How to get the carbon out of industry

ON THE SWEDISH shore of the Baltic Sea near the Arctic Circle, work has started on a SKr1.4bn ($150m) pilot project aiming to help Sweden become the first country in the world to produce fossil-free steel. Martin Pei, the engineer behind the project, promises that by 2020, passengers flying to the nearby Luleå airport will be able to look down on a 50-metre-high test plant. “We need to hurry up, because ‘Winter is coming’,” quips the Chinese-born engineer. Or should that be global warming?

In fact, he says, it was not so much the threat of climate change that led Mr Pei to the idea of making Sweden a pioneer of “green steel”. It is the risk that SSAB, the steel company where he is head of technical development, could face public humiliation and a collapse in its business model if it were to stop Sweden from achieving its ambition to become carbon neutral by 2045. SSAB’s existing blast furnace and steel plant in Luleå emits 1.6 tonnes of CO₂ for every tonne of steel. Though low by global standards, the industry as a whole belches out one-tenth of Sweden’s total emissions.

HYBRIT Development, the zero-carbon-steel joint venture between SSAB, LKAB, a state iron-ore producer, and Vattenfall, a state-owned power company, aims to eliminate almost all of these emissions by curbing the use of coking coal. Instead, it will take advantage of Sweden’s abundant renewable energy to generate hydrogen via electrolysis, and use this to produce a product called “direct-reduced iron” (DRI). It hopes to complete the experimental phase by 2024, moving on to a full-scale trial in the decade up to 2035.

This is not the only example of fossil-fuel-dependent companies trying to reinvent themselves for a post-carbon future. According to McKinsey, almost half of the CO₂ emitted by the entire industrial sector comes from four industries; cement, steel, ammonia and ethylene. Unless consumption patterns change, all of them will have to cut emissions while meeting rising demand for cars, buildings, plastics and infrastructure. And because most of their products are commoditised, higher costs imposed by decarbonisation risk “carbon leakage”—the possibility that places with laxer climate policies will produce the commodities more cheaply.

In many countries the first priority for reducing industrial emissions will be to encourage recycling. But that will not be nearly enough, and the way the materials are made will also need to change. HYBRIT’s experience may provide a model. Its technological challenge starts with the fact that 75% of the world’s steel, including SSAB’s, is made using a blast furnace into which carbon, in the form of coke, is added to “reduce” the iron ore. In this “basic oxygen furnace” system, the iron oxide and the carbon react to form molten iron, carbon monoxide and CO₂ (see chart). In the alternative DRI process, natural gas instead of coke is used as the reductant, producing sponge iron that is then converted to steel via an electric arc furnace.

The reduction process generates as much as 90% of the CO₂ emissions in steelmaking, so HYBRIT wants to stop relying on blast furnaces, introduce DRI instead and use hydrogen rather than natural gas as the reducing agent. The hydrogen will react with iron oxides to form water rather than CO₂. The hydrogen will be produced using fossil-free electricity, which is abundant in Sweden. The arc furnace, into which scrap steel will be added, will also be powered by clean energy.

HYBRIT explored the alternative of using CCS to remove the carbon gases from the blast furnace, but found that it would fail to capture about half of the CO₂—not good enough for meeting Sweden’s zero-emissions goal. It also rejected the idea, used by some Brazilian steel companies, of using charcoal instead of coke in the reduction process, because of the possible toll on Sweden’s forestry. And it reckoned electricity prices in Sweden will be low enough to make it cheaper to use hydrogen from electrolysis rather than biogas in the DRI process.

That said, the process is likely to add 20-30% to the price of crude steel, assuming electricity prices remain at current levels. The amount of additional electricity needed will be staggering. Mikael Nordlander of Vattenfall says that at full production HYBRIT would use about 15 terawatt-hours of electricity a year, or 10% of the country’s current power supply.

Production is not expected to reach commercial scale until at least 2035, which seems slow for such an important adjustment. Mr Pei explains that this is because scaling up takes time; all new technologies pass through a “valley of death” when progress appears to stall. Moreover SSAB’s blast furnace in Luleå has recently been renovated. He says there would be a stranded-asset problem if the project moved ahead too quickly, because the blast furnace would be suddenly rendered obsolete.

Rock-hard

If steel is a big test, cement is an even tougher challenge. Cement is the world’s most widely used manufactured material, but cement works are typically small, scattered and undercapitalised, which makes them hard to press into service for the good of humanity. Demand for cement, which is mixed with water and aggregates to produce concrete, is set to soar in regions such as India and Africa. That means huge additional volumes of carbon dioxide will be generated. About 60% of the waste gas comes from producing clinker, one of the main ingredients of cement. This process, called calcination, involves heating ground limestone to more than 1,600ºC in a kiln, which produces calcium oxide and CO₂.

The clinker is ground and blended with other materials to form what is known as Portland cement; the power used for grinding also normally releases CO₂. Nearly all of the remaining emissions come from the fuels used to heat the kilns, often coal or coke. These can be replaced with alternatives, from biomass to waste materials such as tyres and municipal solid waste (but not electricity, which at present cannot generate the high temperatures needed to produce the clinker). Along with efficiency improvements, that would be the quickest way to lower cement’s carbon footprint.

CCS is a possible low-carbon option for capturing the CO₂ from calcination and from the heat. McKinsey notes that the combined exhaust gases have low concentrations of CO₂, making them more expensive to capture. The consultancy points to an innovative EU-backed project in Belgium called LEILAC that aims to redesign kilns to make it easier to capture exhaust gases from calcination.

The bigger ambition is to develop clinker substitutes, which would do more to reduce emissions. A recent report by Johanna Lehne and Felix Preston of Chatham House, a think-tank, does not hold much hope for an early breakthrough on clinker. But having analysed 4,500 patents, it found that, surprisingly, “the cement sector is more technically innovative than its reputation suggests” (more than steel, for instance).

“Novel cements”, or alternatives to Portland, are being developed by Solidia, an American startup now in partnership with LafargeHolcim, a big cement producer. Solidia claims that its low-clinker concrete slashes CO₂ emissions, partly by containing them within the material. But cement and concrete standards usually dictate the Portland clinker content, and builders, architects and customers are understandably wary of new technology, lest their buildings fall down.

Other ways of decarbonising industry may be less daunting. One of the companies exploring potentially lucrative opportunities is Elysis, a joint venture between Alcoa and Rio Tinto which could revolutionise aluminium smelting for the first time since it was invented in 1886. At present, aluminium comes from the combination of three ingredients: aluminium oxide (alumina), electricity and carbon. Electricity is run between a negative cathode and a positive anode, both made of carbon. The anode reacts with the oxygen in the aluminium oxide, producing CO₂ and liquid aluminium, which is then cast. The quantities of CO₂ can be huge. Vincent Christ, the boss of Elysis, says that in China, which uses coal for the smelting process, 16 tonnes of CO₂ are produced for each tonne of aluminium. Elysis aims to eliminate emissions by using an undisclosed proprietary, non-carbon material for the anode, producing oxygen rather than CO₂.

The project is backed by Apple, maker of the iPhone, which says it wants to lower the carbon footprint of its products. By 2024, Elysis hopes to sell a technology kit that can be used around the world to retrofit existing smelters or build new ones. The aim is to make zero-carbon aluminium 15% more cheaply and 15% more productively than the existing technology, says Mr Christ, partly because the anode will last 30 times longer. If it works at commercial scale, that will hugely increase the technology’s potential. “It’s taken us ten years to crack the code,” he notes. “If it were merely an environmental initiative, it wouldn’t have as much interest in the market.”

Yet in the end much will depend on China, which produces and uses most of the world’s steel, cement, aluminium and other industrial materials. Mr Pei, who recently explained the HYBRIT concept in his country of birth, says China has given little thought to producing zero-carbon steel, because its focus is on curbing the use of coal in its power system. It also has relatively new steel plants which it will be unwilling to close.

Cement may be a different story. The Chatham House study says China has invested more than any other country in cement R&D. Elsewhere in Asia, Japan’s steel industry is pursuing both the hydrogen and CCS approaches to decarbonising industry.

But ultimately it will take pressure from governments to ensure that industry takes the tough, long-term decisions needed for the transformation. They can start by drawing up plans to ensure that enough renewable electricity and sufficient carbon-storage sites are available for a combination of greater electrification and CCS. Then they can offer incentives for hydrogen production and CCS, either by pricing emissions more strictly or providing regulatory and financial support. In time, they can encourage the use of green cement, steel and other zero-carbon materials in public infrastructure projects, creating new markets. That way, industry will be able to move away from old technologies sooner rather than later, without fear that its customers will move elsewhere.