A Low-carbon roadmap for Belgium Study realised for the FPS Health, Food Chain Safety and Environment

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1 A Low-carbon roadmap for Belgium Study realised for the FPS Health, Food Chain Safety and Environment Industry sector non-ferrous metals document This document is based on content development by the consultant team as well as an expert workshop that was held on the

2 Content Industry sector non-ferrous Summary p. 2 Context and historical trends p. 4 Details of the ambition levels and costs per lever p. 16 Resulting trajectories p. 33 Backup p. 41 2

3 Executive summary for the non-ferrous sector Construction of different future production trajectories 3 trajectories for non-ferrous metals production in Belgium have been defined, which include a range between ~+38% to ~-27% of 2010 production levels in 2050 The high growth trajectory assumes that new markets can be captured (e.g. recycling of batteries for electric cars, photovoltaic, fuel cells,...). The medium growth trajectory assumes a stable market in a highly competitive environment. The low growth trajectory assumes a decline of base metal production in Belgium. Energy costs are an important factor in total production costs of non-ferrous metals. Disparities in energy prices within the EU and between the EU and the rest of the world is an important issue to determine competitiveness of the Belgian non-ferrous metals industry. Estimate of potential and cost for the GHG reduction opportunities GHG reduction potential (assuming constant production) ranges between 53% and 98% (level 3 & 4 ambition) Energy efficiency can be improved and reduce emissions by 20% to 30% (CHP potential is very limited) A fuel switch from liquid fuels to gas can be expected to be completed by 2025, leading to 2% of additional emission reductions. The switch to gas has already largely occurred in the past two decades. The substitution of gas by biogas allows for an additional 28% (level 4) to 32% (level 3) of emission reductions. The ambition in level 4 is lower because of the use of electric furnaces. Because of the many relatively small production sites, CCS is applied starting from ambition level 4. The application of CCS is needed to reduce emissions by a further 4%. Besides CCS, electrification (switch of 50% of furnaces to electric furnaces) can also be applied in the level 4 ambition, leading to emission reductions of 35%. NOTES Reduction potentials are for are ambition levels 3 and 4, expressed as a % of the 2010 GHG emission level except where explicitly mentioned otherwise. The reduction in each step represents the additional reduction percentage after all the previous levers have been applied. This is why : (1) The reductions of the actions add up to the total reduction of the sector (levers are applied in the sequential order represented here) (2) Level 4 ambition can therefore be smaller in cases where more potential has been achieved with the previous levers There is a double counting between the biomass potentials mentioned here and in the supply section, it is removed in the OPE²RA model 3

4 Content Industry sector non-ferrous Summary p. 2 Context and historical trends p. 4 Details of the ambition levels and costs per lever p. 16 Resulting trajectories p. 33 Backup p. 41 4

5 A detailed analysis is performed for each industrial sector, the methodology is detailed in the general industry document (and not repeated in each sector document) Understanding the industry Modelling demand trajectories Modelling trajectories with intensity levels + CCS Analyses Definition of the value chain Analyses of growth and competitivity Potential of CO 2 reduction incl. costs Results Modelling the emissions tree Demand trajectories Trajectories with different intensity levels + CCS SOURCE: Climact 5

6 Non-ferrous metals represent 1% of emissions for 2% of the energy consumption GHG emissions and energy consumption in Belgium 2010 (MtCO 2 e, TWh, %) ~85% covered by workshops Wallonia datasets MtCO 2 e 37 19% 36% 6% 3% 11% 7% 1% 13% 2% 1% TWh % 33% 5% 8% 5% 2% 11% 5% 4% 1% 100% Refineries (in chemicals) Steel Industry Chemicals Industry Pulp & Paper Industry Food, drinks and tobacco Industry Construction (Bricks and ceramics) Non-Ferrous metals Cement Industry Lime Industry Minerals Industry (glass) Other Non-ferrous metals represent 1% of emissions for 2% of the energy Non metallic minerals (Cement, Lime and Glass) have high process emissions In steel, there would be less TWh if the coke used as reducing agent was not included in the analysis (cfr with the IEA data) Emissions Energy NOTE: (1) Excluding electricity emissions and consumption (2) Amongst solid fuels, coke use in steel industry has two function (raw material and energy) Both are included in the analysis but only the 2nd creates emissions in the atmosphere SOURCE: NIR CRF v1.4 6

7 Production of non-ferrous metals in Belgium Production of majority of non-ferrous metals: Base metals: Al, Cu, Zn, Pb, Ni, Sn Precious metals: Ag, Au, Ir, Pt, Pd, Rh, Ru Special metals: Co, Ge, Se, Sb, Te, Different forms: Raw metals (ingots, cathods) Semis (extrusion, thread,...) Hightech applications Using different resources Concentrates Metal scraps Complex metal-containing materials and waste products SOURCE : Agoria 7

8 Production of non-ferrous metals in Belgium Core data for 2010 Number of companies: 34 Turnover: Employment: 9,9 billion euro fte Export level: 80% Investment: R&D: 140,5 million euro 33 million euro SOURCE : Agoria 8

9 Production of non-ferrous metals is recovering from economic crisis Production of raw non-ferrous metals (kton product) Production of semi manufactured products (kton product) Copper Zinc Zinc dust Lead Noble metals Misc CAGR +11% Aluminium Copper Zinc Lead CAGR +9% SOURCE : Agoria 9

10 GHG emissions have decreased significantly between , but not since 2000 GHG emissions non-ferrous metals sector ( ) (ktonco 2 e) Data from energy balances (Combustion emissions, electricity excluded) % Model 423 ETS data (Combustion emissions) 383-9% Sharp decline in emissions over the period can be explained by new investments; - Process emissions are reported starting from Not all companies are covered by ETS Flanders Wallonia Model 2008 ETS 2009 ETS 2010 ETS Total SOURCE: Atlas énergétique wallon, ETS registry, MIRA kernset milieudata 10

11 Non-ferrous metals sector combustion emissions decrease faster than energy use because of switch to gas Non-ferrous metals consumption and emissions (TWh, MtonCO 2 e electricity excluded) TWh MtonCO 2 e 2,5 2,5 2,3 2,2 0,8 2,0 1,9 1,9 0,6 1,5 1,0 0,4 Liquid Fuels Solid Fuels Gaseous Fuels 0,5 0,2 Biomass Other Fuels 0,0 0,0 CO2e Emissions SOURCE: NIR CRF v1.4 11

12 Production is fragmented amongst different processes and technologies Emissions and production type per ETS site Company Production site GHG emissions (ktonco 2 e) Comment Aurubis Olen 43,3 (1) 31,6 (1) 38,9 Production of primary copper and semis Aleris Aluminium 43,3 33,9 42,0 Production of aluminium semis Metallo Metallo-Chimique 27,0 26,2 23,0 Nyrstar Balen 12,8 8,1 18,1 Umicore Hoboken 162,3 149,4 136,8 Production of secondary Cu, Sn, Pb, Ni Production of primary and secondary (20%) zinc Production of precious and special metals Olen 73,2 (1) 80,8 (1) 78,0 Production of cobalt powder ETS membership: Production and processing of non-ferrous metals, including production of alloys, refining, foundry casting etc., where combustion units with a total rated thermal input (including fuels used as reducing agents) exceeding 20 MW are operated. Overpelt 21,4 11,7 12,2 Production of zinc powder & zinc metals Total 383,3 341,6 349,0 NOTE: Site ETS site names have been renamed for clarity in this table. (1)Aurubis Olen production has been extracted from Umicore Olen for years 2008 and 2009 SOURCE: ETS registry, Belgium, (1) Sector consultation 12

13 Growth prospects Increasing materials costs are changing the markets dynamics Trade prices of zinc and copper on futures markets (1) (USD/t) Illustrative Zinc Copper Increase in material cost bring: increase in substitution by other cheaper materials increase financial charges for the industry NOTE: Major metals (Al, Cu, Pb, Zn, Sn, Ni) are traded on futures markets such as the LME SOURCE: Agoria, LME future markets ( ), Sector consultation 13

14 Growth prospects Belgium Trends apparent at world, EU and Belgian level World (1) EU (1, 2) Belgium (2) Increasing demand from emerging economies (China, India,...) Demand puts pressure on prices for primary resources Access to scrap (for recycling) also becomes increasingly challenging Competition in production of base metals (Cu, Zn, Al, Pb,...) Competition with other materials in many applications: ceramics, plastics and ferrous metals. Largest copper producer Overcapacity and competition between European production centres Difficulties to access raw materials Major exports to emerging countries Non-ferrous metals industry is crucial partner in low-carbon transition (power cables, fuel cells, solar panels, batteries,...) High energy prices and stringent environmental regulation put sector under competitive pressure compared to other regions Important European player for some base metals (copper, zinc, aluminium semis) Frontrunner in recycling on European/global level Strong (by-)product coupling between non-ferrous metals companies Strong technological expertise and knowhow Focus on production of high valueadded products (special metals, alloys) Importance of low and stable energy prices (e.g. nuclear phase out, GHG emission certificates, GSCs, etc.) because of direct competition with neighbouring countries (France, Germany,...) SOURCE: (1) BREF document non-ferrous industry (2) Sector consultation 14

15 Growth prospects EU Market trends on the long term Non-ferrous metals production coupled to evolution in material use in other sectors: cars, ICT, buildings,... Possibility of new speciality markets opening up (e.g. recycling of Lithium batteries) European resource efficiency initiative: importance of recycling, BUT possible conflict with low-carbon agenda (recycling of low-quality scrap increases direct emissions) Investment in process improvements for environmental reasons need to take into account competitiveness on global level EU moving towards a low-carbon economy: dangers of Intra-EU competition (because of different regulations in EU Member States) Competition between EU and other regions SOURCE: CEPI roadmap 15

16 Content Industry sector non-ferrous Summary p. 2 Context and historical trends p. 4 Details of the ambition levels and costs per lever p. 16 Resulting trajectories p. 33 Backup p

17 Parameters influencing demand in 2050 Parameter Growth prospects CAGR European population towards 2050: 1% CAGR GNP: 1,6% (1) CAGR non-ferrous metals industry physical production ( ) : 0,8% (2) Probability of creation of new infrastructure Proximity of markets (majority of export to European countries) Linked to many sectors crucial for the low-carbon transition (building sector, cars, energy sector, etc.) High energy cost puts sector under competitive pressure; new production plants for base metals (Cu, Zn,...) mostly located in emerging economies (India, China,...) Lifetime of production infrastructure: years (3) Correlation to Belgian production Well developed and integrated production capacity facing competitive pressures Recycling Potential already largely tapped (3) Modification expected in mix of products Partial shift to high added-value speciality products (3) SOURCE: (1) Federal Planning bureau, (2) GEM-E3 projection, physical production output (kton) (used in TUMATIM study), (3) Agoria 17

18 3 trajectories influencing energy demand will be modelled Possible growth scenarios European population: 1% GNP: 1,6% (1) GEM-E3 ( ) 0,8% (2) Agoria: GEM-E3 projection optimistic case (Trajectory 1) Maintaining production capacity in Belgium is central assumption (Trajectory 2) Pessimistic assumption is mirroring the GEM-E3 projection (Trajectory 3) Trajectory 1 Trajectory 2 Trajectory 3 Non-ferrous metals CAGR +0.8% (+38% by 2050) Assuming high growth e.g. driven by new markets in mobility (e.g. batteries), photovoltaic, fuel cells,... CAGR +0% Assuming stable output in highly competitive environment CAGR -0.8% (-27% by 2050) Assuming gradual decline e.g. decrease of base metal production in Belgium SOURCE: (1) Federal Planning bureau, (2) GEM-E3 projection, physical production output (kton) (used in TUMATIM study) 18

19 Growth prospects Belgium Production according to trajectories 1, 2 et 3 Production of non-ferrous metals (primary & semis) (ktons) Delta 10-50,% 2,000 1,500 1,000 Trajectory 1 Trajectory 2 Trajectory 3 +38% +0% -27% +3%

20 Reduction potential Reduction levers are additional and applied in the following order Methodology Product mix Energy efficiency Process improvements Fuel switching End of pipe Augmenting the proportion of product which require less CO 2 for production Reduce mechanical and thermal losses Recuperate thermal energy (CHP) Modification of processes Towards fuels which emit less CO 2 Carbon capture and storage Recycling of scrap metals? Energy efficiency Electrification Fuel vs. gas CCS CHP Fossil fuels vs. biomass 20

21 Changes in product mix Recycling of scrap metals not likely to increase in base metals The production phase of non-ferrous metals based on primary or secondary raw materials has significantly reduced its footprint over the past, meaning that the effectiveness of further improvement is limited. Non-ferrous metals increase durability of materials, extending the lifetime during which these materials are fit for purpose. This durability of non-ferrous materials also reduces their availability for recycling. Combined with the growing demand for non-ferrous metals in a low carbon economy, recycling alone cannot meet the needs of the economy. The collection and pre-processing phase is crucial to ensure the availability of materials for recycling. Re-using non-ferrous materials in countries without available recycling infrastructure reduces availability of scrap metals. SOURCE: Eurometaux 21

22 Energy efficiency (1/4) Reduce mechanical and thermal losses Potential of cross-cutting measures (across industry) = ~10% (1) Energy efficiency of new production units in nonferrous metals industry: 30% more efficient in 2030 (1) Currently not much developments in new (lowcarbon) production technology (2) Illustration Hydrocopper process uses 50% less fuels and electricity compared to pyrometallurgical route SOURCE: (1) SERPEC study; (2) Agoria consultation 22

23 Energy efficiency (2/4) Reduce mechanical, thermal and electrochemical losses Level 1 Level 2 Level 3 Level 4 Minimum effort (following current regulation) Moderate effort easily reached according to most experts Significant effort requiring cultural change and/or important financial investments Maximum effort to reach results close to technical and physical constraints 5% efficiency improvement 10% efficiency improvement 20% efficiency improvement 30% efficiency improvement NOTE: Assumption of BAT application with no additional cost (capex = saved energy expenditures) SOURCE: SERPEC study 23

24 Energy efficiency (3/4) CHP potential CHP potential limited because of demand for hightemperature heat (between 1000 C and 1700 C) SOURCE: SERPEC study 24

25 Energy efficiency (4/4) CHP potential Level 1 Level 2 Level 3 Level 4 Minimum effort (following current regulation) Moderate effort easily reached according to most experts Significant effort requiring cultural change and/or important financial investments Maximum effort to reach results close to technical and physical constraints No additional CHP No additional CHP No additional CHP No additional CHP 25

26 Process improvements A portion of the pyrometallurgical processes can switch to electricity Level 1 Level 2 Level 3 Level 4 Minimum effort (following current regulation) Moderate effort easily reached according to most experts Significant effort requiring cultural change and/or important financial investments Maximum effort to reach results close to technical and physical constraints 0% switch 0% switch 0% switch 50% switch to electric processes NOTE: Transition is expected to be expensive. SOURCE: Agoria consultation 26

27 Fuel switching (1/2) Switch from liquid fuel to gas Level 1 Level 2 Level 3 Level 4 Minimum effort (following current regulation) Moderate effort easily reached according to most experts Significant effort requiring cultural change and/or important financial investments Maximum effort to reach results close to technical and physical constraints No additional switch to gas 100% switch from liquid fuel to gas in % switch from liquid fuel to gas in % switch from liquid fuel to gas in 2025 NOTE: Cost depends on fuel cost, no capex SOURCE: Sector consultation 27

28 Fuel switching (2/2) A switch to biogas is technically possible Level 1 Level 2 Level 3 Level 4 Minimum effort (following current regulation) Moderate effort easily reached according to most experts Significant effort requiring cultural change and/or important financial investments Maximum effort to reach results close to technical and physical constraints No additional biomass in % biomass in % biomass in % biomass in 2050 NOTE: cost depends on fuel cost, no capex SOURCE: Sector consultation; 100% assumption in level 4 used in the study Towards 100% Renewables in Belgium by

29 Reduction potential: CCS (1/3) Industrial costs USD/tCO 2 e SOURCE: IEA 29

30 Reduction potential: CCS (2/3) CCS potential is based on size of installations ton CO2eq by production site category Industry Total Level 1 Level 2 Level 3 Level 4 <0,3 M 0,3-1 M >1 M Iron & steel % 68% 80% 85% Non ferrous metals % 0% 0% 85% Chemical % 51% 71% 85% Refineries % 85% 85% 85% Lime % 40% 85% 85% Glass % 0% 57% 85% Cement % 82% 85% 85% Food % 0% 0% 85% Pulp & paper % 0% 0% 85% Bricks & ceramics % 0% 0% 85% Total % 59% 73% 85% Coverage level 1 Coverage level 2 Coverage level 3 Coverage level 4 SOURCE: ETS registry (Belgium), analyse VITO&Climact 30

31 Reduction potential: CCS (3/3) Level 1 Level 2 Level 3 Level 4 Minimum effort (following current regulation) Moderate effort easily reached according to most experts Significant effort requiring cultural change and/or important financial investments Maximum effort to reach results close to technical and physical constraints No CCS No CCS No CCS 85% of CO 2 in nonferrous metals ETS production captured and stored NOTE: cost = 100 Euro/ton CO2 SOURCE: analyse VITO & Climact 31

32 Reduction potential: Maximum reduction potential for different levers, horizon 2050 Non-ferrous metals Type of lever Improvement Reduction potential (2050) in % Cost Description Product mix Increase of scrap metal????? Energy efficiency Energy efficiency measures (audits, environmental management systems, application of BAT) -5% -10% -20% -30% 0 (capex = savings in energy expenditures) CHP N/A N/A N/A N/A / Maximum potential already reached (1) Process improvements Electrification of pyrometallurgical processes 0% 0% 0% 50% Cost of electricity Switch liquid fuel towards gas 0% 100% in % in % in 2025 Cost of combustibles Alternative combustibles Switch fossil fuels towards biomass 0% 25% in % in % in 2050 Cost of combustibles End of pipe CCS 0% 0% 0% 85% 100/tCO 2 e Emerging technology 1) Application later than in other industries NOTE: Assuming all regions of the world perform a similar effort SOURCE (1) consultation Agoria 32

33 Content Industry sector non-ferrous Summary p. 2 Context and historical trends p. 4 Details of the ambition levels and costs per lever p. 16 Resulting trajectories p. 33 Backup p

34 Reduction potential Emissions according to different trajectories Trajectory 1 (high growth) GHG emissions for different ambition levels (MtonCO 2 e) 0,6 1 Delta 10-50,% +31% 0,4 2-4% 0,2 3-36% 0,0 4-98% SOURCE: OPE²RA model 34

35 Reduction potential Emissions according to different trajectories Trajectory 2 (medium growth) GHG emissions for different ambition levels (MtonCO 2 e) 0,6 Delta 10-50,% 0,4 1-5% 2-30% 0,2 3-54% 0,0 4-98% SOURCE: OPE²RA model 35

36 Reduction potential Emissions according to different trajectories Trajectory 3 (low growth) GHG emissions for different ambition levels (MtonCO 2 e) 0,6 Delta 10-50,% 0,4 1-31% 0,2 2-49% 3-66% 0,0 4-99% SOURCE: OPE²RA model 36

37 Reduction potential Level 4 ambition is needed to reach European targets GHG emissions for different trajectories and ambition levels (MtonCO 2 e and % change (% of 2010 level)) MtCO 2 e 0,6 +38% 0% -27% 0,4-83 à -87% -136% 0,2 0,0 Baseline 2010 SOURCE: OPE²RA model Levels on Trajectory 1 Levels on Trajectory 2-98% Levels on Trajectory 3-72% EU target Industry 2050 Level 1 Level 2 Level 3 Level 4 37

38 Reduction potential Details for trajectory 1 with ambition level 2 GHG emissions in 2050 using different levers (% of 2010) 0,6 +38% -14% 0% -2% -100% 0,4-25% 0% 0,2 0, baseline 2050 BAU Energy efficiency Electrification Switch to gas Switch to biogas CCS Residual NOTE: Percentage reductions are calculated vs the 2010 baseline SOURCE: OPE²RA model 38

39 Reduction potential Details for trajectory 1 with ambition level 4 GHG emissions in 2050 using different levers (% of 2010) 0,6 +38% 0,4-41% 0,2-48% -1% -39% -6% 0, baseline 2050 BAU Energy efficiency Electrification Switch to gas Switch to biogas CCS Residual NOTE: Percentage reductions are calculated vs the 2010 baseline SOURCE: OPE²RA model 39

40 Cost Marginal cost and abatement potential for different levers under trajectory 1 with ambition level 4 GHG abatement curve for the year 2050 (trajectory 1, ambition 4) /tco 2 e, % emission abatement in 2050 (% of 2010 level) /tco 2 e Electrification % Fuel to gas Energy efficiency 20% 30% 40% Gas to biogas 50% 60% 70% CCS 80% 90% 100% 110% 120% 130% 140% % emission abatement in 2050 (% of 2010 level) NOTE: Hypothesis of cost neutral energy efficiency measures, cost of biomass generic across all sectors SOURCE: OPE²RA model 40

41 Content Industry sector non-ferrous Summary p. 2 Context and historical trends p. 4 Details of the ambition levels and costs per lever p. 16 Resulting trajectories p. 33 Backup p

42 Generic processes Production of copper Not in Belgium Not in Belgium ~96% Direct CO 2 emissions result from fuel use (roasting, smelting and converting), carbon dissolved in concentrates, coke use (smelting) and use of secondary materials SOURCE: BREF document non-ferrous metals 42

43 Generic processes Production of zinc (hydrometallurgical route) Direct CO 2 emissions are limited; Roasting is exothermic process; fuel is only required for start-up; Heat from roasting is recovered; Indirect emissions from electricity (electrolysis, vans) SOURCE: BREF document non-ferrous metals 43

44 Generic processes Production of precious metals Very limited information due to commercial confidentiality of processes SOURCE: BREF document non-ferrous metals 44

45 Generic processes Production of special metals (e.g. Cobalt) Very limited information due to commercial confidentiality of processes SOURCE: BREF document non-ferrous metals 45

46 Thank you. Erik Laes Pieter Lodewijks Michel Cornet