Archive for the ‘Green Steel Opinion’ Category

LCA of auto CO2 emissions would strengthen steel use

SBB 7 February 2011 New ways of measuring CO2 emissions across the full lifecycle of a vehicle could increase the attractiveness of high-strength steels compared with alternative materials, SBB hears from Cees Ten Broek, communications director of WorldAutoSteel, a unit of the World Steel Association.

“The current system of measuring emissions stimulates [competing] low-density materials at the expense of steel,” Ten Broek told a Eurofer conference.

A shift to total life cycle analysis (LCA), which would capture a vehicle’s complete carbon footprint including eventual recycling/scrapping, could alter this. Aluminium is responsible for around six times as many emissions as high-strength steels over its full life, Ten Broek noted. The comparisons for other materials are even starker: CO2 emissions from manganese are between 5 and 20 times higher than steel, while emissions arising from carbon fibre are up to 10 times higher.

Ten Broek said that LCA methodology is likely to be taken into account when new legislation was drawn up in North America and Europe.

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EU Commission raises carbon benchmarks for steelmakers

New proposals for CO2 benchmarks for the steel industry have been released by the European Commission. EU-27 steel producers will receive free allowances for CO2 emissions from that stage of steel-making up to the benchmark figure. This approach is designed to encourage all producers to reach the benchmark/best level.

It should be noted that as the benchmark reflects the performance of the average of the top 10% in each class in 2008, only around 5% of installations will currently achieve that target. For others it will remain a goal.

SBB 27 October 2010 The European Commission (EC) has released new higher draft benchmarks for greenhouse gas emissions in the region’s steel industry. Earlier leaked proposals were criticised by the industry as too low.

In the new proposals, for example, the per tonne hot metal benchmark was increased by 24.7% to 1.328 tonnes CO2. This was mainly as the industry’s total carbon allocations for waste gases used to generate electricity were revised, an EC source tells Steel Business Briefing.

Eurofer argues that 100% of carbon in the waste gases used to generate electricity should be returned to the steelmaker as carbon credits. The EC had set the level at approximately 75%, equivalent to the carbon value of the natural gas needed to produce the same amount of electricity. This figure has been increased to 85% to promote the use of waste gases for electricity generation, a Commission source tells SBB.

The benchmarks decide how many free carbon credits steelmakers will receive under the Emissions Trading System in 2013-2020. Each production sub-sector has a benchmark, which is the average emissions of the 10% most carbon-efficient facilities. The Commission tells SBB that its earlier lower estimates were also revised upwards with new data.

Nevertheless, Eurofer is not satisfied. “The best performers in the industry should not suffer any significant additional costs”, Axel Eggert, the Eurofer spokesman tells SBB. Furthermore, the benchmarks for coking and sintering are also high; they should be 0.333 and 0.191 t CO2/t product respectively, Eggert said.

The proposals will now be assessed by EU member states and voted on by the Climate Commission by the year-end. In the spring the proposal will be put to the European Parliament which can approve or reject, but not amend, the proposal.

India registers its 45th Kyoto iron and steel project

On the one hand, these figures suggest that Indian steelmakers may well be among the best informed on CO2 in the emerging markets’ I&S sector, followed by China. But on the other, they also show that there is considerable scope for reduced emissions, and that the industry globally could do a lot more to cut its CO2 footprint. One factor delaying this is clearly the slow speed with which the UNFCCC makes decisions; another is the reluctance of some countries, such as the USA, to commit to a follow on to Kyoto.

SBB 25 October 2010 India has confirmed that it is the country with the most registered steel-related Clean Development Mechanism (CDM) projects, Steel Business Briefing understands. Indian sponge iron producer Shree Nakoda Ispat could earn up to 57,525 Kyoto carbon credits – currently worth more than $1m on the open market – every year for ten years, after it registered a biomass power plant on the CDM list of eligible projects.

SBB data shows that 45 Indian iron and steel projects, which could earn up to 4.4m Certified Emissions Reductions (CERs) annually, have now been registered on the UN Framework Convention on Climate Change’s (UNFCCC) CDM website. India accounts for over half of the 80 projects registered worldwide within the industry. China is second place with 29 projects.

The CERs can be sold on to companies which need them to account for their greenhouse gas emissions, with schemes such as Europe’s Emissions Trading System (ETS), thereby providing a financial incentive for steelmakers worldwide to implement emission-saving technologies.

Investors in CDM projects, including steelmakers and the Carbon Market Investors Association, have complained of delays in approving projects and receiving CERs, SBB notes. Many projects have been carried out, but are not yet registered on the UN’s CDM list.

Even out of the 80 projects registered in the steel industry, only 40 have actually received CERs. Globally, the iron and steel industry could earn up to 17.2m CERs/y, worth some $306.2m/y. However, to date, only 18.7m CERs have been granted to the industry over a period of about five years.

Draft EU carbon benchmarks much lower than expected

The leaked proposed benchmarks, presumably from the Commission, are so far below the industry’s estimated figures that it is hard to know if they are genuine. Until an official draft is unveiled, it has to be assumed that the Commission is whistling in the dark.

SBB 8 October 2010 Draft proposals for benchmarks to determine the  free allocations of carbon credits to steelmakers in 2013-2020 have been leaked, and are much lower than steelmakers had expected, Steel Business Briefing understands. Steel plants must otherwise account for their emissions using European Union Allocations (EUAs).

The hot metal benchmark, which covers the blast furnace, basic oxygen furnace and casting, is almost 30% less than independent estimates based on Eurofer data. If this benchmark figure is maintained, integrated steel makers would have to purchase significantly more EUAs than they had expected.

One variable is how to account for generating electricity from waste-gases. Eurofer argues that 100% of CO2 in the waste-gases should be included in the benchmark, but the actual percentage is still uncertain.

Eurofer also says the European Commission (EC) uses unverifiable literature-based data.

Connie Hedegaard, commissioner for climate action, has argued that the steel industry has profited from the emission trading scheme up to now. A large number of EUAs have been held over from when steelmakers cut production in 2008-2009, though Eurofer points out that this is true of all industries.

However, a Eurofer spokesman tells SBB it may well be illegal to take this into account when determining benchmarks. The Commission  insists the benchmark will be set according to consistent methodologies. The process is a ‘harmonised reallocation exercise’ based on fairness as well as technical elements, EC spokesperson Maria Kokkonen commented to SBB.

Draft proposals for industry benchmarks
Tonnes of CO2 equivalent per tonne of product

Hot metal – 1.065
EAF – carbon steel 0.285
EAF – high alloy steel 0.357
Iron casting 0.325
Coking 0.069
Sintering 0.172

2nd Russian round – $540m of carbon credits – steel mills active

This is the Joint Implementation process – under Kyoto – covering Russia and Ukraine, and hence in theory should finish in December 2012. It can be seen that ERUs trade at a discount to EUAs.Many of the projects so far approved – mostly in Ukraine – relate to greater energy efficiency.

SBB 1 October 2010 Russian industrial facilities with greenhouse gas reduction projects, including steelworks, can apply for a second tender of Emissions Reduction Units (ERUs) from Sberbank from 4 October, Steel Business Briefing has learnt. The tender is for 30m ERUs, each of which recently fetched €13.15 ($17.96) each at a European auction.

As previously reported, the results of Russia’s first tender were released at the start of August. That time Evraz and Metalloinvest came away with 5.32m ERUs between them worth some $95m. However, other steelmakers, such as Magnitogorsk Iron & Steel and Mechel, did not make the final list of 15 approved projects and could re-apply for the second tender.

The companies must apply to the state-owned Sberbank for approval by 21 October. Officials from the bank expect to select the approved companies by the end of the year, Sergei Sitnikov of legal firm Baker & Mackenzie tells SBB. More tenders are likely to follow, he added.

European carbon prices test upper limit

Interesting comments in this report – from analysts – on the likely impact of the shortfall in free allowances for the steel industry. It would appear that they believe that the shortfall is not significant….in terms of the price of allowances. It may however be significant for the individual steel producers in terms of their costs, though they have, unexpectedly of course, accumulated unused allowances as a result of the 2009 recession.

SBB 15 October 2010 Spot European Union Allowance (EUA) prices reached €15.78/t ($22.23/t) at the start of the week, before consolidating to €15.59/t on 13 October, only slightly higher than a week earlier. The upward pressure came from slightly firmer European gas and power prices, analysts tell Steel Business Briefing.

EUAs can be used by European industrial facilities to account for greenhouse gas emissions equivalent to one tonne of carbon dioxide under the European Emissions Trading System (ETS). In the current phase II (2008-2012) of the ETS steelmakers receive most or all of their allowances for free. However, from 2013 onwards they will have to pay for an increasing proportion of their emissions.

Although prices are expected to rise before 2013, EUAs are likely to remain range-bound at €14.5-16.5/t for the remainder of the year, Trevor Sikorsky, carbon analyst at Barclays Capital, tells SBB. The impact of the industrial benchmark proposals leaked last week will be negligible, he says.

These proposals will determine the number of free allowances given to industry from 2013. Eurofer complained that the benchmarks were unfairly low. However, industry already expected a shortfall of free allowance from 2013 onwards and so this has already been factored into EUA prices, Sikorsky says.

Emmanuel Fages of carbon analysts, Orbeo, agrees. Although gas prices have pushed EUAs closer to €16/t than €15/t, they have been unable to break through the €16/t barrier and are likely to remain range-bound in the near term.

LKAB’s ‘green’ DRI plant may come on line in 2011-2012

ULCOS – the programme of the European steel producers to develop new “Ultra Low” CO2 emitting steel-making processes seems to be gathering pace. Besides this project in Sweden, Corus has the HIsarna project in IJmuiden and ArcelorMittal is developing the TGR. There may be others as well? But all these projects will take many years to evaluate and ultimately also seem fairly dependent on the untried CCS. It would be useful to know the forecast impact on production costs, and the expected cut in CO2 emissions for each process.

SBB 23 Aug 2010 Swedish iron ore miner LKAB will take the final decision on building a test plant for its new low emissions DRI-making process, ULCORED, in Luleå early next year, a representative has told Steel Business Briefing.

The plant would take nine months to complete once the decision has been made, meaning it could be commissioned in late 2011 or early 2012. However, the company representative did not comment on funding.

The facility, part of the international Ultra Low-Carbon Steelmaking (ULCOS) project, will use natural gas and waste gases as the reducing agent rather than coke, eliminating the need for carbon dioxide-emitting coke ovens.

In addition, the remaining waste gas from the process would be very pure CO2 and therefore suitable for carbon capture and storage (CCS), SBB understands.

LKAB also said it is starting a new round of testing at its experimental Top-Gas Recycling (TGR) blast furnace in September. Pure oxygen is introduced to the blast furnace instead of air and waste carbon monoxide is fed back into the furnace. This allows emissions to be reduced and to be pure enough for CCS.

The results of the tests will be used as the basis for testing at ArcelorMittal’s upcoming TGR furnaces at Eissenhüttenstadt in Germany and Florange in France, LKAB added.

Corus is also hosting another ULCOS project, Hisarna, in IJmuiden, which could be commissioned in early January 2011, as previously reported.