Written evidence submitted by Danieli UK Holding Limited (GST0014)
The clock is ticking if it is to be achieved by the 2035 the target set by the Climate Change Committee in its Sixth Carbon Budget.
Danieli’s unique technology can support this transition plus the replacement of blast furnaces at UK steelmaking plants, realising 80% reduction in CO2 emissions compared to existing steel production methods and take another major step toward the ‘’holy grail’ of net zero, the stated objective of COP26
Steel manufacturing accounts for 8% of CO2 emissions worldwide and 2.7% of UK emissions, with the steel industry being the biggest industrial emitter of CO2 in the UK.
To comply with the Paris Agreement, emissions must fall by 2050 from the average value of 1.85 to 0.2 tons of CO2 per ton of steel.
More than 80% of UK steel is made via the blast furnace route in the steel plants of British Steel Ltd, Scunthorpe and Tata Steel UK, Port Talbot.
In relation to climate change and the 2050 net zero target adopted by parliament in 2019, the steel industry is aware that a change is necessary in the technology of steel production.
The pathway toward the steel decarbonisation shall be based on the following action lines
Electrification
The current investments in alternative energies from wind, sun and nuclear fusion have electricity as output “green” energy.
A direct use of “green” electricity is the first step for decarbonisation avoiding a vast spread of direct emissions, but it requires important investments in the whole power grids infrastructure.
The UK consumes approximately 11.9 Mt of semi-finished and finished steel products each year.
Currently, the UK produces around 11.3 Mt of scrap steel each year, 2.6 Mt of that is used in domestic steel making, which is a mixture of blast furnace and electric arc furnace production.
The remainder of the recycled metal is exported.
There is room for greater use of recycled scrap by electric arc furnaces to be used domestically or exported with a low carbon footprint.
A full conversion to the EAF route enables CO2 emissions to be drastically reduced but there are concerns over whether the correct quality for all steel grades can be achieved only utilizing scrap. This concern can be addressed by employing as a charge mix a combination of DRI and UK scrap, in various ratios depending on the steel grade being produced.
Hydrogen
Hydrogen is the alternative to coal to be used as a reducing agent in Energiron Direct Reduction to produce DRI without CO2 emissions, allowing the full replacement of the blast furnace for the production of high-grade quality steel and to guarantee a heating vector in processes where the electrification is not applicable.
Hydrogen production, via electrolysis, demands a high amount of green electricity by renewable sources. The increasing installation of renewables is challenging the load balance of the electrical power grid being by nature less predictable in their supply. The electrolyzers can vary the hydrogen production in a smart way, contributing to power grid stabilization.
Scaling hydrogen production is essential to lower the current high cost in CapEx and OpEx, compared to fossil fuels.
CCUS
CCUS technologies can reduce the CO2 emissions in the short term by storage and opening the way to CO2 based chemistry, including fertilizers and synthetic fuels, as soon as hydrogen availability and its cost can be competitive against fossil-based products.
There are a number of potential barriers for the steel decarbonization in the UK requiring policy support
Electricity cost : Energy prices in UK is higher compared to other steel manufacturing countries.
Considering that a substantial part of decarbonization is based on using more electrical power, both for EAF and Hydrogen production it is necessary to find solutions.
UK-ETS vs EU-ETS : UK steel manufacturers participate in the UK Emissions Trading Scheme (ETS), which came into force post Brexit. The price and the mechanism are almost the same as the EU model, but due limitation in size of the UK trade market the compensation of missing quotes can be more expensive than EU trade market
Metals Recyclers organization : UK is exporting the majority of the scrap collected in the country. Scrap is a key raw material in the decarbonization of the steel thanks to very low emissions related to its recycling.
The UK scrap market is dominated by two companies who have both made considerable investments in the UK in infrastructure and equipment focused on scrap export. There could therefore be a reluctance to switch away from this current business model to a more domestic focused market supply.
Knowing the size and the chemical composition of scrap helps to build the right charge for the melting in function of the final steel grade, minimizing the energy consumption as well as having a full control of the unwanted residuals limits the need of virgin steel.
Business rates : The load of business rates is estimated to be from 5 to 10 times higher in UK compared to EU countries. This taxation may discourage investments in the new technologies, having a double impact of obstructing the decarbonization of the steel industry and of compromising the future market for the UK steel
Concentrating all the decarbonisation technologies on one site via a pilot site would demonstrate the feasibility of the technology, fostering the diffusion of the knowledge of emerging steel manufacturing techniques, and will make available the supply of green steel to other downstream industries, opening market opportunities for them.
The pilot site would host a steel factory that will deliver overall a production of roughly 600 kton of green steel products per year, in order to be able to give an impulse to green economy and allow the economic sustainability of the site.
The plant would include a Direct Reduction Plant, like EnergIron®, fed with Hydrogen, and a continuously fed electrical arc furnace, like DDM-ECOPRO® and a QLP casting and rolling complex.
This would allow the use of iron ore and scrap, modifying the mix with flexibility, delivering a zero-carbon steel.
The direct reduction plant would have the flexibility to run also partially hydrogen mixed partially with natural gas; such flexibility is a key factor to allow the stepwise implementation of the new technology, reducing the need to concentrate in one investment, all the infrastructures needed to have a carbon-free steel.
Liquid steel would be cast and melted in one continuous co-lamination plant, as the one of the QLP®, in order to achieve the target of a low emission process and an economically sustainable production.
The traditional steel production route, based on iron ore reduction in blast furnaces charged with coal, generates an average emission value of 2.2 tons CO2 per ton of liquid steel.
The scrap based process route is much greener, less than 0.3 tons CO2 per ton liquid steel using one eighth of the energy compared to the BF-BOF routeThe route is based on the Electric Arc Furnace (EAF) and the electrical power is the source of energy for this route.
A different method of steel production from virgin iron is the direct reduced iron- electric arc furnace (DRI-EAF) route, with an average emission value of 1.2 tons CO2 / ton liquid steel, using natural gas as the energy source for the iron reduction.
Danieli as a group is working in all technologies related to steel manufacturing to improve their performances.
A production route that would have less than 0,6 tons CO2 per tons of final product could be identified as low carbon steel.
Technologies available to produce “green steel” do exist, direct reduction process, considering the DRI-scrap-EAF route is the alternative to substitute BF-BOF route and in particular the ENERGIRON technology for the production of iron ore (DRI) with CO2 emissions reduced by 60-70% and at least 82% for green hydrogen up to 100% for a full green hydrogen use in all DRP plant.
DRI by Energiron has been commercialized since 2005 and many reference plants are in continuous production using natural gas as a reductant. Technology for direct reduction was first introduced in 1957 and in 1994 a pilot plant tested operations with hydrogen of up to 90%.
For even greater efficiency iron ores are processed by Energiron as hot DRI that is charged directly into the EAF at over 600 °C, which results in savings of 120-150 kWh/ ton Liquid Steel.
The Energiron Carbon Capture built in and its own unique design makes it possible to use as a reducing agent and fuel the natural gas or a mixture with hydrogen of up to 100% hydrogen for CO2 emissions going to zero.
Additionally, Energiron ZR allows reforming the natural gas inside the reactor producing carbon monoxide and hydrogen without the use of an external reformer.
Consequently process efficiency is increased to unprecedented levels: the product absorbs most of the energy supplied to the process, with very minor losses.
Energiron ZR plant efficiency is above 78%, compared to 70% for competing technologies.
Risks are related to normal operating conditions of any steel plant
DDM - Liquid Steel production with electric arc furnace
Electric arc furnace is the key equipment to drastically reduce carbon emissions in steel production.
Danieli has been one of the world’s leading suppliers of electric arc furnaces since the mid-1980s and today can account for the commercialisation of more than 280 references worldwide.
Danieli’s developed and patented Digimelter® (DDM), a revolutionary melting unit consisting of a unique combination of mechanical design (ZeroBucket ECS), electric power feeding (Q-One) and intelligent control system (Q-Melt) able to achieve 15,000 heats per year with minimal OpEx, lowest environmental impact, and high flexibility for charging both DRI and scrap in any mix .
Danieli DigMelter Zerobucket Endless Continuous Charging (ECS) is the most environmentally friendly melting technology with the lowest CO2 footprint.
Characterised by high flexibility in raw materials, low energy consumption, very high reliability and utilisation factor, lowest noise and pollution emissions, Danieli Digimelter® Zerobucket with horizontal continuous scrap charging system (ECS) is the perfect answer to the latest needs of the steelmaking market.
Q-One®, the latest Danieli patented technology for EAF power management, handles irregular power loads with high flexibility and reliability, thanks to the control capabilities provided by power semiconductor devices.
It replaces traditional furnace transformers and does not require any disturbance compensation systems, like Static Var Compensator (SVC).
Q-One® reduces EAF overall electric power consumption and graphite electrode consumption with a shorter power-on time and close to zero generation of reactive power.
Q-One® has a high voltage DC-link and hence is ready for direct feeding of energy coming from renewable sources.
Q-Melt™ is the intelligent control system which enables the EAF to be best optimised process under any operating conditions and in fully automatic mode. It interacts continuously with the Q-One® electrical control and the Danieli chemical injection systems to control operating conditions. The impact on both productivity and energy consumption results in higher productivity and lower operating costs (OpEx).
Continuous casting and rolling
Danieli Universal Direct rolling is available both for long products (QLP) and for flat products (QSP)
Utilizing this technology, liquid steel is transformed into finished product in less than 15 minutes. The process is continuous and stable, with long production campaigns possible in endless casting and rolling mode, achieving high efficiency in terms of yield, energy savings and environmental sustainability.
QLP® process, with Octocaster technology is able to produce up to 1.5 Mtpy on a single casting-strand compared to the six strands necessary in a standard technology. Moreover, the high casting speed preserves the inner energy of the cast billet avoiding the installation of a reheating furnace and cutting its related emissions.
The energy saving for the QLP casting- rolling process is up to 330 kWh/t. OpEx savings are around 20%.
QSP process with Dysencaster technology can produce up to 4.5 Mtpy of quality coils on a single casting strand.
The Danieli QSP configuration offers unmatched production flexibility and almost no limits in steel grades. With its unique ability to perform in endless, semi-endless and coil-to-coil modes on the same production line.
Operating in endless mode, the energy saving for the QSP casting-rolling process is up to 260 kWh/t. OpEx savings are around 20%.
Danieli endless casting and rolling minimizes CO2 emissions up to 100 kg/ton of steel produced, saving up to 100% of energy lost to reheating compared to traditional cold-charging practice.
Other decarbonization relevant technologies are available, for example;
Electric heating for product reheating
Induction heating technology is the most environmentally friendly solution for achieving the required rolling temperature without using gas, reducing emissions, and drastically reducing scale formation.
Danieli has developed an induction heating system called Q-Heat, developed according to a modular design of the coils and through single control of the electrical power feeders. The requested heating power is supplied “just-in-time” according to the different operating conditions, zeroing any heat loss.
Such solutions, already applied in some traditional and in all Danieli MIDA minimills, allows for on-line temperature distribution control, excellent energy efficiency and minimum carbon footprint. Induction heating might also be applied in thermal treatment lines for quality steels, with the above advantages and an improvement in temperature treatment control.
Hydrogen heating
Whenever it is not possible to use electricity, the solution to reduce the CO2 footprint is to switch from natural gas to hydrogen also in any reheating activity that can be the ladle and tundish preheaters as well as reheating furnaces for large products.
Danieli Centro Combustion has developed a series of specific solutions customizable to steelmakers requests looking towards progressive decarbonisation of the thermal processes and NOx emission control. These are achieved by specific design and construction techniques such as choice of insulating materials, process control and mainly through combustion technology by means of high-efficiency heat recuperators, and flameless and regenerative hydrogen burners.
Danieli Hydrogen burners can operate with mixtures of natural gas and hydrogen up to 100%, thus confirming the versatility of the technological solution according to hydrogen availability.
CO2 emissions are reduced to zero with full hydrogen combustion, and thanks to the flameless technology NOx emissions are kept to the same very low level as with natural gas, or even reduced.
Carbon Capture
CO2 removal from an industrial process stream has been applied for 30 years, although in most of the cases it was treated as waste.
Four CO2-removal technologies are widely practiced in industry:
> chemical or physical absorption;
> adsorption process;
> membrane system;
> cryogenic processes.
The chemical absorption using amine- based solvents is the readiest and cheapest CO2 separation technique. It is widely used and applied in several small and large-scale projects worldwide in power generation, fuel transformation and industrial production.
A schematic representation of the process is presented in the below picture
After conventional air pollutant clean-up (SOx, NOx, PM), flue gas enters an absorber reactor and flows counter-currently to a CO2-lean solvent, where CO2 is absorbed into water-soluble compounds by reacting with tertiary amines like MEA. The treated flue gas is discharged to the atmosphere and the CO2-rich solution is pumped to a stripper unit for regeneration of solvent. In this unit, a reboiler, supplied with steam, provides the energy for regeneration of the solvent. Consequently, CO2 is released, producing a concentrated stream which exits the stripper and is then cooled and dehumidified in preparation for compression, transport, storage or use.
Danieli adopts the CO2 chemical absorption for carbon capture in BF, BOF, and natural gas DRI process gases and reheating furnaces.
Waste-heat recovery is an important contributor to reduce the cost of energy necessary for the amine-CO2 separation, as well as the improvement of solvent formulation.
Zero water discharge
Even though 71 percent of the Earth’s surface is covered by water, less than 1 percent is freshwater that is suitable for human consumption. Global water demand is expected to increase by more than 50 percent by 2040.
Water use and water consumption nowadays are important factors for determining environmental compliance and related company ratings.
Danieli minimills are generally supplied with the Zero Liquid Discharge system. Since 2007, 14 ZLD units have been supplied with capacities rated from 20 to 180 m3/h, including systems with evaporation and crystallization stages.
A large volume of water in the cooling circuits of steelmaking plants is lost due to water blow-down, necessary to maintain the correct water-quality parameters.
In the Zero Liquid Discharge concept 75% of blow-down water can be recovered and reused as make-up water for the same circuit.
In addition to saving natural resources and the re-use resulting from no water discharge, steelmakers benefit from no need for discharge authorisation and no risk of plant stoppages due to regulatory limit infringements.
In the previous paragraphs we have highlighted that carbon avoidance and carbon capture are the key points for the steel decarbonization.
Carbon avoidance means to apply as much as possible both to the electrification of processes and the reduction of CO2 direct emissions during steel production.
Electrification needs increasing amounts of renewables to abate the CO2 footprint of electricity and to allow the production of green hydrogen by electrolyzers.
The reduction of CO2 direct emissions occurs by optimisation of the iron and steel process by reducing the necessary amount of carbon and by replacing coal as a reducing agent: so DRI with the use of green hydrogen instead of blast furnace and carbon of biological origin (biochar) or from treatment of urban waste based on polymers for operations in EAF.
Contemporaneously, the availability of hydrogen makes it possible to replace fossil-based chemistry with green chemistry based on the combination of green hydrogen and captured CO2 making possible the production of fertilizers, synthetic fuels and methanol.
Finally, all the technologies suitable for heat recovery can be used directly for district heating systems connected to the steel plant, for the capture of CO2, to produce biomass (microalgae) and when favorable for the conversion of recovered heat into electricity.
The conversion of steel production to a low climate impact is already required by some sectors of the industry, e.g. car and appliances manufacturers. Beside this spontaneous request from the market, European Union is working on the adoption of a Carbon Border Adjustment Mechanism. This European law, that is being discussed in these months in the European Parliament, will apply a duty that will be calculated on carbon footprint of the products, applying the value of CO2 emissions set in the market of EU. The law will compensate the duty if steel has already paid for its carbon footprint in its production country. Failing the conversion to green steel, the products will be subject to the application of this duty at EU borders and they will be severely disadvantaged when compared to green products. This could result in a loss of export market of roughly 5 million tons, having a countervalue ranging from 3 to 5 billion pounds.
The presence of a close access market for decarbonized steel will affect the competition of the rest of the market. High carbon footprint steel, for instance manufactured in countries slower to convert to green, will find difficult access to decarbonized markets, leading to the possibility of the steel being dumped in countries where no Carbon Border Adjustment Mechanism is in place.
This scenario will eventually create a double level market, in which the green steel will have a higher price, compensating at least partially the higher costs of production, while the grey steel will compete with steel being manufactured in emerging countries. The effect would be a reduction of revenues that could be estimated between 1 and 2 billion pounds.
March 2022