2020s a singular opportunity for steel decarbonisation

The requirement for reinvestment in a large proportion of the world's blast furnace capacity before 2030 presents a singular opportunity to invest in steelmaking through the direct reduced iron (DRI) route, policy think tank Agora said at the UN Cop 26 climate conference today.

The group estimates that 71pc of the world's blast furnace will expire or require relining before 2030. "This presents a time-window of opportunity for large-scale transformation of the industry, but also presents a risk and will lead to carbon lock-in and stranded assets," said international director Jesse Scott. The lifespan of a new furnace is estimated at 50 years, while blast furnaces need to be relined approximately every 15-20 years.

Since steel is a global sector, it would make sense for the industry to make a one-speed transition to carbon neutrality, added Scott. Agora also pointed out that while a total of 40mn t of green DRI projects have been announced for construction by 2030 so far, no steel company has invested in an industrial scale carbon capture and storage (CCS) project, with CCS steelmaking limited to pilot plants such as Tata's Hisarna facility at Ijmiujden in the Netherlands. Tata eventually decided against the route, favouring a move to hydrogen-fed output.

In developed countries, there has been little investment so far in green steel projects. ArcelorMittal, which has announced three full-scale DRI projects in Belgium, Spain and Canada, is yet to plan a similar investment in India, where it has blast furnace operations owned jointly with Nippon Steel. ArcelorMittal chief executive Aditya Mittal today echoed Indian prime minister Narenda Modi's call for capital support from developed economies to help India reach climate goals. India yesterday set a target to become carbon neutral by 2070, and Modi asked developed nations to make $1trn in climate finance available at the earliest opportunity.

But financing for projects is not the only ingredient missing for developing economies such as India. The higher cost of natural gas compared to coking coal, and the higher grade of iron ore required for direct reduction compared to the furnace process, means costs are significantly higher, even in the preliminary natural gas phase that is planned for hydrogen-based steel projects.

"Investment in industrial decarbonisation becomes viable when there is a carbon cost," stressed Mittal, "otherwise these facilities quickly become uneconomical". ArcelorMittal would be interested in investing in green DRI facilities in India once there is green energy and hydrogen available at "appropriate competitive prices", he added.

By Brendan Kjellberg-Motton