Sustainability has been high on the automotive agenda for years but has been thrown into the spotlight in the wake of the novel coronavirus (COVID-19) and growing environmental concerns. It’s a broad topic and industry players are tackling it from numerous angles. More recently automakers have begun looking beyond the tailpipe to wider well-to-tank emissions, which means re-evaluating their manufacturing operations, sourcing strategies and raw material choices.
Steel has long been the material of choice for vehicle production. According to the International Organization of Motor Vehicle Manufacturers, the 91.8 million vehicles built in 2019 contained an average of 900kg of steel per vehicle. On the sustainability scale, steel doesn’t score too badly. It is endlessly recyclable, is supported by a well-established recycling infrastructure and boasts lower CO2 lifecycle emissions than other automotive materials. However, the steel industry as a whole still remains a significant contributor to CO2 emissions.
ArcelorMittal is one of the players determined to change that. It aims to reduce CO2 emissions from its European steel production operations by 30% by 2030. On a global level, it is working to become carbon neutral by 2050. “We are confident that the technology will be found to make steel without CO2 emissions,” says Alan Knight, General Manager of Corporate Responsibility and Sustainable Development at ArcelorMittal.
Smart Carbon approaches
The steel giant is testing a number of different approaches geared at making steel in a carbon neutral way. One set of technologies is bundled together under the category ‘Smart Carbon’, which aims to significantly and rapidly reduce the CO2 levels from its blast furnaces in Europe.
A demonstration project is underway at a facility in Ghent, Belgium involving the company’s Carbalyst (Steelanol) family of recycled carbon chemicals. It aims to capture carbon off-gases from the blast furnace and convert it into 80 million litres of bio-ethanol a year. This €165m (US$195m) project should be completed in 2022. Plans are underway for a similar project in Fos-sur-Mer in France, aiming to boost CO2 savings through hydrogen injection, supplied by a large-scale electrolyser that will produce the hydrogen locally from renewable electricity.
In the French city of Dunkirk, the company is building an industrial-scale pilot to capture waste CO2 and waste hydrogen from the steelmaking process and internally convert it into synthetic gas. This gas will replace fossil fuels used in ironmaking. Other pilots around carbon capture and the conversion of waste wood into bio-coal are also under way in Europe.
“These technologies include the use of circular carbon in various ways, but also capture CO2 emissions either to store them or to make new high value biomaterials for the chemical industry or cosmetics,” says ArcelorMittal’s Jean-Martin Van der Hoeven, Chief Marketing Officer Global Automotive & Mobility Solutions and Head of Sustainable Development, Flat Carbon Europe. “The nice thing about these Smart Carbon technologies is that they are compatible with green hydrogen—when this becomes available and affordable in the future—but we don’t have to wait for that.”
The hydrogen-DRI route
The second set of technological approaches at ArcelorMittal does depend on green hydrogen, which is produced through the electrolysis of water in which the electricity comes from renewable sources. ArcelorMittal is looking to combine green hydrogen with direct reduced iron (DRI); it is currently the world’s largest DRI producer. The trouble is that green hydrogen is neither easily available or affordable at the moment.
“Our overall objective at the moment is to be ready for these new technologies as they come,” explains Knight. “At the moment there’s no way we could use hydrogen on a big scale even if our technology works because of the cost of hydrogen. But what we can do is make sure that we’re ready.”
In Bremen, it plans to install an electrolyser so that hydrogen can be produced and injected in large volumes into the blast furnace tuyeres. The project will reduce the volumes of coal needed in the iron ore reduction process, cutting CO2 emissions. In Dunkirk, it is developing a hybrid blast furnace process, which uses DRI gas injection technology in the blast furnace shaft as well as gas injection in the blast furnace tuyeres, using plasma technology to create a reducing gas. Eventually it will enable green hydrogen to be injected into the blast furnace as it becomes available.
Besides these two projects, the company plans to use gases from different sources for blast furnace injection in almost all its products sites. “Injecting hydrogen-rich coke oven gas is an efficient, cost effective method that allows steelmakers to reduce CO2 emissions now,” says Van der Hoeven. He points to Asturias in Spain, where the company claims to have the most advanced coke oven gas project under way, with injection of grey hydrogen due to start in early 2021.
Van der Hoeven is keen to emphasise that the hydrogen-DRI route and the Smart Carbon sets work together: “It’s not a choice between the one or the other. These technologies will function together to reach our target.”
Thanks to the rollout of the projects, ArcelorMittal Europe recently announced that it can offer customers the first 30,000 tonnes of green steel through green steel CO2 certificates aggregating the CO2 emissions savings achieved in the various decarbonisation projects versus a 2018 baseline. The volumes of green steel available will increase to 120,000 tonnes in 2021 and 600,000 tonnes in 2022.
The cost of going green
All of these measures could significantly improve the sustainability of the steel industry, but they come at a cost. “We are already paying a price on carbon as part of the European Carbon Trading Scheme,” says Knight. “Then there’s the R&D, the rollout costs and the additional opex costs. It is vitally important that we manage these well.”
To help cover some of this, ArcelorMittal is preparing funding applications for the European Union’s Emissions Trading System (ETS) Innovation Fund, targeted at supporting low-carbon investments in the region. It also benefits from the sale of ethanol as a by-product from some of the Smart Carbon technology. But it’s not enough to outweigh the expense involved. A carbon border adjustment (CBA) could help. Steel makers in Europe pay a high price on carbon, and many believe that steel brought into Europe should bear the same cost. “The CBA must provide a very fair system to maintain free trade and allow European companies to compete globally,” asserts Van der Hoeven. “At the same time, it must incentivise energy-intensive industries, such as ours, to lower their CO2 emissions and to contribute to the EU’s Climate Goals.”
Ideally, he wants the CBA to serve as an enabler to allow companies to get on with the challenge of moving to carbon neutral steelmaking, but that’s not all. Many are keen to tackle the problem of carbon leakage, a term referring to the migration of steel production from Europe to lower cost regions outside the EU, which often have less strict climate protection legislation. There are also calls for the CBA to motivate non-EU producers to reduce their carbon emissions and generally to provide European steelmakers with a framework to make carbon neutral steel.
“When you have a well-designed carbon border adjustment, it will definitely help to build the framework we need to move to making carbon neutral steel,” he states. “It could help us reach our goal quicker even by ensuring that the European producers and importers bear the same carbon costs.”
And hopefully over time, those costs will naturally fall. “As technology develops, things become cheaper,” Knight points out. “At the moment, though, we cannot afford to make these changes until the price of hydrogen comes down and there is policy in place to ensure that our steel is competitive against people not making those changes.”
It may take some time for the cost of green hydrogen to come down. “Everybody knows this is a long game,” he adds. “Adair Turner, Chairman of the Energy Transition Commission, is optimistic that by 2050 hydrogen will be at a price which make this economic and at the right volumes. Others are not as confident, but we’ll be ready.”