Discussion Paper

Basic Industries

Chapter 5.2

Steel Production

GHG emission perspective and potential solutions to barriers

The steel industry is recognised as one of the most critically dependent industries worldwide due to its popular use in many applications. As a result, steel is a heavily traded commodity amongst all countries. Whilst crude steel production saw growth of 4% (World Steel Association, 2018, p. 9) in 2017, issues surrounding environmental impacts continue to be a focal point. To add to this figure, most of the top 10 countries (China, Japan, India, United States, Russia, South Korea, Germany, Turkey, Brazil and Italy) who produce steel have also been identified in chapter 3 as countries who could considerably benefit from the use of powerfuels.

From a resource management perspective, the world steel association believes that in 2016, wasteful excess materials from all steelmaking process accounted for 2.4% (World Steel Association, 2018, p. 5) of the net products combined. This demonstrates that the industry is self-conscious about its footprint however the barriers to reduce CO2 emissions lie within the manufacturing processes itself. However the problem with reducing steel industry CO2 emissions, however, is that today’s production facilities can hardly be optimized any further (Siemens - Steel Production – without CO2 Emissions? (https://www.siemens.com/innovation/en/home/pictures-of-the-future/research-and-management/innovations-carbon2chem-environmentally-friendly-steel-production.html)). Through analysing steel-mills,  climate-damaging smelting gases, such as carbon monoxide, hydrogen and methane, are produced. After steel production, these gases are burned in power plants to generate electricity. But the catch is that this process also generates CO2 emissions. Right now progress is being made on low-carbon industrial innovation as it is crucial to achieve the 2 degree scenario with non-OECD countries (IEA, 2015, pp. 94–95). Powerfuels can be used to solve this problem as 28% (World Steel Association, 2018, p. 10) of the world crude steel production is powered by electricity.  As renewables and iron ore deposits are used to power electrolysis processes for electrical steel production, by replacing the following with powerfuels, it is believed that with green saving hydrogen there will be a 95% in CO2  emissions via the blast furnace route turn (Strategieplattform Power-to-Gas, 2018a).

Chemical industry

GHG emission perspective

Chemicals and petrochemicals is globally the industrial sector with the highest energy demand, accounting for approximately 10% of total final energy consumption and almost 30% of industrial final energy consumption. The chemical sector is also the largest industrial consumer of both oil and gas, accounting for 14% and 8% of total primary demand for each fuel respectively (IEA, 2018b, p. 27). The Chemical Industry is unique as about half the sector’s energy input is not combusted but is consumed as feedstock i.e. as raw material for production of other products. The other half is used to provide direct heat, steam and electricity to drive the sector’s processes. Consequently, emissions from chemical industry, can be classified into process related emissions (emissions resulting from the use of chemicals as feedstock) and energy related emissions. Total CO2 emissions from the chemical sector are approximately 1.5 Gt CO2 per year globally, or 18% of industrial CO2 emissions. 85% of the total emissions originate from the energy related use and the remaining 15% is from the process related emissions. It should also be noted that chemical feedstock usage accounts for 600 Mtoe of energy usage (IEA, 2018b, p. 28) which is the equivalent of 1,8 Gt CO2  if burned (Own calculation, based on naphtha, emission factor 73,3 tCO2 /TJ, UBA-Emissionsfaktoren https://www.umweltbundesamt.de/sites/default/files/medien/361/dokumente/co2_ef_2018_komplett.xlsx).

Despite the substantial complexity of the chemical sector, only seven primary chemicals - ammonia, methanol, ethylene, propylene, benzene, toluene, and mixed xylenes – provide the key building blocks on which the bulk of the chemical industry is based. These primary chemicals account for approximately two-thirds of the sector’s total consumption of final energy products.

Potential abatement options

The energy related emissions for the Chemical industry are expected to be transformed in similar ways as the electricity sector, through efficiency increases, using renewable electricity for covering the heating and power needs. Cases where the fossil fuels are used as feedstocks for their carbon and hydrogen content, alternative sustainable sources are needed. Biomass and recycling of waste could provide valuable contributions, however these can’t supply the volumes that are required. Hence powerfuels (E-chemicals) are required in the long-run to replace the fossil fuel use in the feedstock applications of fossil fuels. Of particular mention are Power to Methanol and Power to Ammonia processes which directly replace the present use of natural gas in these applications (IEA, 2017).

Pilot projects

  • Power to Ammonia (Institute for Sustainable Process Technology (ISPT), 2017)
  • Power to Methanol (Carbon Recycling International – George Olah Plant in Iceland)


Technologies for power fuel production (electrolysis, carbon capture) are evolving and there is huge potential for cost reduction through economies of scale. The time taken for this process depends on the intensity and extent of the regulatory frameworks. Even in the most optimistic scenarios it is expected to take till 2030 when these technologies are cost competitive and mature. Production of e-chemicals requires water, CO2 source and renewable electricity at the same site, without which significant transport infrastructure/costs are required. Utilising same water sources as the general public, especially in areas of water shortage could create local acceptance issues.

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