The Steel Industry’s Economic Significance and Environmental Impact
The steel industry is a crucial foundation for economic development, supporting numerous sectors such as construction, automotive, machinery and equipment, appliances, aerospace, railways, public transportation, and shipbuilding. It is closely linked with iron and coal industries and various steel recycling activities. The industry contributes nearly 4% to the global GDP and employs over 6 million people worldwide. However, it accounts for 7% of global CO2 emissions.
In Mexico, the steel industry contributes 2% to the GDP but has a confusing presence in the National Inventory of Greenhouse Gas Emissions. Alongside cement and petrochemical industries, steel production is one of the most significant CO2 emitters in the industrial sector. This sets a substantial climate imperative to decarbonize the steel industry by 2050, driven by international business initiatives, taxes, carbon markets, government regulations, and pressures from competitiveness, sustainability, risk minimization, capital cost, reputation, regulations, and disclosure of climate and environmental information to financial markets.
Two Paths: The Contaminating and the Cleaner One
The steel industry has two primary paths: the more polluting one and a cleaner alternative. The traditional method, using blast furnaces at 1,500°C with iron ore (mainly iron oxides), limestone, and coal, generates significant CO2 emissions. Coal heats and “reduces” iron, removing oxygen in the form of iron oxides to produce carbon dioxide (CO2) and monoxide (CO), which then acts as the primary “reducing” agent.
These reactions produce large volumes of CO2 emitted into the atmosphere. The reduced metallic iron, called sponge iron, has a high carbon content from dissolved coal. Sponge iron goes to a Basic Oxygen Furnace (BOF) where pure oxygen is injected under pressure to oxidize and eliminate dissolved carbon, also emitted as CO2. This process yields steel—iron without oxygen and low carbon content, resistant and ductile.
The Cleaner Alternative: Direct Reduced Iron (DRI)
The cleaner path involves producing iron ore pellets subjected to Direct Reduced Iron (DRI) using reformed natural gas (CH4), separated into carbon monoxide and hydrogen. These potent reducing agents eliminate oxygen from iron without melting it, creating porous iron or “sponge” iron. This sponge iron undergoes a hot compression process to form dense, consistent, and flexible “briquetted” iron (HBI) with low carbon content, easy to transport.
The briquetted iron is then fed into an Electric Arc Furnace (EAF), which uses electricity to melt the briquetted iron along with scrap and chrome to produce high-quality stainless steel, nickel, manganese, or other elements for special alloys.
Benefits of Electric Arc Furnaces
Electric Arc Furnaces (EAF) are crucial for producing flat steel products like plates and hot-rolled coils across various industries, including automotive, white goods, and pipelines. EAFs have lower emissions, can utilize renewable electricity sources, and incorporate scrap metal, promoting recycling and circular economy.
In Mexico, Ternium and Arcelor Mittal operate EAFs and are the largest steel producers. Ternium generates its own electricity at a 1,000 MW combined cycle plant in Pesquería, Nuevo León. Other companies with EAFs include DeAcero (Monterrey), Grupo SIMEC (Guadalajara), and Tenaris Tamsa (Veracruz).
Clear Paths to Decarbonization and Sustainability
Given the technological landscape, the steel industry’s decarbonization and sustainability paths are clear. First, replace blast furnaces with Electric Arc Furnaces and achieve full electrification. Second, use clean electricity in EAFs—currently unfeasible in today’s Mexico. Third, employ green hydrogen as a reducing agent in DRI production via electrolysis powered by renewable energy.
European companies like Sweden’s HYBRIT, Germany’s Salzgitter, and Thyssenkrupp are already implementing these strategies. In Mexico, Ternium and Arcelor Mittal are moving in this direction.
Key Questions and Answers
- What is the steel industry’s contribution to the global economy? The steel industry contributes nearly 4% to the global GDP and employs over 6 million people worldwide.
- What are the environmental concerns related to steel production? The steel industry is responsible for 7% of global CO2 emissions, making decarbonization a significant climate imperative.
- What are the traditional and cleaner methods of steel production? The traditional method involves blast furnaces, while the cleaner alternative is Direct Reduced Iron (DRI) using reformed natural gas and Electric Arc Furnaces (EAFs).
- What are the benefits of using Electric Arc Furnaces (EAFs)? EAFs have lower emissions, can utilize renewable electricity, and incorporate scrap metal, promoting recycling and circular economy.
- What are the decarbonization strategies for the steel industry? These include replacing blast furnaces with EAFs, using clean electricity in EAFs, and employing green hydrogen as a reducing agent in DRI production.
