Sustainability and steel industry

decarbonisation

Opportunities and challenges for the EAF sector

Dr. Sarah Macnaughton

Principal Analyst, CRU
Climate pressures are increasing across the steel industry
Global Community Raw material suppliers Investors

Paris Climate Vale pledges to reduce Woodside shareholders

Accord Scope 3 emissions by 15% call for science-based
by 2035 emissions targets
2015 Dec 2020 March 2020

Traders Consumers Policy Makers

Cargill pledges to reduce BMW commits to be 20% China commits to carbon

Scope 3 GHG emissions by reduction in upstream neutrality by 2060
30% by 2030 supply chain by 2030
2019 June 2021 September 2020
Steel industry GHG emission sources are spread throughout
the value chain
Scope 1 - Direct GHG emissions occur from sources that are owned or controlled by a company
Raw Materials
Preparation
Own power
generation Ironmaking Steelmaking Hot Rolling Cold Rolling Coating

Scope 2 - Indirect GHG emissions occur from the generation of purchased electricity consumed by the company

Purchased
Power generation (purchased) from grid

Scope 3 - Occur from sources not owned or controlled by the company

Upstream Downstream

Raw materials production Transportation &

Distribution

Transportation & Purchased goods Processing of sold

Distribution and services products
 The majority of steelmaking emissions occur at the
ironmaking stage
Crude steel emissions intensity of major global steel plants, 2021, t CO2e/t-crude steel

EAF steel’s
tCO2e/t liquid steel

lower carbon
footprint
makes it
attractive to
sustainability-
conscious steel
consumers

Steel production, Mt
DATA: CRU Emissions Analysis Tool.
EAFs’ high use of recycled scrap makes it key player in the
circular economy

Enhanced durability
Carbon efficiency

CO2

Reuse & recycle Material efficiency

Future Challenges
 In the long term, climate pledges will need all steelmakers to
play a role in reducing emissions
Steel production will grow …but steel emissions need to This implies emissions intensity
1 2 3
~25% in the next 30 years… fall by >90% to reach net zero of ~0.2 tCO2/t

2.5 4.0 2.5

BOF
-90%
2.0 2.0
3.0

1.5 1.5
2.0
1.0 1.0 EAF
-75%
1.0
0.5 0.5

0.0 0.0 0.0

2020 2050 2020 2050 2020 2050

Global crude steel production Global steel sector CO2 emissions Average steel emissions intensity
Gt Gt tCO2e/t-crude steel
DATA: CRU.
 EAF-based processes will need to be adopted across the
industry to reach the strictest emission targets
Crude steel emissions intensity of major global steel plants, 2021, t CO2e/t-crude steel
Up to 30% reduction
BF-BOF current best practice, Natural gas BF injection, H2 BF injection

40% reduction
BF-BOF w/ CCS, Corex, HIsarna
tCO2e/t liquid steel

70% reduction
Natural Gas DRI-EAF
>70% reduction
Scrap-EAF, H2 DRI-EAF, w/ renewable power

Steel production, Mt
DATA: CRU Emissions Analysis Tool.
Industry decarbonisation will bring EAF steelmakers new
challenges
Scrap supply is finite Rising scrap
Increased competition for demand from the BOF sector and BOF-
1
scrap to-EAF conversions will increase scrap
competition and raise prices.

Renewable energy infrastructure in

Access to renewable many locations is insufficient Other
2
electricity demand for energy such as EVs will
compete for electricity supply.

Limited substitutes for carbon-

Limited supply of low carbon containing inputs Hydrogen or biofuel-
3
raw materials based substitutes are in limited supply
H2
and expensive.
As the steel industry decarbonises, there will be increasing
scrutiny of other ESG concerns

➢ Supply security ➢ Water

➢ Social licence to operate ➢ Biodiversity

➢ Fair transition ➢ Resource efficiency

Key Takeaways

The global focus on environmental issues and emissions reduction is placing

increasing pressure on the steel industry to improve its sustainability credentials.

The EAF sector’s relatively low carbon footprint and high use of recycled raw
materials means it is well positioned amongst for sustainability-focused steel
consumers.

However, the challenge for the industry to get to net zero by 2050 is large. EAFs will
have to improve on current performance while facing increased competition for low
carbon inputs.

While decarbonisation is the focus today, EAF steelmakers will need to improve
broader ESG credentials to ensure sustainability leadership.
Thank you for your attention

Contact details
Dr. Sarah Macnaughton
Principal Analyst, CRU
sarah.macnaughton@crugroup.com
www.crugroup.com