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IJmuiden and why a portfolio of solutions are still needed for the European steel industry

October 4, 2021 Work Area: Carbon Capture, Zero-Carbon Fuels

Last month, the development of carbon capture and storage for the steel sector hit a stumbling block with Tata Steel’s announcement that it was abandoning plans to deploy the technology at its IJmuiden plant in the Netherlands.

Under the now-shelved ‘Everest project’, Tata had planned to start capturing 3 million tons per year of carbon dioxide from IJmuiden by 2027, to be permanently stored in depleted gas reservoirs off the Dutch coast. Instead, the company has opted to replace one of the facility’s two existing blast furnaces with an alternative low-carbon technology based on clean hydrogen. This move is predicted to eliminate the roughly 5 million tons per year of carbon dioxide associated with this part of the plant. Through this, Tata Steel IJmuiden aims to achieve its target of 40% decarbonisation by 2030, with a view to reaching carbon neutrality in 2050. As the largest carbon dioxide emitter in the country, the future of the plant is highly significant for the Netherlands’ climate goals.

But what does it mean for the decarbonisation of global steel production, which accounts for over 5% of global carbon dioxide emissions?

Tata’s decision highlights the two low-carbon technology pathways available to the iron and steel sector, both of which had been actively pursued at the IJmuiden site until now. Currently, iron can be produced from iron ore via two routes: in a blast furnace fuelled primarily by coal, or through the direct reduced iron (DRI) process, which generally uses natural gas or hydrogen. After raw iron is produced, it is then converted to steel. While blast furnace iron is usually turned into steel in a basic oxygen furnace (as at IJmuiden), direct reduced iron is normally paired with an electric arc furnace (EAF), which are also widely used to produce new steel from scrap material. DRI-EAF technology therefore offers a clear path to low-carbon steel by running the DRI process on cleanly produced hydrogen and sourcing the electricity for the EAF from clean power.

The key to this approach is the availability of low-carbon hydrogen, which can be obtained either by capturing and storing the carbon dioxide emitted during its conventional production from natural gas, or by using clean, low-carbon electricity to power the electrolysis of water. Importantly, the natural gas route must also eliminate emissions of methane – another potent greenhouse gas. The possibility of a process based entirely on renewable energy has won support from many policymakers and environmental groups in the EU, and is also the vision of Swedish steel producer SSAB. Earlier this year, SSAB successfully trialled small-scale production of steel using hydrogen from electrolysis, and has plans to scale up the process.

Despite the appeal of the hydrogen-fuelled DRI solution, for global iron and steel production to be decarbonised as rapidly as possible there is likely to be an important role for carbon capture and storage. This technology can be used to capture the carbon dioxide emitted by blast furnaces and various other carbon dioxide sources associated with steel plants, including conventional DRI plants based on natural gas. While partial carbon dioxide capture from a DRI process has been successfully operated at the Al Reyadah steel plant in Abu Dhabi since 2016, the technology has yet to be demonstrated at large-scale on blast furnace emissions.

In the IEA’s recent roadmap to achieve net zero globally by 2050, the carbon capture route ultimately accounts for over half of total steel production, capturing 670 million tons of carbon dioxide per year (IEA, 2021). This significant contribution hints at the enormous challenge of decarbonising the sector within such a short time frame. Over 70% of global steel production is from blast furnaces and, while much of this predominance is due to China, they also represent 60% of EU production. Closing all of this capacity and replacing it with hydrogen-DRI in the next 30 years would be an enormous undertaking, particularly given the massive demand for clean hydrogen and renewable electricity there will be across all sectors in a net-zero world.

To illustrate this, it is estimated that replacing IJmuiden’s entire steel output (roughly 7 million tons per year) with renewable electricity, would require 6 GW of wind power for the production of hydrogen alone – nearly equivalent to the Netherlands’ existing installed wind capacity. And although electrolyser costs are expected to fall over time, carbon capture and storage is currently estimated to deliver a ton of low-carbon steel at a significantly lower cost than the electrolysis route (IEA, 2020).

While Tata has not explicitly stated where all of the new facility’s hydrogen will be sourced from, the company has existing plans to install a 100-MW electrolysis facility – bigger than the largest units operating today. And yet this plant would produce less than a tenth of the hydrogen needed to match the output of the replaced blast furnace. Other plans to develop up to 100,000 tons per year of low-carbon hydrogen production using the alternative, carbon capture-based approach, now seem unlikely to proceed. A third option could be imports of low-carbon hydrogen from regions with an abundance of renewable energy, such as Iceland – but the quantities required remain daunting. Based on these challenges and the typical size of DRI-EAF facilities, the conversion at IJmuiden may be associated with a reduction in steel production.

Consideration of whether to apply carbon capture to IJmuiden or to use hydrogen derived from renewable energy cannot ignore the trade-offs associated with delay and with other potential demands for renewable energy and hydrogen, such as decarbonising the Netherlands’ electric grid and fueling heavy transportation and shipping. Equally, there are long-standing local concerns over poor air quality and other environmental effects associated with the plant, which must be carefully addressed regardless of the site’s future. There are no easy answers here, but timing, cost, and planning certainty must all come into the evaluation.

Despite Tata Steel’s decision at the IJmuiden plant, the company clearly sees carbon capture and storage as an important climate solution as it recently commissioned a small carbon capture test facility on one of the company’s blast furnaces in India – home to the vast majority of Tata’s production. In the UK, the Port Talbot steelworks remains part of the South Wales Industrial Cluster, whose plans to decarbonise lean heavily on carbon capture. Even at IJmuiden, statements from Tata’s engineers suggest that the company has not abandoned this pathway entirely; the current plans leave emissions from IJmuiden’s second blast furnace completely unchecked post-2030, leaving an unanswered question that carbon capture may yet need to resolve.

These efforts to reduce carbon dioxide emissions take place against a backdrop of challenging economics for steel plants in Europe, which struggle to compete with lower-cost imports, and both the Welsh and Dutch sites face uncertain futures. Having originally threatened to sell the struggling Port Talbot, Tata have instead come close to selling IJmuiden to SSAB earlier this year, only to see the deal fall through. The plant’s presence in ‘the shop window’ may therefore have some bearing on the strategy Tata has put forward for its decarbonisation. Ensuring that these industries successfully navigate and survive the EU’s transition to net zero is of the utmost importance not just for the climate, but for their thousands of employees and local economies. Allowing this production to be replaced by carbon-intensive imports from regions with less demanding climate targets would be a failure on both these fronts.

For society to address emissions from the steel industry within the next three decades, it is essential to develop both the carbon capture and storage and hydrogen-based approaches to widescale use. Banking on only one of these nascent solutions for the steel sector presents a climate risk: the risk of a slower transition if technology uptake is inadequate or renewables resources become too strained. Europe’s emitting industries will ultimately depend on a range of clean technologies, but given that more than half of the world’s steel is made in China – mostly in a fleet of relatively new, coal-based blast furnaces – developing carbon capture for these sources could well prove to be mission-critical for climate. And although many existing technologies should be directly applicable to capturing blast furnace emissions, there is growing urgency to properly demonstrate this application at large scales if the technology is to be ready to contribute to pressing near-term climate goals. As a leading project in a country with a good existing policy framework for supporting carbon capture deployment in industry, the loss of Project Everest therefore represents a significant setback and a lost opportunity for technology leadership.

Far-sighted climate policy can and should help foster and encourage a robust portfolio of solutions for Europe’s steel industry and beyond.

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