Salzgitter strip unit is 92% self-sufficient in electricity

Steelmakers may still be concerned about the cpotential costs of Europe’s Emissions Trading System. Although costs will likely be less than estimated by many (see below) the additional cost of power is still a worry. However, this does not change the fact that captive power supply should still cut costs. Power generators expect to be able to pass on thier costs from the ETS to customers in full. As such the additional cost to captive production should be equal to the additional cost of buying in power. Meanwhile, steelmakers with captive power will be able to choose how to allocate their allocated carbon credits, potentially making their additional costts lower.

 Platts SBB News – 1 June 2012 German steelmaker Salzgitter is around 60% self-sufficient in electricity across its strip steel plant in Salzgitter and its Peiner beams mill. The electricity generated at the strip mill site – by two in-house power plants – has an annual market value of around €150m, the company told Platts Steel Business Briefing.

The two 110 megawatt units were finished a few years ago and have since been optimised. Strip production in Salzgitter is now 92% self-sufficient, whereas the Peiner meltshop still relies 100% on external power suppliers.

Together, the Salzgitter stations produce roughly one terawatt of power per year, all of which is consumed on site, the company said. Self-supply creates an annual saving for the company of up to €25m, according to the firm’s spokesman.

However, changes to the European Union’s emissions trading scheme for carbon-dioxide from 2013 onwards could mean that Germany’s steel industry incurs extra costs totalling up to €485m/year, according to Salzgitter’s comments to the German press.

This action would add additional costs of between €17 and €37 per tonne of steel produced, according to Salzgitter’s ceo, Heinz Jörg Fuhrmann.

Steel use must fall, but opportunities exist: Wellmet

SBB 24 April In order to reduce greenhouse gas emissions sufficiently to prevent catastrophic climate change the global use of steel must fall, notes Julian Allwood, group leader of the Wellmet2050 project at Cambridge University. However, there are opportunities for steelmakers to add value and potentially increase margins by producing less steel, he argues.

The global industry has almost reached the maximum amount of blast furnace capacity it will ever need, Allwood says. Increasing scrap supply should mean that new capacity will be primarily EAF-based.

However, steelmakers should also be producing less steel by making their products more material-efficient. Many steel products, such as sections, are around one third heavier than they need to be to fulfill their roles and much auto sheet contains around twice as much steel as carmakers will use, Allwood says.

By working with their customers steelmakers can help to find ways of providing exactly the same products with significantly less steel, and therefore significantly less raw material, labour and other costs. Producing steel with a specific end-use in mind could also increase efficiency and create low-cost premium products for steelmakers to profit from.

Unfortunately economies of scale are working to prevent this. Producing large quantities of commodity products to minimize labour costs currently makes economic sense but is not environmentally sustainable. Meanwhile, making more labour-intensive but tailored products for end users is only economical if a significant premium is being paid for the product.

Perhaps materials should be more highly valued by society and priced higher, one ArcelorMittal executive quipped at Platts SBB’s Green Steel conference in Berlin.

Worldsteel chief: ‘combined solution’ key to climate change

SBB 20 April World Steel Association director general Edwin Basson said all industry – and all industrial nations – must be included in ongoing efforts to curb carbon emissions, not just steel.

Basson, in an address during Platts Steel Business Briefing’s third-annual Green Steel Strategies conference in Berlin, called regulations aimed at reducing so-called tailpipe emissions “nonsensical” and said a life-cycle assessment approach is essential in making future strides.

Worldsteel, whose membership includes 17 of the 20 largest steelmakers in the world, believes the global steel industry is already a key player in moving toward greener industrial output, even as it accounts for just 6.5% of all CO2 production.

Basson pointed to the construction of the Golden Gate Bridge in 1937, which required some 83,000 tonnes of steel. “Today, only half that amount would be needed,” due to advances in stronger, lightweight steels, Basson said, adding that water recycled by steelmakers back into rivers and other bodies of water also is often cleaner than when it was extracted.

“Clearly, it is impossible to solve he climate change issue by focusing on the steel industry,” he said. “The future solution must be a combined solution.” Also, any near-term results gained by reducing steel’s CO2 output will be limited. “This is not going to give us results today or tomorrow. We will not halve carbon emissions in the next five years,” Basson said.

Matthias Finkbeiner, professor of life-cycle analysis at the Berlin Technical University, said “hardly any measure is a silver bullet.”

Finkbeiner said the UK’s total CO2 emissions increased by 19% since 1990, even as its domestic industry reduced overall emissions by 12%. The reason: the UK was a net importer of emissions related to the consumption of products made in other regions not as environmentally conscious.

European mills see differing profits from carbon credit sales

In the current period of the European Emissions Trading System, steelmakers have been left with a surplus of carbon credits. This surplus may be reversed as restrictions on emissions become more stringent from next year onwards but for now these credits are a tempting way to bolster ailing balance sheets. However, the key to getting the most out of these credits is a proper strategy and some steelmakers are achieving almost double the return per credit as others, as this story from Platts Steel Business Briefing’s Daily Briefing shows.

SBB 19 March – SSAB sells surplus carbon credits as emissions fall

Sweden-based steel producer SSAB saw greenhouse gas emissions at its European plants decline in line with production last year to 5.5m tonnes of carbon dioxide. The company also took the opportunity to bolster its balance sheet by selling 4.1m surplus carbon credits.

SSAB earned SEK 275m ($40.47m) from the sale of carbon credits last year. This would suggest it earned just $9.87 for each of the credits.

The company sold most of the credits towards the end of the year when SSAB’s blast furnaces were running at low utilisation levels, a SSAB spokesperson says. Carbon credit prices fell sharply in Q4, Platts SBB notes.

ArcelorMittal earned an average of $18.6 per credit last year, indicating a more sustained sale of credits through the year, analysts suggest.

As part of the European Emissions Trading System (ETS), steelworks must report their greenhouse gas emissions and hand over one carbon credit for each tonne of carbon dioxide equivalent emitted. In the current trading period (2008-2012) steelmakers have been given sufficient carbon credits to cover their emissions. In fact they have received more than they have so far used as the allocation was calculated before the 2008 financial crisis and so actual emissions have been lower than previously expected.

SSAB was granted 36.7m credits for 2008-2012 and now has 7.5m remaining to cover emissions this year. SSAB could therefore have more credits to sell unless it increases its European steel production by around 36%. Platts SBB calculates.

EU OKs compensation for big energy users hit by power costs

European steelmakers have oft bemoaned the costs of emissions trading systems. This includes the indirect costs from higher energy prices as weell as the direct costs of emitting greenhouse gases. Now the European Union has agreed to allow some compensationfor higher electricity prices. Although this will not eliminate the added costs to steelmakers, it should, if memebr states provide the cash for compensation, mean that the future of EAF steelmakers in Europe will be decided by market conditions, not by environmental regulation.

SBB 24 May The European Commission has adopted a framework under which member states may compensate high energy users, including steel producers. This is in response to the higher electricity costs expected to result from a change to the EU Emissions Trading Scheme as from 2013.

The regulation will allow subsidies of up to 85% of the increased cost faced by the most efficient companies in each sector from 2013 to 2015, a cap that will gradually fall to 75% in 2019-2020.

However, European steel industry body Eurofer says that is grossly insufficient and will not restore the level-playing field with competitors outside the EU.

At first glance, the most impacted products (EAF steel and downstream) would be covered by a maximum 50-60% of the indirect CO2 cost, should member states give the maximum they are allowed to as per guidelines, a spokesman for Eurofer told Platts Steel Business Briefing in an emailed response to questions on Wednesday.

“Given the current economic situation and the state of public finance in the EU, we don’t expect member states to give away much,” he added.

China’s steel industry tops 20m UN carbon credits

Earlier this year, China’s steel industry earned its 20 millionth carbon credit. Projects such as the Clean Development Mechanism have helped steelmakers, especially in China and India, to find financing for energy efficiancy investments. With India introducing its own energy efficiency certificate trading suystem and China looking at various ways to price carbon these kinds of scheme are likely to continue aiding investment. To hear what other factors are driving investment in the steel industry come to SBB’s third annual Green Steel Strategies conference in Berlin on 19-20 April.

Platts SBB 10 February The total number of Certified Emission Reductions (CERs) issued to the Chinese steel industry crossed the 20 million mark this week, Steel Business Briefing understands. 33.5m CERs have now been issued to steelmakers globally.

820,320 CERs were issued to China’s Jinan I&S on 8 February, taking the company’s total issued CERs to over 5.9m. The market value of CERs has fallen to around €4/t currently but Chinese steelmakers have mostly entered into contracts with a price of around €7-8/t, analysts tell SBB.

CERs are issued by the UN’s Clean Development Mechanism to projects which lower greenhouse gas emissions. One CER is given for a reduction in greenhouse gas emissions equivalent to one tonne of carbon dioxide.

Jinan I&S earned the latest batch of CERs from a plant it has built to generate power from waste gases at a blast furnace and coking oven at its plant in eastern China’s Shandong province. The plant reduces CO2 emissions by over 2m t/y.

China and India dominate CER issuance in the steel industry, accounting for over 97% of CER granted to the industry. Jinan I&S is the second biggest beneficiary after India’s JSW Group.

WorldAutoSteel pushes for ‘life cycle’ emissions approach

As climate change becomes an increasingly pressing political issue, how we measure success in reducing emissions becomes ever more important. Life Cycle Assessment (LCA) is more comprehensive than many other forms of assessment and has the support of steelmakers. How the steel industry can best respond to the challanges of climate change and how regulation will change the global industry will be central themes of the third annual SBB Green Steel Strategies conference. For more details click here.

SBB 1 December With more stringent US fuel efficiency and emissions rules on the table and ongoing European negotiations bringing the issue of climate change to the forefront, WorldAutoSteel is pushing for governments around the world to shift the basis of greenhouse gas reduction initiatives from simply measuring tailpipe emissions to a life cycle assessment (LCA) approach.

The US is considering new fuel economy and emissions requirements for 2017-2025, and the European Union is preparing a mid-term review of EU emission standards for new cars, expected by the end of 2012. Vehicle efficiency standards are also being evaluated in a number of Asia Pacific countries, points out WorldAutoSteel – the automotive arm of the World Steel Association.

Rather than focusing purely on emissions, WorldAutoSteel says an LCA approach “considers emissions from all aspects of a vehicle’s life, including material production, manufacturing, driving and end-of-life-recycling,” giving a better picture of a vehicle’s actual carbon footprint.

WorldAutoSteel director Cees ten Broek says measuring only tailpipe emissions “encourages the use of greenhouse gas-intensive manufacturing phase technologies, such as low-density materials, in an effort to reduce fuel consumption.” These materials, such as aluminum, compete directly with highly recyclable, advanced high-strength, low-weight steels being developed by WorldAutoSteel member companies.

“A regulatory approach that includes life cycle principles also has the advantage of providing carmakers greater flexibility in applying the lowest cost technology in complying with the rules as opposed to the current tailpipe approach,” ten Broek says in a statement sent to Steel Business Briefing.

CSA major source of CO2 emissions in Rio de Janeiro

SBB 14 November Companhia Siderúrgica do Atlântico (CSA) – the new Brazilian slab plant owned by ThyssenKrupp and Vale – is being blamed for a large rise in carbon emissions in Rio de Janeiro, Steel Business Briefing learns from local environmental authorities.

From June 2010 to June 2011, city chiefs estimate 5.7m tonnes of CO2 were released into the atmosphere by CSA’s activities, half the city’s total 11.35m t of CO2 emissions in 2005.

Rio de Janeiro aims to reduce CO2 emissions 8% (from 2005’s CO2 total) by 2012 and the policy on climate change and sustainable development requires emissions to be cut 16% in 2016 and 20% by 2020.

Authorities have yet to decide whether to penalize CSA or if the company can receive its definitive operating license. To date, the mill has functioned with a pre-operation license that expires in September 2012, SBB notes.

Earliest industrialisation of Hisarna 2020: Tata Steel

SBB 14 November The earliest industrialisation of Hisarna, the smelting reduction technology being trialled at the IJmuiden steelworks, is 2020, Koen Meijer of Tata Steel told the recent German steel industry conference in Dusseldorf. Hisarna is a high risk/reward innovation, he said at the event attended by Steel Business Briefing.

On 18 April 2011 the process, which removes the need for coking and agglomeration, was piloted for the first time. After one failed start three successful attempts followed, and 60% of capacity was achieved for a short time, Meijer said.

The results of the pilot indicate that the process works as expected, though more operating hours are needed. Between December and February improvement proposals will be implemented and April-May next year will be the next campaign. Industrial scale demonstration will be carried out between 2014-2018, according to Meijer.

Hisarna is part of the Ultra-low CO2 Steelmaking (ULCOS) project, which aims to cut CO2 emissions by 50% per tonne of steel produced. Without carbon capture and storage technology Hisarna can cut emissions by 20%, whereas with CCS it can achieve a reduction of up to 80%.

It not only has environmental benefits, Meijer said. Costs associated with coking and agglomeration disappear through Hisarna and you can use iron ores not currently suitable for blast furnaces and non-coking coal.

Steel production accounts for 5% of manmade CO2 emissions globally, and consumption is expected to double by 2050. Further reductions in CO2 need breakthrough technologies, not just energy saving, Meijer said.

Tata could link into UK carbon capture and storage network

The steel industry will need to find a wide range of option to reduce emissions in the coming years if it is to avoid punitive costs. However, it does not always have to do so alone. Sometimes collaborating with existing projects may be a viable alternative to implementing an entirelyseparate scheme from scratch. One potential area for collaboration, if it is proved succesful, is in carbon capture and storage.

SBB 15 July Tata Steel Scunthorpe is in discussions to connect to a carbon capture and storage project in northern England, it confirms to Steel Business Briefing. Pending funding, this could significantly reduce the plant’s carbon dioxide emissions and the resulting costs.

The UK’s National Grid has begun consultations on a £5bn pipeline project to transport CO2 from the Don Valley power plant project to a storage site in the North Sea. The pipeline is planned for completion in 2015.

It is now also talking to other power plants and industrial sites in the Yorkshire & Humber region, including Tata Steel Scunthorpe, which together account for some 60m t/y of CO2 emissions.

The goal would be to develop a pipeline network in order that other facilities could feed their emissions into the main pipeline, the National Grid tells SBB. However, each facility would have to first receive funding, most likely from the European NER300 funding programme (New Entrants’ Reserve of 300m credits), it adds.

Tata Steel is looking at how carbon capture and storage and how this could benefit plants such as Scunthorpe, it tells SBB. It could now apply for the second round of NER300 funding, although no decisions have yet been taken, it points out. Applications may open next year once first round applications are decided, Jan Lucas, managing director of PNO Consultants Germany, tells SBB.

However, the exact amount of funding available is uncertain as the fund consists of the 300m carbon credits rather than a cash amount, warns Lucas. These have to be sold before the exact cash value of the fund is known.