Here’s how steel and cement can help change climate change – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology

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This article is brought to you by the collaboration of The European Sting with the World Economic Forum.

Authors: Rana Ghoneim, Head of Energy Systems and Infrastructure Division, United Nations Industrial Development Organization (UNIDO), Gökçe Mete, Head of Secretariat, Founding Member, Leadership Group for Industrial Transition (LeadIT) and Women on the Green Hydrogen Network & Anthony Hobley, Executive Director, Mission Possibility Platform

  • Steelmaking and cement production are both highly carbon intensive, and achieving net zero will require the industry to overcome technical limitations.
  • The use of electric arc furnaces and renewably produced hydrogen already reduces energy and resource consumption.
  • There have also been advances towards fully recyclable steel, including technologies that use carbon from old rubber tires, eliminating the need for coke and coal.
  • A government commitment to green public procurement is now required, as the large purchasing power of public bodies will kickstart the market for low-emission steel and concrete.

Steel and cement are integral parts of the modern world. Steel is found in everything from key infrastructure to kitchen utensils, while cement, the main ingredient of concrete, is the world’s most consumed resource after water. About 3 metric tons of cement are used annually for every person in the world. Steelmaking and cement production are both very emission intensive. The need for continuous high-temperature heat to produce steel, cement and concrete requires large amounts of energy, most of which are still dependent on fossil fuels. In addition, the chemical processes involved in producing these materials are themselves a major source of emissions. According to most estimates, steel and cement production accounts for just over 50 percent of all industrial emissions (see image below).

Chart showing global greenhouse emissions by industry (2014)
Chemicals and plastics were among the top greenhouse gas emitters (by industry) in 2014 Image: UNIDO/Rissman, J., Bataille, C., Masanet, E. et al., (2020).

Nearly 2 billion tonnes of steel are produced annually, producing about 8 percent of all global CO2 emissions. For every tonne of steel produced in conventional furnaces, between 1.5 tonnes and 3 tonnes of CO2 are released into the atmosphere. Cement accounts for a further 6 percent of total emissions, with two-thirds related to the chemical reactions involved in production, and the remaining one-third resulting from the combustion of fuels.

Chart showing share of global direct combustion and CO2 process emissions (2016)
The heat and electricity sector contributes more than double the contribution of the iron and steel sector Figure: UNIDO/Bataille, C., (2019).

In addition, demand for cement and concrete will increase by more than a third by 2050, when the global population is estimated to reach 9.7 billion, 70 percent of whom will live in cities. To accommodate this massive urban expansion, another New York City equivalent would be built every month for the next 40 years. Even technologies that drive the energy transition, such as wind turbines, require large amounts of steel and concrete. Therefore, it is critical for the mining and manufacturing industries—and especially steel and concrete—to bring their process technologies in line with climate commitments. To achieve this, process emissions in the steel industry must fall by at least 30 percent by 2030. Achieving net zero emissions from cement by 2050 will require the industry to overcome technical limitations and establish the use of carbon capture and storage (CCS). technology. As the graph below shows, the challenges will be much greater for developing countries.

Two graphs comparing CO2 emissions with material production (2020 to 2050)
Chemical and steel production can lead to CO2 emissions Figure: UNIDO/Maltais, A., Gardner, T., Godar, J., Lazarus, M., Cashew, G., and Olsson, O. (2021).

What is the World Economic Forum doing about climate change?

Climate change is an urgent threat that demands decisive action. Communities around the world have experienced increasing climate impacts, from droughts to floods to rising sea levels. The World Economic Forum’s Global Risk Report continues to place this environmental threat at the top of the list.

To limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is important for business, policy makers and civil society to advance comprehensive short-term and long-term climate action in line with the goals of the Paris Agreement on climate change.

Global warming can be defeated thanks to this simple plan

The World Economic Forum’s Climate Initiative supports the scaling and acceleration of global climate action through public and private sector collaboration. The Initiative works across multiple workflows to develop and implement solutions that are inclusive and ambitious.

These include the Alliance of CEO Climate Leaders, a global network of business leaders from across industries developing cost-effective solutions for the transition to a low-carbon and climate-resilient economy. CEOs use their position and influence with policymakers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.

Contact us to get involved.

Mission Possibility Platform: Provide industry pathways t…

Challenges ahead

Deep decarbonization of the steel and cement industries will require several parallel strategies: demand management using the principles of market creation and a circular economy, energy efficiency improvements through technical advances, and major changes in production methods and technologies. While some of these technological and process innovations are commercially viable or are already in pilot stages, there are currently no commercial-scale sites producing (near) zero-emissions steel or cement. Moving forward will require some additional process innovations (such as energy efficiency solutions) as well as some more radical ones. Furthermore, heavy industry is associated with high capital intensity, which means the development of a new plant requires an investment of several billion US dollars, while a gradual upgrade requires an investment of hundreds of millions of US dollars. It is estimated that the development, commercialization and dissemination of such innovations can be costly USD 26 – USD 60 per tonne of CO2 for steel, and USD 110 – USD 130 per tonne for cement.

The long investment cycle that characterizes these production facilities is another challenge – steel and cement plants typically have a lifespan of around 40 years, and an investment cycle of 25 years. Windows of opportunity rarely open, and discontinuing an asset before the end of its productive life goes against traditional business and economic doctrine. This is even more pronounced in developing countries as their global fleet of heavy industrial assets is usually relatively young. In addition, global market competition for cement and steel and thin profit margins make experimenting with unproven technologies unattractive. Either way, any capital investment in cement and steel is likely to “lock in” the industry’s emissions profile for decades to come. Therefore, significant policy support will be the basis for reducing the risk of this type of investment.

New frontier

While industrial decarbonization may seem daunting, it is also an interesting industrial frontier, with a lot of progress already underway. Use of electric arc furnace and rRenewable produced hydrogen already reduces energy and resource consumption, with added benefits higher up the supply chain. In 2021Swedish steelmaker Hybrit provides Volvo with steel produced using the hydrogen production process.

Another venture inspired by circular economy, leveraging innovations in recycling and reduction of key resources. While much remains to be done, there is, in principle, there is no reason for steel not to be a completely recyclable product. Initiatives and R&D in this area are underway around the world, such as a technology invented in Australia that harvests carbon and other useful materials from old rubber tires to replace coke and coal in steelmaking. Similarly, technologies that optimize construction processes and reduce waste, such as 3-D printing, has appeared. Therefore, deep decarbonization is primarily a question of upgrading, accessing finance, and offering products at competitive prices.

Given the challenges discussed above, market creation is a critical component of achieving net-zero. Strong demand signals are needed to drive the effort, cost and perceived risk of bringing new technology online. One of the most promising routes is through green public procurement commitments in major cities and among building material importers. Worldwide, government agencies are one of the main buyers of steel, cement and concrete for large infrastructure projects, and leveraging their large purchasing power will fuel a growing market for more environmentally friendly steel and concrete.

The Industrial Deep Decarbonization Initiative (IDDI) proposes to do just that. Launched at COP26 in Glasgow, it is an initiative of the United Nations Industrial Development Organization (UNIDO) in partnership with the UK, India, Germany, United Arab Emirates and Canada. He challenges the industry: if you produce low-carbon steel and concrete, we’ll buy them. This secure market sends a strong signal to manufacturers as, together, the participating governments represent between 25 and 40 percent of the domestic market for heavy construction materials.

More to do, however

Of course, many challenges remain. Among the biggest barriers to industrial sector decarbonization is the lack of data and standards. The current system does not capture everything needed to accurately evaluate the carbon contained along the supply chain. Advances in producing accurate, high-resolution data are urgently needed; establish standardized, comprehensive calculation methods that are comparable across manufacturers and jurisdictions; and develop procedures and knowledge for implementing and reporting environmental requirements.

The second consideration is that most of the demand for building materials over the next few decades will come from developing countries. While many of these countries have the wealth of renewable resources needed in this transition, they risk being left behind in premium green commodity markets. Mismatches in the spatial distribution of supply and demand can seriously undermine the decarbonization of these industries.

A way forward

However, there is now a realistic way forward and, what’s more, the transition is affordable. While large investments are required, it is important to put this into perspective: The Energy Transition Commission (ETC) has shown that net zero carbon emissions from heavy industry can cost less than 0.5 percent of global GDP. With influential investors, industry leaders and markets all moving in the same direction of breaking down policy, technology, and co-financing barriers, industrial decarbonization may be just around the corner.

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