Techno-economic evaluation of innovative steel production technologies

At current primary steel production levels, the iron and steel industry will fail to meet the 80% emission reduction target without introduction of breakthrough technologies (Warder et al., 2013: 19). The current research analyses the technical and economical long-term potential of innovative primary steel production technologies in Germany throughout 2100. Techno-economic models are used to simulate three innovative ore-based steelmaking routes verses the reference blast furnace route (BF-BOF). The innovative routes in focus are blast furnace with CCS1 (BF-CCS), hydrogen direct reduction (H-DR), and iron ore electrolysis (EW). Energy and mass flows for the production of one tonne of crude steel (CS) are combined with hypothetical price, cost, and revenue data to evaluate the production routes economically, technically, and environmentally. This is a purely theoretical analysis and hence further external factors that may influence practical implementation or profitability are not considered. Different future developments are considered by using three scenarios, representing an ambitious, a moderate, and a conservative transformation of the German energy sector. In general, looking into the future bares various uncertainties which should be reflected in a suitable manner. According to the present scenario analysis, chances are that with rising prices for coal and CO2 allowances BF-BOF and even BF-CCS become unprofitable by mid-century. With a high share of renewable energy sources and high prices for CO2 allowances, H-DR and EW become economically attractive in the second half of the current century, when BF-based routes are long unprofitable. Energy and raw material efficiency is significantly higher for H-DR and EW and furthermore, the 80% reduction target by 2050(2) can be achieved in the ambitious scenario. However, high investment costs and high dependency on electricity prices prohibit a profitable implementation before 2030-2040 without further subsidies. EW is the most energy and resource efficient production route. Since continuous electricity is needed for the continuous operation, the electricity costs are 20-40% higher than for H-DR (with high-capacity hydrogen storage units). Even though hydrogen production implies efficiency losses compared to the EW route, the decoupling of hydrogen production from continuous operation of the steel plant through hydrogen storage offers the opportunity to use cheap excess renewable electricity. This makes the H-DR economically and environmentally the most attractive route and provides a crucial contribution to stabilize the grid and to store excess energy in a 100% renewable energy system. (C) 2014 Elsevier Ltd. All rights reserved.