Role of Advanced Steelmaking Technologies in Global Climate Change Mitigation Scenarios

Abstract

This study explores different decarbonization strategies in the iron and steel sector using the MIT Economic Projection and Policy Analysis (EPPA) model, a multi-sector, multi-region model of the world economy. Opportunities to switch away from coal-based production processes and toward processes employing electric arc furnaces (EAF) in conjunction with either scrap steel or direct reduced iron (DRI) fueled by either natural gas with carbon capture and storage (NG CCS DRI-EAF) or hydrogen (H₂ DRI-EAF) are considered. Under global mitigation scenarios, adoption of advanced steelmaking technologies can enable deep decarbonization of the steel sector by 2050, but the scale of their deployment depends on assumed costs. Under base cost assumptions, a combination of switching from conventional technologies that use coal to those that use electricity and natural gas, greater use of scrap, and demand reduction can lower iron and steel sector emissions by more than 50% relative to today, but deeper decarbonization remains challenging. When the cost of advanced steelmaking technologies is assumed to be lower, there is substantial deployment of NG CCS DRI-EAF, while H₂ DRI-EAF is deployed only if the cost of hydrogen production is also assumed to be lower. Across the scenarios considered, steel-related direct emissions are abated by about 45-75% relative to a reference case at a CO₂ price of $200/tCO₂. Overall, steelmaking can be more or less costly to decarbonize compared to the energy sector as whole, depending on technology assumptions.