Importance of Steel Scrap in Steel Industry Decarbonisation

The steel industry has been vital to the creation and development of modern society. It is one of the key engineering, construction and building materials needed to sustain urban societal needs. Since the 1970s, global steel demand has increased fourfold, attributable to expanding economies, growing urbanisation and focus on infrastructure development.

The iron and steel industry emits high levels of carbon compared to other heavy industries. It ranks first in CO2 emissions and second in energy use. The industry is responsible for ~8% of final global energy demand and ~7% of CO2 emissions in the energy sector. It emits ~3 gigatons of CO2 annually, higher than the emissions from all road freight. Steel demand is expected to grow through 2050, particularly in developing countries in Southeast Asia, where steel use per capita is materially lower than that in developed economies in Europe and North America. As a result, the industry has come under considerable pressure to reduce its carbon footprint in line with the Paris Climate Agreement, which aims to limit the annual temperature ramp-up worldwide below 1.5º C

To meet global goals and ambitions, steel industry emissions should reduce ~50% by 2050, followed by continued efforts to achieve net-zero emissions. Several innovative technologies are being pursued by steelmakers to reduce their GHG emissions, such as carbon capture and storage, transition to electric arc furnaces and use of hydrogen in steelmaking. However, these technologies are still maturing and need heavy investments in research and development to bring down the cost of steel production in line with traditional steel-making processes. Until this materialises, the industry must adopt other solutions to reduce its carbon footprint and GHG emissions.

One such solution that can be implemented today without prohibitive costs is the use of scrap steel (discarded steel or steel products that can be recycled to produce new steel and cast-iron products) in steelmaking. Scrap steel is already a key input for steel production, as steel is a highly recyclable material globally.

Global steel production process by IEA

Steel manufacturing based on scrap consumes around one-eighth of the energy required in steel production using iron ore. This advantage has resulted in high steel recycling rates. Steel scrap accounts for ~30% of raw materials required for meeting global steel demand; the rest is met by mined iron ore. Apart from lower energy consumption, scrap steel has three key advantages compared to iron ore in steelmaking:

  • Reduced GHG emissions: Every ton of scrap emits 1.5 tons less CO2.
  • Low natural resource consumption: Steel scrap consumes 1.4 tons less iron ore, 0.7 tons less coal and 0.1 ton less limestone for every ton of steel produced.
  • Reduced landfill burden: Every 7.5 tons of recycled scrap reduces landfill area by 1m3.

Several global steel producers have already planned to expand their scrap-based electric arc furnace portfolios as a short-term strategy in their decarbonisation road map. Tata Steel, Nippon Steel, Arcelor Mittal, Baowu Group and Nucor Steel, among others, have announced scrap- and electric arc furnace-based 2030 targets to reduce their carbon footprint.

The increased use of steel scrap alone cannot fulfil the steel industry’s climate protection and carbon reduction commitments. Scrap recycling rates are already high in several steel-producing countries; however, they can be improved with systematic investments. Steel demand is higher than steel scrap available today and, hence, recycling alone cannot reduce emissions from the sector. Other technologies, such as green hydrogen use and carbon capture, need to be adopted as well to bring down the sector’s carbon footprint, which requires collaboration among steel producers, governments, policymakers, investment firms, regulatory bodies and technology providers.




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