Availability of low-emissions technologies

Background

Various models highlight what a net-zero transition could look like, two notable ones being those created by the International Energy Agency and Mission Possible Partnership, respectively. No matter their target and timeline — net zero by 2070 (IEA) or by 2050 (Mission Possible Partnership) — either feasibility is dependent on the maturity of certain technologies considered essential for the industry’s decarbonization. By 2050, the adoption of best available technologies and breakthrough technologies could reduce an estimated 90% of the industry’s direct emissions, assuming expected maturity timelines for new technologies are met. An estimated 25% of emissions reductions are expected to be achieved from two technologies alone, hydrogen-based DRI (ironmaking) and carbon capture, utilization, and storage (CCUS), though the feasibility and economic practicality of the latter is still in question. Despite the challenges, green hydrogen and CCUS are two of the technologies most focused on for rapid development. Each steel plant will have its own decarbonization pathway, depending on the local market and availability of resources and infrastructure, as well as investment options. Therefore it is important to develop a larger mix of technologies that enable decarbonization across contexts.

Technologies for both short- and medium-term emissions reductions will be needed, e.g., to reduce emissions while BF-BOF plants are still operating, and net-zero technologies that ensure long-term decarbonization. Mission Possible Partnership’s “Summary of technology archetypes” visualizes the estimated carbon emissions associated with each potential future production pathway (i.e., technologies), and divides them into transitional technologies (yellow) and near-zero emissions technologies (blue).

Summary of technology archetypes with associated emissions intensities (including Scopes 1 and 2) in t of CO2/t of steel in 2050, and dates of expected commercial availability. Source: Mission Possible Partnership, 2022, p. 36.

An estimated 50% of all global steel plants will require refurbishment or new infrastructure investments before 2030, including 73% of all BF-BOF plants. This reality reveals a critical juncture: a point in time at which the decisions made will determine the future pathway of steel production. The technologies available, their affordability, and their effectiveness will dictate if they will be implemented by the time of reinvestment, or if investors decide to stick with carbon-heavy technologies. If plant owners decide to reinvest in BF-BOF plants, it would be almost impossible to achieve carbon neutrality by 2050, because the plants will then continue to operate for another 25–40 years, if not forced to shut down in advance. Thus, by 2025, there should be no further investments in BF-BOF steelmaking. Making new technologies available as soon as possible, but by 2030 at the latest, is essential to avoid a technological lock-in into a carbon-intensive steel industry.

Emissions from existing steel industry infrastructure (in Gt of CO2 per year) under different lifetime assumptions. Intervening at the end of the next investment cycle could reduce 30 Gt of CO2 by 2060. Otherwise, these emissions will be “locked in”. Source: IEA, 2020, p. 48.

At the moment, many of these green technologies are still under development and not yet scalable. The International Energy Agency uses the “Technology Readiness Level scale” (TRL) to categorize developing technologies based on their maturity.

Within its Iron and Steel Technology Roadmap, the IEA evaluated some of the primary near-zero technologies, including their importance for achieving net zero, the expected year of maturity given current developments, and their role in decarbonizing steel plants. From the 15 technologies evaluated, five were considered to be “very important” to achieving decarbonization, one was “important”, and the other nine were of “medium” importance. Of the “very important” technologies, only one is already available today (DRI: Natural gas-based with CO2 capture). Another one will likely be available by 2028 (Smelting reduction with CCUS), and the other three only by 2030 (BF off-gas hydrogen enrichment and/or CCUS, DRI natural gas based with high levels of electrolytic hydrogen blending, and DRI based solely on electrolytic hydrogen). Given that many investment decisions will be made before 2030, it is critical to ensure that these — and other — technology development goals are met, potentially through acceleration, to enable more plant owners to choose low-emissions technology routes. Some models also argue that net-zero emissions cannot be achieved until 2070, unless technology development processes are greatly accelerated. Acceleration could enable a transition by 2050.

Technology Readiness Level scale (TRL) by Mankins (1995), showing the different maturity levels of developing technologies. Source: IEA, 2020, p. 83.

For plant owners, it is also essential that information and maturity timelines are available and reliable. It would, for example, make little sense to equip their plants with CCUS capabilities now, if green hydrogen becomes available and affordable by 2030, as CCUS would not be needed for a plant powered by green hydrogen.

Policy Action

Policy targets to promote technological maturity include:

• Work with national steel plant owners to identify the most important technologies for the national steel decarbonization strategy, as well as the fleet’s reinvestment cycles.
• Invest in the most important breakthrough technologies (e.g., hydrogen-DRI, CCUS, smelting reduction, etc.) using blended finance innovations, to ensure their maturity before 2030. This includes deciding which of the technologies should be promoted.
• Collaborate with financial stakeholders and international organizations to increase investments in R&D, e.g., through financial support (e.g., funded by carbon pricing), public-private partnerships, green bonds and investment portfolios, low-interest loans, concessional finance, etc. R&D can focus on developing and advancing known emissions reduction and steel production technologies, or on developing new near-zero steelmaking processes.
• Lower the cost of relevant technologies to prevent innovation and deployment blockages, for example through subsidies or contracts for difference.
• Increase the number of pilot and demonstration projects to develop and de-risk projects, for example through public expenditures, concessional finance, and collaborations with steel plant owners and research institutions.
• Incentivize the deployment of new technologies, e.g., through subsidies, exhortation, public expenditures, etc., to ensure they become profitable and commercially scalable.
• Reduce bureaucratic barriers to accelerate licensing procedures for new technologies and enabling infrastructure, e.g., through regulatory reforms and capacity building.
• Set up and promote knowledge-sharing and innovation coordination programs to accelerate technological development and maturity. This should include making technology maturity timelines and developments transparent and available to steel plant owners.
• Promote the creation of enabling infrastructure and resources to implement breakthrough technologies. This requires collaboration with steel producers and the steel supply chain.

Examples and Case Studies

EU Innovation Fund

Green Steel Tracker R&D and Pilot Projects

POSCO Malaysia CCUS Feasibility Study

Sasol and ArcelorMittal Green Hydrogen Partnership

Thyssenkrupp Hydrogen Infrastructure Project

External Links

IEA 2020 Iron and Steel Technology Roadmap