Potential for CO 2 Mitigation of the European Steel Industry

Transcription

1 Stahlinstitut VDEh 0 IEAGHG / IETS Iron and Steel Industry CCS and Process Integration Workshop, November 2013, Tokyo, Japan Potential for CO 2 Mitigation of the European Steel Industry Dr.-Ing. Jean Theo Ghenda and Dr.-Ing. Hans Bodo Lüngen, Steel Institute VDEh, Duesseldorf, Germany J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

2 Stahlinstitut VDEh 1 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Technology review Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

3 Stahlinstitut VDEh 2 Introduction and background European Union defined ambitious target for CO 2 emission reduction for European Industry of 80 to 95% compared to 1990 until 2050 Therefore EUROFER contracted the Boston Consulting Group in collaboration with the Steel Institute VDEh to obtain a realistic view of the EU 27 steel sector's CO 2 mitigation capabilities based on physical / technical limits as well as economic considerations A functioning steel industry is crucial for Europe, hence BCG/VDEh do not assume a deindustrialization of Europe, but rather evaluate;- Steels own CO 2 mitigation potential by sharing best practices, implementing incremental improvements and alternative steel-making technologies as well as combinations with CCS as an end-of pipe option Indirect effects of steel as a mitigation enabler, i.e. the CO 2 savings by applications where steel and only steel leads to CO 2 savings J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

4 Stahlinstitut VDEh 3 Overview of iron- and steel-making routes BOF steel EAF steel Raw material Integrated route Smelting reduction Direct reduction Scrap Lump ore Fine ore Lump ore Fine ore Lump ore Fine ore Raw material preparation Coal Coke Sinter Pellets Pellets Pellets Scrap Blast furnace Shaft prereduction Fluidized bed Shaft furnace Fluidized bed Iron making Coal, oil, or natural gas Scrap Blast O 2 Hot metal Meltergasifier Reducing gas HCI Coal O 2, coal Hot metal Natural gas HBI hot / cold DRI Natural gas HBI Steel making O 2 O 2 BOF Scrap BOF EAF Scrap EAF Casting Rolling / processing J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Liquid steel Liquid steel Liquid steel Liquid steel Crude steel Finished products (flat & long) Stahl-Zentrum

5 Stahlinstitut VDEh 4 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Technology review Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

6 System boundaries mirror steel's CO 2 footprint originated in EU27 Scope I direct CO 2 emissions from the following facilities: not included Scrap System boundaries for base line Sintering xx g CO 2 /t Pelletizing xx g CO 2 /t Coke making Pellets Oxygen xx g CO 2 /t Steam Iron making xx g CO 2 /t Pig iron xx g CO 2 /t xx g CO 2 /t Sources: World Steel Association; Project team analysis. 1. The utilization of byproducts, such as process gases or waste heat, is not counted as a credit, because such use helps reduce the energy consumption of aggregates. Only byproduct gases that are sold to a second party can be counted as a credit, because they help to reduce emissions of a different sector. 2. Currently no credits are given for the CO 2 savings through slag usage in cement production Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx 5 BOF EAF Steel making Casting + hot rolling Cold rolling + further processing Scope II indirect CO 2 emissions from purchased electricity Scope III indirect CO 2 emissions from purchased materials (produced in EU27): DRI Coke Graphite electrodes Credits for process gases 1 Burnt lime Credits for slag 2 Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

7 The starting point: EU27's specific CO 2 intensity decreased 14%, absolute emissions in dropped by 25%, from 1990 figures ( ) Specific emissions Production Avg. CO 2 Crude steel Total CO = = 2 share 1 intensity 1 production 1 emissions 1 kg CO 2 /t crude steel % kg CO 2 /t crude steel Mt Mt CO 2 1,968-4% % 1, BF-BOF EAF -11% % 1, % 1. Includes BF-OHF share of 6 percent in 1990 and 0.4 percent in, accounting for 3 and 0.2 Mt CO 2, respectively Note: Figures include the process step of hot rolling Source: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx 6 1, % % 223 Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

8 The development since 1990: Significant reduction of CO 2 emissions from 1990 to, mainly driven by volume effects Mt CO BF-BOF production -30 Mt 1990: 131 Mt CS : 101 Mt CS EAF production +16 Mt 1990: 55 Mt CS : 71 Mt CS Total emissions 1990 BF-BOF efficiency gain -80 kg CO 2 /t CS 1990: 1,968 kg CO 2 /t CS : 1,888 kg CO 2 /t CS BF-BOF route volume effect BF-BOF route efficiency gain BF-BOF route EAF route volume effect EAF efficiency gain -212 kg CO 2 /t CS 1990: 667 kg CO 2 /t CS : 455 kg CO 2 /t CS Effect of better indirect emissions (electricity) only minor (~ 10%) EAF route EAF route efficiency gain OHF route effect Total emissions Note: Includes all direct and upstream emissions as well as casting and hot rolling; BF-OHF route volume 1990: 11 M; CS = crude steel Source: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx 7 Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

9 Stahlinstitut VDEh 8 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Technology review Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

10 Technology review Stahlinstitut VDEh 9 Agglomeration Integrated route EAF route Incremental Sinter plant cooler heat recovery Coke dry quenching (CDQ) Injection of H 2 rich reductants 1 Injection of H 2 into shaft Optimization of Pellet ratio to Blast Furnace Top gas recovery turbine Waste gas recovery Heat recovery Optimization Alternative (Substitution and Breakthrough) Corex Finex HIsarna Midrex / HyL based on natural gas Finmet / Ulcored based on natural gas + fine ores Synergies between different technologies 2 Top gas recovery (TGR) Combination of technologies with CCS 3 1. Includes the potential use of coke oven gas as reductant 2. E.g., use of coke oven gas for DR, BF+Corex/Finex+DR, use of Corex/Finex gas for DR 3. BF: CCS after power plant, TGR with CCS, Corex/Finex with CCS, HIsarna with CCS EAF: gas based DR with CCS, Ulcored with CCS J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

11 Stahlinstitut VDEh 10 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Technology review Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

12 Backup Overview of the CO 2 abatement potential of incremental technologies applied in economically viable scenarios Per ton product: CO 2 saving potential Per ton of crude steel: CO 2 saving potential kg CO 2 /t product 209 kg CO 2 /t crude steel Sinter plant cooler heat recovery CDQ 1 TRT Optimization of pellet ratio to BF 2 Penetration in (%): COG inject. BF BOF gas recycling TGR- BF EAF process optimization It is sometimes argued that during wet quenching around 1 percent of the coke produced is lost because of burning when the coke is in contact with the surrounding air during transport to the quenching facility. This would reduce CO 2 savings from 54 to 22 kg CO 2 per ton of coke for. Assuming a CO 2 intensity of 210 g CO 2 per kwh, this would even result in a negative CO 2 balance for CDQ of about 6 kg CO 2 per ton of coke % pellet ratio assumed for calculations 3. If credits for slag were to be taken into consideration, this would reduce the effect of 100 percent pelletoperated BFs by 72 kg CO 2 per ton of hot metal (or 65 kg CO 2 per ton of crude steel) because of a lower slag volume of around 130 kg (based on operational plant data). Depending on the grade of pellets, fluxes which normally are bound into the sinter may have to be charged directly into the BF, which could increase CO 2 emissions from blast furnace operations. In optimizing the pellet ratio the trade off between operational benefits due to lower slag volumes and less CO 2 savings in the cement industry pertaining to slag, have to be considered Note: Saving potential per ton of crude steel is calculated on the basis of respective material-input amounts as well as yield factors for each process step Source: BFI; Steel Institute VDEh; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx Sinter plant cooler heat recovery 18 CDQ 1 9 TRT EAF process optimization Optimization of pellet ratio to BF 2 COG inject. BF TGR BF 24 BOF gas recycling 20 Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

13 Stahlinstitut VDEh 12 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Technology review Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

14 The baseline forward: Moderate annual growth of crude steel production expected (0.8 percent from until 2050) Historically, crude steel production stable in EU15 but declining in Eastern Europe Going forward, slow growth expected for EU27, 2007 production level to be reached in 2032 Mt Mt Note: e = estimate Source: World Steel Association; Project team analysis Other EU EU Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx e 0.8% e Other EU e EU e EU27 Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

15 Backup Scrap availability forecasted to grow by 0.9 percent annually until 2050, mainly driven by obsolete scrap Scrap availability driven by three scrap types Total available scrap in EU27 (in Mt) Production waste and errors in conversion of crude to finished Depending on efficiency of production process Production waste and errors in steel-using sectors Depending on industry sector Steel in products at the end of their life cycle Depending on scrap recovery rate and life cycle per sector Source: Project team analysis New/prompt scrap Home scrap Obsolete/old scrap Crude steel production Finished steel consumption per sector Finished steel < cons. per sector Recycling rate (%) Scrap rate (%) Scrap rate (%) Lifetime (y) Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx Home scrap New scrap % e 2050e Obsolete scrap Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

16 Stahlinstitut VDEh 15 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

17 Overview of CO 2 intensity per route for and 2050 Scrap-EAF BF-BOF DRI-EAF 1 Smelt. red. 2 -BOF t CO 2 / t crude steel % 100% 63% 128% 2050 Drivers Notes t CO 2 / t crude steel % 1.66 Best-practice sharing + incremental technologies CO 2 intensity of purchased electricity (429 g CO 2 / kwh in and 221 g CO 2 / kwh in 2050) Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx % 60% 139% Only pellets produced in EU27 are included Self sufficiency in terms of electricity 1. Based on Midrex direct reduction technology 2. Based on Finex smelting reduction technology Note: Differences between routes in production of the by-product slag not considered in analysis Sources: VDEh; Project team analysis Hot charging in 2050 All pellets (1,120 kg) w/ 105 g CO 2 / t pellet rucksack 5% efficiency gain Self sufficiency in terms of electricity Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

18 The option space for possible CO 2 abatement until 2050 Mt CO % -80% compared to Crude steel production [Mt crude steel] Specific CO 2 intensity [kg CO 2 /t crude steel] , Upper boundary A CSP forecast + CO 2 intensity on level B Increased EAF-share based on scrap availability + bestpractice sharing Lower theoretical boundary without CCUS C 44% Scrap-EAF, 45% DRI- EAF, 11% BF-BOF; incremental improvements esp. for BF-BOF Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx , crude -steel production with CO 2 intensity and Scrap-EAF share Source: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/; Project team analysis A 1,219 1,145 B 1, C A B C Economically viable Not economically viable Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

19 Stahlinstitut VDEh 18 Economic feasibility assessment of the technologies Economic feasibility was computed by comparing costs (CAPEX et OPEX) with the potential savings over considered investment period, depending on different price scenarios The price scenarios included a reference-price scenario (inflation only), medium-price scenario (doubling of real input factor costs) and high-price scenario (fivefold increase of input factor costs) The economically feasible technologies were gradually implemented based on varying adaptation curves for the different scenarios J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

20 A comparison of capital expenditures for alternative steelmaking technologies CAPEX BF-BOF retrofit Scrap-EAF Smelting reduction DRI-EAF BF-BOF greenfield Costs normalized BF-BOF retrofit = 100 CAPEX ( /t CS) Scrap-EAF 184 BF-BOF retrofit DRI-EAF +8% +143% +131% EAF DRI BOF 17 4 Corex/Finex Smelting reduction BF-BOF greenfield 1. BOF: 50 percent of Greenfield investment 2. BF: 50 percent of Greenfield investment 3. Sinter: 30 percent of Greenfield investment 4. Coke: 15 percent of Greenfield investment Note: CS = crude steel Source: Diemer et. al., 2011; Steel Institute VDEh; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx BF Sinter plant Coke plant Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

21 A comparison of the operating expenses of alternative steelmaking technologies OPEX BF-BOF Smelting reduction 2 Scrap-EAF DRI-EAF Costs normalized to BF-BOF = 100 OPEX ( /t CS) BF-BOF DRI-EAF 1 Smelting reduction % 76% +33% +3% +14% % 87% Other OPEX 1. Based on Midrex direct reduction technology 2. Based on Finex smelting reduction technology Note: CS = crude steel Source: Steel Institute VDEh; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx % 82% OPEX input factor costs Scrap-EAF % 88% Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

22 CO 2 Abatement Economic Scenarios for 2050: Around Percent as Compared with 1990 (Close to Point B) -60% -80% compared to 1990 Mt CO Crude steel production [Mt crude steel] Specific CO 2 intensity [kg CO 2 /t crude steel] ,508 Abatement cost of moving from existing BF-BOF to DRI-EAF: 260 to 700 /tco ,293 Economically viable Not economically viable Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx crude -steel production with CO 2 intensity and Scrap-EAF share Source: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/; Project team analysis , A 1,219 1,145 B C A B -9% C -38% Upper boundary A Crude steel production forecast & CO 2 intensity on level B Increased EAF-share on the basis of scrap availability & best-practice sharing Economic scenarios Lower theoretical boundary without CCUS C 44% Scrap-EAF, 45% DRI- EAF, 11% BF-BOF; increased improvements, especially for BF-BOF Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

23 Development of average specific CO 2 intensity for different scenarios (without CCUS) kg CO 2 /t crude steel (including hot rolling) 1,600 1, ,400 Base line -14% 1,300 Upper boundary aa 1,200 1,100 1, Upper boundary bb Economic scenarios Reference-price scenario 1 Medium price scenario 2 High price scenario Input factor prices adjusted for inflation 2. Doubling of (real) input-factor prices from until Fivefold increase of (real) input-factor prices from to 2050 Note: All scenarios are without CCUS Source: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx 22-24% Lower boundary cc -26% to -28% -48% Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

24 Absolute CO 2 emissions in 2050 could be almost 60% lower than in the 1990s with the full implementation of CCUS Mt CO Abatement cost of moving from existing BF-BOF to DRI-EAF: 260 to 700 /tco 2-80% compared to Crude steel production [Mt crude steel] Specific CO 2 intensity [kg CO 2 /t crude steel] , , crude-steel production with CO 2 intensity and Scrap-EAF share Source: EUROFER Benchmark 2007/2008; VDEh data exchange 1990/; Project team analysis Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx ~ A 1,219 1,145 B 1, C ~ 550 D A B -9% -38% C D -56% Upper boundary A Crude steel production forecast & CO 2 intensity on level B Increased EAF-share on the basis of scrap availability & best-practice sharing Economic scenarios Lower theoretical boundary without CCUS C 44% Scrap-EAF, 45% DRI- EAF, 11% BF-BOF; increased improvements, especially for BF-BOF Lower theoretical boundary with CCUS D 44% Scrap-EAF, 56% BF- BOF+TGR, DRI-EAF, or SR- BOF Economically viable Not economically viable Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

25 Stahlinstitut VDEh 24 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and 2050 Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

26 Stringent four-step logic applied to isolate the case studies for evaluating steel's own mitigation potential Initial list Weight reduction cars Onshore/offshore wind power Leaf springs Rubber-enforcing steel structures for tires Motor systems Assembled camshafts CCS Structural steel < 1 Geography Focus on EU-27 Nuclear power plants Solar power 2 Potential impact vs. Relevant potential by 2030 Inland water transport CCS 3 Substitution of materials Bridges Onshore wind mills No comparative examination of alternatives 4 Rail Jet engines Absolute potential Cases with abatement 5 MtCO 2 / year 8 case studies with distinct potential Selection: Only savings that are 100% attributable to steel are taken into account Sources: VDEh; BCG/VDEh analysis. Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx 25

27 Eight case studies for EU27 show annual CO 2 savings of about 440 Mt attributed to steel and only 70 Mt of extra CO 2 Emissions Case study Emissions in the Ratio between CO 2 Net CO 2 reduction potential 2 steel production reduction / emission 1 Efficient fossil fuel PPs ~ 155:1 2 Offshore wind power ~ 23:1 Energy industry 3 Other renewables ~ 148:1 4 Efficient transformers ~ 17:1 Traffic Household / industry Efficient e-motors Weight reduction cars Weight reduction trucks Combined heat / power 1. Bioenergy. 2. Net reduction refers to reduction attributable to steel. Note: PP = power plant Source: BCG/VDEh analysis Mt CO 2 / yr Mt CO 2 / yr Exhibits-Low Carbon Europe-Eurofer Steel Day-FS-MUN final.pptx ~ 443 ~ ~ 2:1 ~ 4:1 < 1 ~ 9:1 ~ 6:1 Copyright 2013 by The Boston Consulting Group, Inc. All rights reserved.

28 Stahlinstitut VDEh 27 Agenda Introduction and background Baseline CO 2 emissions calculation of EU27 steel industry in 1990 and Incremental CO 2 reduction Potentials Forecast for 2050 EU27 steel production and scrap availability CO 2 reduction for 2050 scenarios CO 2 mitigation by steel application Conclusions J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

29 Stahlinstitut VDEh 28 Conclusion to CO 2 Reduction Potential of the EU 27 Iron and Steel Industry until 2050 The equipment of the European iron and steel industry are already operated at very high efficiency level Existing potentials of energy and heat recovery provide only small contributions to increase efficiency and reduce CO 2 emissions but request high investment and operating costs. Steel will not be able to come anywhere near the requested CO 2 reduction of about 80% for the ETS sector between 1990 and A reduction of 38% seems possible with a transition from coal-based to gas based reduction method. However, this would require access to raw material, scrap and energy at competitive prices, incentives for further investment and full offset of distortive CO 2 costs. A CO 2 reduction of 56% seems possible with the implementation of CCS The use of steel makes a significant contribution to CO 2 emission reduction J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum

30 Stahlinstitut VDEh 29 Thanks for your attention J.T. Ghenda and H.B. Lüngen Stahlinstitut VDEh Stahl-Zentrum