Posted on 08 Feb 2022
As demand for wind turbines — and the steel plate and rebar needed to build them — grows in the race to decarbonize energy sources, steelmakers and their windpower customers are striving to more closely align their sustainability goals.
Several European Union platemaking mills — prime movers in steel sector decarbonization worldwide — are bringing forward their net-zero carbon emissions targets to much earlier than 2050, until recently the sector’s ballpark deadline.
These moves should bring the mills closer to targets announced by windpower giants including Denmark-based Vestas, which has promised to achieve carbon-neutrality by 2030.
Orsted, also Denmark-based, aims for climate-neutral windpower operations as soon as 2025, with Chief Commercial Officer Martin Neubert announcing late January a target for climate neutrality in indirect carbon emissions by 2040. Spain-based Siemens Gamesa aims for its own and supply chain net zero emissions by 2040, with 100% recyclable turbines marketed by that year.
German heavy platemaker Salzgitter, a major supplier to the wind sector and which recently struck a development partnership with Orsted, announced Feb. 2 it is bringing its emissions-reduction target forward by 12 years to 2033. Tata Steel, with integrated works in the UK and Netherlands, aims to transition to direct reduced iron technology to make steel using hydrogen by 2030 or earlier.
Germany’s Dillinger, whose steel may be used for all parts of offshore wind installations, is part of the SHS – Stahl-Holding-Saar group which believes it can achieve “significant carbon savings by 2035”. Thyssenkrupp Materials Services, the holding company of Thyssenkrupp MillServices & Systems, a distribution and services provider, said Feb. 3 its goal is to operate climate-neutrally by 2030.
Liberty Steel Group, which produces plate in Scotland and Poland, also has a 2030 carbon-neutral target, to be achieved primarily by installing DRI facilities at its integrated steelworks in Australia and Romania, initially to be fed by gas before transitioning to hydrogen.
Steel’s carbon footprint
The dates mismatch dilemma is recognized by governments anxious to meet climate targets compatible with their Paris Agreement pledges to keep global warming to 1.5 C this century. While steel is inherently green due to its recyclability, its transition to greener production technology is both lengthy and costly, and most steelmakers say this requires state support.
“Wind turbines and electric vehicles have a major carbon footprint due to the steel used to manufacture them,” stated the UK Parliament’s Environmental Audit Committee, or EAC, noted as it opened an inquiry into “green” steel Feb. 3.
“Steel is a crucial material for the UK’s low carbon aspirations: it is an essential component of wind turbines to electric vehicles. However, the steelmaking process itself produces significant greenhouse gas emissions, with the production of a ton of steel generating almost two tons of CO2 emissions,” EAC acknowledged.
Advances in DRI technology seen in Sweden and Germany may offer the sector a low carbon future, but decarbonizing steel production in the UK is “an enormous challenge and will be difficult to achieve by the 2035 target set by the Climate Change Committee in its Sixth Carbon Budget. The decision point for investment to renew the UK’s steel installations is fast approaching, without a clear lead from the Government on the technology to adopt,” EAC notes.
Dogger Bank
The UK’s northeast is home to the world’s largest offshore windpower project, Dogger Bank Wind Farm, being set up by SSE Renewables (40%), Equinor (40%) and Eni (20%) in three 1.2 gigawatt phases, due for completion by 2026. The government’s green plan foresees 40GW of offshore wind power by 2030, which could require over 5 million mt of steel.
The UK is also home to steelmaking facilities serving windpower including those owned by Tata Steel – which will supply products to Dogger Bank – and rebar producer Celsa UK.
“Huge amounts of steel will be needed to help the UK achieve its net-zero goals – to build everything from renewable energy and low-CO2 transportation to hydrogen production and distribution,” commented Sandip Biswas, board chairman of Tata Steel UK. “At the same time, we have targets for our own decarbonization as a steelmaker. Our own transition to a decarbonized future will rely on a secure supply of competitively priced renewable energy.”
The price to pay
One wind energy steel buyer told S&P Global Platts it would need its steel suppliers to minimize their own emissions before it could itself become totally carbon neutral. But steel industry decarbonization, with new equipment and technology, won’t come cheap in an inflationary and carbon-conscious environment. Steelmakers are already passing on high energy costs to customers as price premiums. Carbon prices on Feb. 2 reached a record Eur94.62/mt ($108.22/mt); the price of Fe 62% iron ore feedstock has jumped 82% since Nov. 8, partly on supply issues.
Fluctuating steel prices over the last two years have impacted wind energy companies’ pricing calculations, as mills look to lock in yearly contracts at elevated prices. In recent months, the plate market has seen a downturn amid greater availability of cheaper steel slab from CIS mills.
Since their June 2021 market peak of Eur1,100/mt amid market tightness, North European plate prices have fallen to Eur962/mt ex-works Ruhr on Jan. 28, correcting also in Southern Europe from Eur1,030/mt to Eur870/mt ex-works Italy, Platts assessed.
Into 2022, however, demand for metal-intensive components like wind turbine towers, in conjunction with stronger growth in renewables, could place further strain on plate supply and prices, a Platts Analytics report showed.
“The plate market is a crystal ball, but I expect prices to stabilize on increasing costs for energy and transport,” a Benelux service center said. “Northwest European mills have enough orders, as far as I hear.”
German and Benelux mill orderbooks were recently heard sufficiently filled, with those mills not searching for spot volumes partly due to ample orders from wind power projects.
Source:Platts
