not linearly linked. It is therefore not possible to calculate CO2-intensities of the steel sector by making an energy balance only! In the framework of the methodology for the allocation process of emission allowances in the EU ETS post 2012, a sector report for the iron and steel industry has been done by Ecofys, Fraunhofer Institute and Oko-Institut and Eurofer. This table gives approximate GHG emissions ( indicative ) from the iron and steel production chain, calculated from production volume and direct specific emissions. 13

14 Some comments: - CO2 emissions coming from electricity consumption for making steel are not included in these direct emissions. - For BF/BOF route, if we combine the consumption of coke, coal PCI, sinter% in the BF burden... the approximate specific emission is around 2300kg CO2 /t hot rolled products ( good reference plant). - For the recycling route, that means EAF route with scraps input, the approximate specific GHG emission is 210kg CO2/t hot rolled products. Trend of evolution in the past two decades. In 1990 the steel production of EU27 countries was at 180 Million tons, in 2000 at 193 Million tons and in 2007 at Million tons. In 2008 the production dropped at 198Mt, first the first effect of the financial crisis in the last quarter. According to the statistics from 1990 to 2007 coming from IPCC sector definition, there was a decrease in absolute CO2 emissions of 18.4 % in the EU 27. From 2000 to 2007 the decrease was only 1.2 %. If we take into account the increase of steel production, the progress of specific emissions has been around 30%. So far we are more or less on a 14

15 plateau, The shift from BOF steel to EAF is now confined by scrap availability and scrap quality and the blast furnace operation- with existing technologies- cannot be improved significantly as it is close to the limits set by the laws of thermodynamics. II. Likely evolution of the sector 1. What is the likely evolution of the sector in 2020, 2030, 2050 in terms of turn-over in Europe? Is your sector more likely to invest in plants outside the EU? In Western Europe, the market is close to saturation and only limited increase of capacity will be necessary. The situation is different in Eastern Europe, which is still catching up in term of quality and quantity. It is difficult to make clear projections because the results are very sensitive to different hypothesis o Export/ import hypothesis. Steel market is more and more a worldwide market with important flows of products between o continents. Consumption in the construction sector, trying to reach a good energy efficiency The financial crisis started mid 2008 has reduced the demand in Europe drastically, with a reduction of production by around -25% in Difficult to plan when EU27 will recover the output level of the years The steelmaking sector is becoming very international with new players having plants in different part of the world; e.g. ArcelorMittal, Tata/Corus, etc.. The market is very active in BRIC countries, mainly China which is, by far, the first producer in the world. Therefore, investments will be made in such markets by almost all players in this market. Below is given the evolution of crude steel production for the last 10 years, in Mt per year for China, EU 27 and worldwide. EU 27 is clearly on a plateau, at around 200Mt crude steel per year, when China has an average growth over 20% year after year! 15

16 Evolution of steel production for the last decade, in Mt/year For the next three decades, the worldwide production will increase again, but mainly in the BRIC countries, when developed countries will remain more or less at constant level. Here under a reference scenario ( sources IEA, Worldsteel but before financial crisis..). 16

17 The proportion of BF route is around 70% worldwide, so far when it is 60% in EU 27. For the next two decades we could imagine an increase of scraps recycling but there will be a limit at around 50% with existing technologies and the potential of available scraps vs the total steel production. 2. Will new types of products be introduced? If yes, what is the timeline of their introduction? What would be the likely impact on energy consumption and GHG emissions? A lot of new steel products are introduced every year. Recently most of the new kind of steels introduced in the market were for the automotive industry in order to design lighter cars with less fuel consumption and improved safety. The impact of such new products on the energy consumption of the steel industry itself is very low, if any. The main impact is for the energy consumption of our customers. Similar developments are coming for the construction industry as well as other industries (energy production, packaging, domestic appliances, etc..). In this sectors too, the main impact is the energy consumption of our customers. 3. In a business as usual scenario with regards to energy efficiency and GHG abatement measures, what are the likely improvements in energy efficiency and GHG emissions expected in 2020, 2030, 2050? Which stage of the manufacturing process and process utilities are prime candidates for improvements? What are the main components that would be improved? At what cost? As explained above, the energy consumption is close to a minimum given by thermodynamics requirements. There only two possibilities: a. Increase further the share of the recycling route, which is already very high and can only be increased through a levelling off of the worldwide production over a period of, at least, 15 years. From 40% today, we could perhaps reach 50% in the next 15 years. b. Alignment of all plants on the best performers. This may represent a 10 to 15% decrease in global efficiency. Numerous plants in Europe are among the bests, and we can expect an average improvement of 17

18 around 10% within EU 27 for the next decade ( up to 2020). Most other possible improvements are in Chinese and Indian plants. The figure below compares a large set of different existing or theoretical technologies to produce steel from iron ore, at their best level of efficiency. It is clear that the amount of required energy is about the same plus minus 10% whatever the technology used: Blast furnace is the first bar in black on the left; other technologies are using biomass, electrolysis, natural gas, etc. Clearly, energy requirements are almost the same. This is reflecting the binding energy of the Fe 2 O 3 molecule. 25,00 20,00 15,00 10,00 5,00 0,00 ULCOS Reference ULCOS Reference + CCS SP1 Reference Energy consumption GJ/ t of coil BF-Charcoal Reference BF-DRI Reference BF 1 Coal + CCS BF1 Coal BF 1 Charcoal + CCS BF 2.1 Coal + CCS BF2.2 Coal + CCS BF 2.2 Charcoal + CCS BF 3.1 Coal + CCS BF 3.2 Coal + CCS BF 3.2 DRI + CCS BF 3.2 DRI + CCS + CCS SR BF 3.2 Charcoal + CCS BF 4 Coal + CCS BF 4 Charcoal + CCS ISARNA Haematite basic case ISARNA Haematite HV coal ISARNA 100% charcoal ISARNA Haematite MV coal + CCS ISARNA Haematite 100% Charcoal + CCS ISARNA Haematite 125kg Charcoal + CCS Circofer EAF Haem MV Circofer EAF Haem MV Circofer EAF Haem Charcoal Circofer EAF Hae Charc CCS RHF EAF Haem LV Optimised RHF EAF Haem LV Optimised + CCS RHF EAF Haem Charcoal Optimised RHF EAF Haem Charcoal Optimised + CCS DRI+EAF refernce DRI+EAF New DR 2% C cold New DR 0,2% C cold New DR 0,2% C hot DRI + EAF + CCS LRI + BF LRI + CCS + BF LRI + CCS + BF + CCS DRI + AMF DRI + AMF + CCS SR H2 DRI + EAF SR H2 DRI + EAF + CCS CMR H2 DRI + EAF + CCS El. H2 DRI + EAF Aqueous Alkaline Metalysis NTNU/Sintef Pyroelectro Plasma BF2 + CCS Plasma BF2 without sequestration So, no big breakthrough is expected for energy consumption. However, as can be seen from the above charts, beyond best practices some improvement at the level of 10-15% are possible using different technologies under investigation now such as oxygen burners, overall dynamic energy management, optimum management of scale, near net shape casting, etc 18

19 As far as CO2 emissions are concerned, the results are very different. On one hand the continuous progress for scraps recycling rate and gradual reduction of energy consumption for BF route would bring in proportion the results presented above. One the other hand, with the new technologies, such as those promoted in ULCOS program, we expect significant progresses. There are different horizons of time: a. Incremental improvements of existing technologies. As already explained more or less 10-15% potential progress for the next 15 years. b. Advanced existing technologies. Under investigations so far we need experiments at large scale and the first industrialisation at the horizon We are in the frame of ULCOS II with the main project: Blast Furnace ULCOS, with Top Gas Recycling and CCS. The potential is a reduction of CO2 emissions by 50%. c. Breakthrough technology, in the frame of ULCOS II as well, with the Smelting Reduction Process, Isarna type. Not supposed to be implemented at large scale before The potential is a reduction of CO2 emissions by 70-80%. 4. If this potential is achieved what would be the possible impact of each of the measures identified above on: a. Fuel savings b. Employment c. CO 2 savings As explained above, the maximum achievable impact could be 10 to 15% energy saving for the integrated route. Effect on employment will be also low. As well CO2 savings will be of 10 to 15%. It must be understood, that CO2 savings can be made though the energy saving is zero or even negative: geological storage of CO2 is typical of such situation. Increase of the share of the recycling route is very dependant on the availability of scrap. If the worldwide production of steel is levelling off to a plateau, then the share of the recycling route could increase. This will have a large impact on fuel saving and CO2 emissions as explained above: the moving of one ton from BF/BOF route to scraps/eaf brings 80% reduction of energy consumption and 90% reduction of CO2 direct emissions. This will also have a large effect on employment since such plants are much smaller 19

20 that the one of the integrated route (Roughly 30% for the same production). As such plants are using mainly electricity, CO2 savings will depend on how the electricity has been produced. On the long term, and not before 2020, we could imagine the implementation of new technologies, as those developed in ULCOS program. III. Maximising efficiency potential 1. Are there any advanced technologies and concepts that are currently not exploited due to high phase-in or capital replacement costs, which however, could improve the energy efficiency and GHG emissions in your sector? What would be the cost of implementing such measures? As explained above: very little for available technologies. Some technologies are proposed by the Japanese (Coke Dry Quenching, etc..) But conflicting results exist about the real global efficiency. Other technologies are existing or under development ( Top Gas Recovery Turbine, oxygen burners, regenerative burners, overall dynamic energy management,, near net shape casting, etc). Most of such technologies require large capital expenditures and/or technological risks. In addition, stable consumers especially off-site will be needed because the on-site energy demands especially for heat and steam will often be exceeded.. In this respect legal an political support will be pivotal. In addition it must be kept in mind that energy recovery in integrated steel making as a rule does not reduce the demand for metallurgical carbon needs and thus has little impact on on-site CO2-emissions. Since not much can be made for further energy savings with existing facilities, either BF/BOF or EAF routes, large R&D programs have been launched to look for solutions emitting less CO2. It is the objective of one large European consortium called ULCOS. The R&D budget has been 75 M over the last 5 years, only for the first part, until small scale demonstration. Roadmaps to reach industrialization are under investigation: ULCOS phase II. The path is very long: 15 to 20 years and the capital expenditures are in the range of 50 to 150 / t of annual production. 20

21 2. If these technologies are not yet commercialised, what is the scale of research, development and demonstration that is required to accelerate their development? See above: R&D for energy saving should be in the range of 20 M / year. Looking for CO2 saving demonstrators will require two or three projects in the range of 300 M to 500 M over 5 to 10 years. 3. If already commercially available, what are the main barriers to their implementation? What incentives and efforts are needed to deploy them in your sector? See above: Some technologies are available for energy consumption decrease, but with a total impact for the BF/BOF filiere at around 2-5%. Due to cost of investment price of energy so far is not always a sufficient driver to implement it. 4. If the maximum potential in energy efficiency improvement and GHG emissions reduction are realized, what would be the impact of each of the measures/incentives identified above on: a. Fuel savings b. Employment c. CO 2 savings Using only available technology beyond best practices toward developing countries, very small proportion of saving is possible: less than 5% in any case. This will have very low impact on employment and CO2 emissions. IV. THE CONTRIBUTION OF THE SET-PLAN Which are the key measures and incentives that should be undertaken at the EU level in order to maximise the development and uptake of energy efficiency and GHG emissions abatement technologies by your sector? To be discussed during the workshop 21