As a key material for manufacturing clean energy technologies, steel is crucial for energy transition, but its production causes 2.6 Gton of CO2 emissions at global level each year. In 2020 the European Union (EU) set a net-zero emissions target by 2050, fostering innovation in the steel industry to reduce its environmental impact. However, a scenario-oriented and technologically comprehensive analysis assessing prospected environmental and market implications of steel decarbonisation strategies remains a gap, which is addressed in this paper. The analysis adopts a hybrid input-output-based life-cycle assessment model built in the MARIO framework, extending the Exiobase database to represent the supply chains of the most promising low-carbon steelmaking technologies in the EU, such as hydrogen- or charcoal-injected blast furnaces and natural gas- and hydrogen-based direct reduction routes. The penetration of these technologies is explored by formulating scenarios resembling European climate targets. The results show a reduction in the carbon footprint of steel across all scenarios, ranging up to -26% in 2030 and to -60% in 2050. However, the extent of footprint reduction is highly dependent on the share of clean electricity in the European supply mix, highlighting the relevance of holistic decarbonisation strategies. Economic implications affect steel prices, which rise up to 25% in 2030 and 56% in 2050, opening discussions on the need for suitable policies such as CBAM to avoid protectionism and encourage international technological progress.

Assessing environmental and market implications of steel decarbonisation strategies: a hybrid input-output model for the European union

Rinaldi, Lorenzo;Ghezzi, Debora;Colombo, Emanuela;Rocco, Matteo Vincenzo
2024-01-01

Abstract

As a key material for manufacturing clean energy technologies, steel is crucial for energy transition, but its production causes 2.6 Gton of CO2 emissions at global level each year. In 2020 the European Union (EU) set a net-zero emissions target by 2050, fostering innovation in the steel industry to reduce its environmental impact. However, a scenario-oriented and technologically comprehensive analysis assessing prospected environmental and market implications of steel decarbonisation strategies remains a gap, which is addressed in this paper. The analysis adopts a hybrid input-output-based life-cycle assessment model built in the MARIO framework, extending the Exiobase database to represent the supply chains of the most promising low-carbon steelmaking technologies in the EU, such as hydrogen- or charcoal-injected blast furnaces and natural gas- and hydrogen-based direct reduction routes. The penetration of these technologies is explored by formulating scenarios resembling European climate targets. The results show a reduction in the carbon footprint of steel across all scenarios, ranging up to -26% in 2030 and to -60% in 2050. However, the extent of footprint reduction is highly dependent on the share of clean electricity in the European supply mix, highlighting the relevance of holistic decarbonisation strategies. Economic implications affect steel prices, which rise up to 25% in 2030 and 56% in 2050, opening discussions on the need for suitable policies such as CBAM to avoid protectionism and encourage international technological progress.
2024
steel decarbonisation
carbon footprint
price impact
hybrid input-output analysis
Exiobase
European union
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11311/1270160
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