Steel recycling capacity

Background

A major opportunity to reduce emissions is through recycling (secondary steel production), where previously used steel (“scrap”) is reclaimed and remelted, instead of producing new steel from raw materials (primary steel production) through the carbon-intensive ironmaking process. Recycling can reduce 1.5 metric tonnes of CO2 per metric tonne of scrap used in steel production, as well as reducing other resources used, including coal (740 kg saved per metric tonnes of scrap used), iron ore (1.4 metric tonnes saved per metric tonne of scrap used), and limestone (120 kg saved per metric tonne of scrap used).^[1] Moreover, secondary steelmaking, on average, uses only 50% the energy of primary steelmaking.^[2] Thus, using 100% scrap as input in an Electric Arc Furnace (EAF) could allow skipping the primary production process and thus reduce carbon emissions, or even eliminate them completely if using green electricity. Scrap can even be used as a 0-30% share of the total input for BOF steelmaking, thus reducing the amount of iron needed (World Steel Association, 2021). Recycling rates are currently at an average of 85%, although some sectors in industrialized countries have significantly higher rates of up to 98%.^[2]

Scrap availability depends on a system of efficient recollection, separation, and sorting of steel at the end of a product's lifetime. On average, steel products last for 40 years, after which they can be collected and reused.^[1] Scrap can either be remelted and retrofitted to become a new product, or it can be reused directly, depending on its quality. The steel industry has been limited by a lack of holistic and efficient scrap collection and sorting systems — including documentation and labeling of products — needed to create a circular economy and closed loop recycling. Because different types of steel are used for different products, steel properties and quality vary significantly. Officially, scrap is classified into three categories: 1) home scrap (which is produced within the steelmaking process and directly reused at the steel plant), 2) prompt scrap (which is generated during the manufacturing of products that use steel), and 3) end-of-life scrap (which is created at the end of a product’s lifetime).^[3]^[4] If high-quality steel scrap is being remelted together with low-quality, or even contaminated, scrap, the end product is of lower quality.^[5] The steel may then be unusable for the intended products or would require additions of ore-based steel to achieve the necessary quality.^[3]^[6] Hence, despite high recycling rates, the issue of “downcycling” perpetuates the industry’s use of primary production routes.

While one aim is to maximize the availability of scrap, it is also important to reduce the creation of home scrap and prompt scrap through increased production efficiency.^[3] Waste is then reduced as new production declines, promoting reduced steel demand. However, this means that scrap availability may decrease over time without new ways to improve the recovery process of end-of-life scrap.

Factors influencing scrap availability and its consequences on steel production. Source: Merholz, 2023.

Larger use of EAF with maximized scrap feedstock are needed to transition to low-emissions steelmaking. However, even with more EAF plants, and despite the expected increase in scrap availability in the upcoming 25 years, the amount of scrap available is finite and cannot cover global steel demand, especially with the expected level of steel demand increase by 2050.^[6] At the current recycling rate, more than half of the steel produced in 2050 will still need to be made using primary production processes, highlighting the importance of tackling decarbonization across primary production as well.^[7]

Strategies to address these challenges include increased collection rates, separation of steel from other metals, sorting of steel quality and type, and documentation and labeling of steel products used (Bataille, 2019; EIA, 2022; Swalec & Shearer, 2021).^[2]^[4]^[8] These steps will require greater cross-industry collaboration, improved demolition techniques, changes in product and infrastructure design, and better recycling regulations.^[3]^[6]

Policy Action

Policy targets to increase steel recycling rates include:^[9]

Incentivize the direct reuse of steel products without remelting, such as recovering and reusing steel beams or pipelines for new purposes. This may require the implementation of quality controls through documentation and labeling of materials.^[6]
Use standards and regulations to change product and building designs to require separability during deconstruction processes.^[2] This requires collaboration with the construction and manufacturing companies using steel.
Urge steel companies and their customers to create scrap recollection and sorting contracts for the end-of-product lifetimes. Selling steel scrap back to producers may create an economic incentive for behavior change. Working with steel producers to make such contracts the default can function as a nudge toward improved recycling rates.
Provide manufacturers, demolition companies, and other customers with incentives to increase steel recovery rates of their products. Recycling regulations can be used to enforce greater steel recovery.
Support the creation of sorting and distribution networks that bring steel scrap back to steel producers for consistent recycling efforts.^[1]
Classify grades of scrap to increase demand for purer materials and incentivize improved sorting and high-quality steel recycling.^[2]