Climate
Steel manufacture in the world unavoidably generates carbon dioxide. Emissions from steel production principally derive from the use of coal for the reduction of iron ore (iron oxide) to iron. There are no alternatives to coal as a reducing agent for the foreseeable future. Other carbon dioxide emissions come from the use of fossil fuels in furnaces for smelting, heating and heat treatment.
Swedish ore-based steel is carbon dioxide efficient
Steel is partly manufactured from iron ore and partly from scrap wherein the latter process generates considerably less carbon dioxide since no reduction process is involved. Owing to the development of steel consumption in the world, however, not all steel can be produced from scrap; quite simply there are insufficient quantities and new ore must be used the whole time. Almost 70% of the world’s steel production is ore-based.
In Sweden, the ore-based production accounts for around two-thirds of the total. In comparison with many other countries, Swedish steel production is carbon dioxide-efficient through the use of magnetite ore (which requires less energy than hematite ore), efficient processes, highly developed products and CO2-free electricity production.
Necessity for global trading system
The climate issue is a global problem and cannot be solved by individual countries or regions. The political measures must be developed on the basis of international collaboration since they affect the preconditions for growth and production. The consequences, otherwise, will be reduced investments, less employment and shrinking production with a corresponding expansion of production in other parts of the world where emissions per tonne of steel are greater.
For the steel industry it is important that operating conditions are equivalent for all manufacturers and a global trading system is the only solution that also sets a price for emissions. The steel industry within the EU recommends a trading system based on target values and one that does not limit production. The system would reward those steel plants that are most efficient in terms of emissions and motivate measures to reduce emissions within the framework of what is technically feasible. Production-limiting steering instruments would never be accepted by countries such as e.g. China or India.
The Swedish steel industry is an efficient producer of effective and modern materials from both a functional and environmental viewpoint and works for a global market. Products that are sold on the European market are subject to international competition. The global trading flows are far-reaching and imports to the EU are increasing sharply, above all from the so-called BRIC countries.
If the steel industry in Sweden and the EU is to be able to continue producing steel the operating conditions must be equivalent to those of its competitors outside the EU. Otherwise, the steel industry in the EU will disappear in the long run. Extra costs, specific to the EU, cannot be transferred to its customers. In any European trading system the steel industry must therefore obtain sufficient emission rights to be able to continue producing and growing and this allocation must be free of charge.
European emissions trading
The European Union’s trading scheme for greenhouse gases is now in its second phase, 2008-2012. The allocation of emission rights has taken place in advance based on historical emissions. For process-related emissions, e.g. for reduction process coal, a production forecast is also included for the period in question. Depending on whether the world market and thereby production rises or falls there is a consequent deficit or surplus of emission rights for companies. Over and above the direct costs of emission rights, the companies pay, like all the rest, the carbon tax placed on the electricity price under the emission trading scheme despite the fact that Swedish electricity is practically free of CO2.
Under the EU’s future Emission Trading Scheme, to take effect after 2012, it has been decided that sectors exposed to international competition with associated risk of transfer of operations ∼ so-called carbon leakage ∼ shall be enabled to obtain free allocation of emission rights. This allocation is based on target values i.e. emissions per produced unit for the respective sector. In the Emissions Trading Directive there is also a possibility for vulnerable industries to receive compensation for the emission trading scheme’s impact on the electricity price.
It is our opinion that:
- The steel industry as a whole shall be part of the group deemed to be exposed to the risk of carbon leakage.
- Those target values that are used for allocation of emission rights shall be based on carbon dioxide efficiency and adapted to the different process stages that are included in steel production.
- The steel industry shall be compensated for the impact of emissions trading on the electricity price.
- Any industry sector agreements at the international level must imply equivalent standards and costs for all steel manufacturers.
Research
There is in progress within the EU a large-scale research programme ULCOS (Ultra-Low Carbon dioxide Steelmaking) with the objective of reducing carbon dioxide emissions from steel production by 50%. Participants comprise 48 companies and organisations within mining, steel, energy and the engineering industry as well as research institutes and universities. From Sweden there is participation by LKAB, SSAB and Swerea MEFOS.
Read more: www.ulcos.org
CCS (Carbon capture and storage) i.e. collection and storage of carbon dioxide is a possibility for rapidly reducing emissions. The steel and mining industries are participating in research programmes where the preconditions for the transportation and storage of carbon dioxide shall be investigated.
