SBB 23 April A critical lack of funding and the high cost of developing and implementing carbon capture and storage (CCS) mean it is unlikely to become widespread in the steel industry, senior advisor to the European Bank of Reconstruction & Development, Christopher Beauman told delegates at Platts Steel Business Briefing’s third annual Green Steel Strategies conference in Berlin.
Some funding is being made available in Europe, pointed out Baroness Worthington of Sandbag which campaigns for action on climate change. The European Commission has made revenues from the sale of 300m carbon credits available to CCS projects, with a current market value of around €2.25bn ($2.97bn).
However, the funding is not sufficient to counteract the huge cost of investment. A relatively cost-efficient steelmaker would become unsustainable if it carried the cost of installing CCS alone. The funding in Europe is insufficient and there is even less of it available in other regions, Beauman argued. Furthermore, the funding that is available is focused almost entirely on the power sector.
In Europe the only steelmaking CCS project remains ArcelorMittal’s project at Florange in France. This intends to develop a top-gas recycling blast furnace which will produce waste gases with no carbon monoxide, making them suitable for underground storage. Part the Europe’s Ultra-Low CO2 Steelmaking (ULCOS) project, the plant is expected to generate results by 2014.
There is some chance that CCS funding will become available in China as Beijing has noted that it is a technology it wants to develop in the current five-year plan (2011-2015). However, this too is likely to be focused on the power sector and the availability of storage sites may also be an issue, Beauman said.
SBB 20 October ArcelorMittal has been given an official licence from the French government to examine possible locations for carbon dioxide storage in what could be the world’s first steelmaking carbon capture and storage (CCS) project. The project aims to capture and store emissions from an experimental blast furnace at the company’s Florange steelworks in the east of the country.
The blast furnace at Florange will recycle waste gases back into the furnace to add to the process of reducing iron ore to iron, cutting emissions by 25%. The remaining emissions would be suitable for CCS, which would lead to a further 50% reduction in emissions. The company hopes to have results from its industrial-scale pilot plant by 2014, Steel Business Briefing notes.
The project is part of the ‘Ultra-Low CO2 Steelmaking’ (ULCOS) programme which aims to develop new steelmaking technologies that could reduce greenhouse gas emissions from steelmaking by over 50%. ULCOS is funded by a group that includes the EU, national governments and companies including steelmakers.
In phase II (2008-2012) of the Emissions Trading System European steelmakers managed to secure free allocations of carbon credits. As steel production declined during the recession, so did their greenhouse gas emissions. Now, many steelmakers sell some carbon credits at the end of each year to boost their results.
SBB 14 February Global steelmaker ArcelorMittal earned $140m from trading carbon credits in the fourth quarter of 2010, its financial results show. This was 7.6% of its earnings before interest, taxation, depreciation and amortisation (EBITDA) for that quarter, Steel Business Briefing calculates.
The money will be reinvested in over 30 projects designed to reduce carbon dioxide emissions across ArcelorMittal’s Flat Carbon Europe division, the company tells SBB. These include the Ultra-Low Carbon Dioxide Steelmaking (ULCOS) pilot projects at Eissenhüttenstadt in Germany and Florange in France and the relining of blast furnace No.5 at Galati in Romania.
ArcelorMittal, and other steelmakers with production in Europe, currently receive free European Union Allowances (EUAs) under the EU Emissions Trading System. These are used to account for greenhouse gas emissions at the end of every year. One EUA counts for one tonne of CO2 equivalent.
Producers with reduced capacity utilisation often have credits left over each year. Many steelmakers sell some credits in Q4, when they can predict how many will be left over. Revenue from such sales adds to their annual financial results.
From 2013 onwards steelmakers will receive fewer free EUAs. Paris-based carbon analyst Orbeo predicts that EUAs could cost as much as €40/tonne ($54/t) by 2020, compared to €14.36/t currently. However, steelmakers will be able to use EUAs carried over from 2008-2012 to lower the costs and so do not sell all of their spare credits.
SBB 7 February ArcelorMittal has submitted an application for funding from NER300, the European Union’s carbon capture and storage (CCS) funding scheme, the company confirms to Steel Business Briefing. The funding would go towards the top-gas recycling (TGR) blast furnace pilot plant which the company intends to build at its Florange steelworks in northern France as part of the EU’s Ultra-Low Cost Steelmaking programme.
The NER300 scheme is able to provide a total of 300m European Union Allowances (EUAs), with a current market value of some €4.3bn ($5.6bn), to CCS projects in the EU. The scheme could pick successful applications by the end of this year, SBB understands. ArcelorMittal is also looking for French and German state backing and funding from the ULCOS programme itself.
The NER300 scheme is primarily targeted at the oil, gas and energy industries, as steelmaking emissions are not normally suitable for CCS. However, some new ironmaking technologies generate emissions which are suitable.
The TGR blast furnace could reduce greenhouse gas emissions by reusing waste gases. Any further emissions would then be suitable for CCS. ArcelorMittal is currently looking for a suitable storage site for captured carbon dioxide in northern France. The company expects the Florange pilot plant and another in Eisenhüttenstadt in Germany to yield results by 2013/2014.