Decarbonise now to avoid stranding assets, jobs: Agora

Posted on 05 November 2021

It is of "paramount importance" the steel industry invests now in low-carbon steelmaking technologies that are compatible with climate neutrality, to avoid exposing assets and jobs to high risks in the 2030s and beyond. So says German think tank Agora Energiewende.

Around 71% of the world’s coal-based steel blast furnace capacity – 1.09 billion tonnes/year – will reach the end of its operating lifetime before 2030 and require major reinvestments. At the same time, emerging economies with rising steel demand will require at least 170 million t/y of new capacity. “Meeting these needs with coal-based capacity will create long-term carbon lock-in and lead to stranded assets, endangering jobs and putting any pathway compatible with 1.5°C out of reach,” the think tank observes.

Kickstarting the steel sector’s transformation will require a massive increase in global iron ore pellet capacity to feed direct reduced iron plants, new infrastructure, government support and a regulatory policy framework for low-carbon steelmaking, Agora Energiewende says. This could include policy instruments such as carbon contracts for difference, green steel labelling and reporting standards, embedded carbon requirements, green public procurement, hydrogen support instruments and the construction of a hydrogen infrastructure.

“If the global steel industry moves ahead at the same speed, the resulting single-speed transformation will bring enhanced international cooperation and a level playing field,” the organisation opines in a report seen by Kallanish.

The project pipeline of green steelmaking capacity that will come online before 2030 is growing rapidly, with 40m t/y of DRI capacity already planned. “Retroactive post-combustion CCS for coal-fired blast furnaces may be a dead-end road,” Agora Energiewende comments. “The best strategy from now on is to avoid reinvestments into blast furnaces by prolonging lifetimes of old assets by 2-5 years and after 2025, invest into DRI directly.”

Source : Kallanish