REDUCING THE FOOTPRINT: FROM LOW-CARBON EMISSIONS STEEL TO CARBON NEUTRALITY
Ute Neuhaus: Steel to Zero – how steel will go green. The sustainability podcast by Waelzholz.
Original speaker Ute Neuhaus: My name is Ute Neuhaus, and I’m the host of our German podcast series. In order to make it accessible to an international audience as well, we’ve had the conversations professionally dubbed by native English speakers.
Ute Neuhaus: “Cooking steel” – this phrase has a long tradition, especially here in the Ruhr region of Germany. The same goes for coal, which has always been a key ingredient in industrial-scale steel production and is part of the formula. But this process, which is indeed tried and true, also means that steel manufacturers are major emitters of CO2. For every ton of steel produced, around two tons of CO2 are emitted. That’s a significant amount, and it’s also why the greatest potential in the steel value network lies with the steelmakers. Because they are the ones that can cut carbon emissions by the greatest amount. This means the most important task is changing the formulation. But what could a new formula look like that would make it possible to cook green steel in the future? What technologies would this require – and what environment? What’s already possible today and what’s the long-term goal? That’s what I want to talk about in the second episode of our Steel to Zero podcast.
Ute Neuhaus: My name is Ute Neuhaus and I’d like to welcome my guests Dr. Marie Jaroni, Head of Decarbonization at thyssenkrupp Steel, who’s work, as her title suggests, focuses on precisely this topic...
Dr. Marie Jaroni: Hello Mrs. Neuhaus.
Ute Neuhaus: …and Dr. Heino Buddenberg, CEO of cold rolled steel manufacturer Waelzholz.
Dr. Heino Buddenberg: Hello Mrs. Neuhaus.
Ute Neuhaus: thyssenkrupp Steel is an important supplier of hot rolled steel strip to Waelzholz and a long-standing development partner.
Let’s begin with a few figures: Approximately two billion tons of crude steel are produced worldwide each year, of which around 150 million tons are produced in the EU. Accounting for almost 40 million tons of crude steel, Germany is the European Union’s largest steel producer. And this is also an interesting fact: In Germany, around 180 kilograms of steel are needed per person for private consumption each year. thyssenkrupp Steel Europe produces around eleven million tons of crude steel per year alone. Dr. Jaroni, Dr. Buddenberg, why is the demand for steel so staggeringly high?
Dr. Marie Jaroni: Steel is the most widely used industrial material and plays an indispensable role in the German industrial sector, across the entire value chain. When we think about body panels for the automotive industry, about structural steel for buildings, about quite a number of applications – we need steel everywhere. This is due to steel’s inherent properties: it is very soft, is extremely malleable, can exhibit high degrees of tensile strength, and high levels of stability. All of this makes steel so exciting and important to our industry in Germany, and we are constantly conducting research to ensure that we develop ever better steel materials for our customers.
Dr. Heino Buddenberg: Yes, I completely agree. As a manufacturer of cold rolled steel strip and special steel solutions, Waelzholz relies on suppliers such as thyssenkrupp Steel so that it can purchase high-quality special steel materials and manufacture them for its customers in such a way that they meet their explicit, individual requirements. Our job is to develop steel strip solutions for individual applications. This wouldn’t be possible without the right hot rolled steel strip, suitable analyses, and steel formulations with high degrees of purity. It’s impossible to see the quality and sophistication of the processes employed by the hot strip supplier when driving past their blast furnace here in Duisburg. But they’re definitely there.
Dr. Marie Jaroni: If I could add to that – there are also quite a few applications that are important to the energy transition. In other words, it’s not just about the green steel that we produce, but also about where the steel actually goes and how it will help stop the climate catastrophe. Examples include wind turbines containing steel, motors for electric vehicles, and submarine cables that bring wind power to the mainland. There are many examples of where steel is needed in the climate debate. This is a huge market that is opening up – 15 million electric vehicles are expected to be on the road in Germany by 2030, for example, compared with only half a million today. We need renewable energy on a large scale, because 80 percent of our electricity is supposed to come from renewable sources by 2030. In other words, the demand for high-tech steel materials is enormous and will continue to grow.
Ute Neuhaus: But this also means that electric cars, wind power, all of this is necessary for, let’s say, the transformation and to achieve climate neutrality, but this means that even more steel will be needed, and that would also mean even more carbon emissions. We said at the beginning that one ton of crude steel generates two tons of carbon emissions. Dr. Jaroni, could you perhaps briefly explain to us why CO2 is actually emitted during the current steel production process at all?
Dr. Marie Jaroni: Sure. Today, steel is primarily produced in a blast furnace process. In this blast furnace, iron ore – this is the feedstock, FeO if you express it chemically – is layered together with coking coal. Coking coal is essentially the C carrier, again expressed chemically, it’s the C. And this coal “steals” the oxygen from the FeO, the iron ore. So CO2 comes out of the top of the blast furnace, and these are the emissions that are generated by the process today. But we no longer want to conduct this process in a blast furnace in the future. This is because we can’t simply use hydrogen in a blast furnace, for example, but have to use a new process to reduce the FeO, i.e., the iron ore, but in this case using hydrogen, H, so that H2O comes out at the top, which most people are familiar with. This is simply steam and is completely harmless.
Ute Neuhaus: At the moment, green hydrogen is still a little way off. But if you look at the near future, steel is also recyclable. So isn’t there a good starting point for a circular economy somewhere in there? Couldn’t a solution be found in that regard?
Dr. Marie Jaroni: Steel is an extremely recyclable material; 100 percent of steel is recycled today. In fact, there’s no other material where this works better than with steel. But our customers also have high standards of quality, and we can’t satisfy them with recycled materials alone. That’s why we also have to use fresh ore via the blast furnace process and produce what is known as primary metal, and that’s what we do here at thyssenkrupp. Nevertheless, we also try to use scrap as far as possible, for example in our converters and in our steel mills, so that we also have a high recycling rate of about 20 percent at our plant.
Dr. Heino Buddenberg: I can only agree with Dr. Jaroni and point out that around 30 percent of global steel production is already made from scrap in electric arc furnaces, which reduces the CO2 output of this process route to a third of that of the blast furnace process. The scrap available worldwide, which is roughly equivalent to the amount of steel produced 30 or 40 years ago, is now consumed in large quantities for steel production. An additional reduction in carbon emissions by switching to scrap-based variants is therefore only relevant from a business point of view, but irrelevant from the perspective of the global carbon footprint, and doesn’t lead to any further reduction in carbon emissions in the overall processes. Furthermore, high-quality scrap is, of course, in short supply, so the aspect cited by Dr. Jaroni regarding the quality of the steel materials is relevant, but using more scrap won’t have any effect on the overall carbon footprint.
Ute Neuhaus: Okay, so the steel industry currently accounts for six percent of total carbon emissions in Germany. And 2.5 percent are emitted by thyssenkrupp Steel alone. So the need to take action is clear. thyssenkrupp aims to produce three million tons of carbon-neutral steel per year starting in 2030 and become completely climate neutral by 2045. But doesn’t something need to be done now, doesn’t something need to be done today?
Dr. Marie Jaroni: A lot is already being done at thyssenkrupp today, but also across the steel industry as a whole. Over the last 30 years, we’ve improved our processes so that we generate more than 20 percent fewer carbon emissions or even emissions in general than we did 30 years ago. And in this context, we’ve improved energy efficiency, we’ve improved the feedstocks, we’ve improved processes as a whole and, of course, we’ve also invested a significant amount in these new processes, but at some point you reach a limit to how much you can optimize the blast furnace route, and we have to start using new processes. And that’s what we’re doing now, and we’re starting by building a direct reduction plant here in Duisburg, because it’s simply no longer possible to optimize the current processes.
Ute Neuhaus: In other words, direct reduction is the name of the game in the future? Can Waelzholz say today: “But we’d like to have low-carbon emission material right now”?
Dr. Marie Jaroni: Yes, very gladly even. Today we’ve already developed two such products produced via the blast furnace route: one is bluemint pure and the other is bluemint recycled, these are both steel materials with reduced carbon emissions. In the case of bluemint pure, we are already using HBI, biomethane, or hydrogen in the blast furnace today in order to improve the carbon footprint somewhat, and are therefore also offering a low-carbon emissions material. The entire system is certified, of course, in this case by DNV. In the case of bluemint recycled, we use steel scrap, special steel scrap. In both processes, we can cut emissions by almost 1.5 metric tons of CO2 per metric ton of steel or hot rolled strip – that’s 70 percent. So it’s already possible to make considerable progress here.
Ute Neuhaus: I’d like to jump in briefly, if I may – can you explain the term HBI, which not everyone listening might be familiar with?
Dr. Marie Jaroni: Sure, HBI stands for hot-briquetted iron, a compacted form of direct reduced iron, also known as sponge iron, which is then still melted down in a blast furnace. But this means less coal has to be used, so less C “steals” the oxygen as explained before, and therefore we end up with less CO2.
Ute Neuhaus: And how much of it is available for purchase? How do you calculate it, especially since it’s applied to the footprint in this way?
Dr. Marie Jaroni: It’s true, we can only use a small amount of HBI. As I said, the blast furnace is also optimized in terms of energy efficiency, etc. We can still use more HBI or even biomethane and other materials, but only up to a maximum of ten percent, however. We can’t use much more, because we need the layers in the blast furnace, of the coking coal and the iron ore, for the process to work.
Ute Neuhaus: Now this is interesting, a new brand, a new brand environment – bluemint. And bluemint doesn’t offer increased tensile strength, or incredible tolerances, or a profile. Instead, it has a single feature – fewer carbon emissions. This is actually something of a first for steel manufacturers, selling something like this. How do you do that, how do you tell customers to please buy something that serves a social goal?
Dr. Marie Jaroni: It’s important to us to offer our customers products with reduced carbon emissions that are based on real and verifiable CO2 savings as quickly as possible. And our customers are asking for them, too. Because, in turn, our customers’ customers are asking for them. This is because society is changing and many people now realize that products with lower carbon emissions are also good products. That they meet a new requirement that may not have existed a few years ago, and we can see that there’s a demand for them.
Ute Neuhaus: Dr. Buddenberg, is this product characteristic also relevant to customers like Waelzholz?
Dr. Heino Buddenberg: This feature is tremendously important and we’re depending on our partners to use innovative processes to minimize carbon emissions. At Waelzholz, we have an ambitious and comprehensive roadmap to cut carbon emissions ourselves, and are striving to achieve climate neutrality over the long term. However, 90 percent of the emissions from our products stem from the raw material, which in this example means from thyssen. And we can influence our own emissions. But we can only make our final product emission-free if the source of the raw material also does its part to ensure that this is the case. When it comes to steel, the factor that plays the key role in emissions is determined upstream at the beginning of the value chain.
Ute Neuhaus: So thyssenkrupp Steel, as the first stage in the value chain, bears a big responsibility on the road to green steel, doesn’t it?
Dr. Marie Jaroni: As you said earlier, thyssenkrupp accounts for 2.5 percent of Germany’s carbon emissions. And we’re working on it, we’re aware of our responsibility.
Ute Neuhaus: How then, Dr. Buddenberg, is Waelzholz, as the next stage in the value chain, helping drive the climate transition?
Dr. Heino Buddenberg: You can’t look at this process of achieving carbon neutrality in isolation from the perspective of one company alone. We are part of value creation networks where we need to consider and achieve climate neutrality for the final products step by step at every level of production. Major investment decisions need to be made at every level to eliminate carbon emissions from the relevant processes. And the energy industry that supplies these networks must also play a massive role, and this must, of course, be recognized by policymakers and society at large. Because we also have a collective responsibility to create this product characteristic, namely that the product is, as I always say, “marketable.” After all, at the end of the day, costs that are incurred as a result can’t simply be borne by an individual company, but must be shared collectively via the value network and ultimately reach the end customer and, unfortunately, also be paid for there.
Ute Neuhaus: You mentioned policymakers earlier, and the energy industry. This means that there is an underlying framework and the framework conditions have to fit. But at the moment they don’t fit. What can be done to make it easier for companies to plan when it’s not yet clear what the framework conditions will look like?
Dr. Marie Jaroni: I don’t think you can plan for everything. This is a period of transformation. That’s clear to us as a company, and I think it’s clear to the entire industry that’s going through this transformation. You simply can’t plan for everything. You can try, together with policymakers, to ensure that the regulatory framework remains stable and , at least, to make plans within this framework. And ultimately, it isn’t politics that stands at the end of this entire transformation, but a business model that works for us. And works for our customers and our suppliers. And we need to work together to get there, through this entire period of transformation until this business model works, the market has to develop, and policymakers have to provide support as well. But our goal is always to return to a self-sufficient market that doesn’t need politics or subsidies, but in the end is also green and climate neutral.
Ute Neuhaus: But that means a market has to be created around carbon emissions?
Dr. Heino Buddenberg: Exactly! At the end of the day, carbon emissions must represent a real cost for the end user. This cost must remain affordable, but it also has to be paid. And this additional cost must be enough to cover the gigantic investments involved in this transformation process. According to estimates, Germany alone will have to invest around three trillion euros to achieve a complete climate transition. And it goes without saying that the raw material industries and also steel will account for a commensurate share of this.
Ute Neuhaus: This means that we have to create an awareness of the costs associated with these things, and we’ve also heard that there are already opportunities today to offer products that at least were produced with fewer carbon emissions. If we now look ahead to 2045, what will it take for steel to truly go completely green in the end? What needs to happen?
Dr. Marie Jaroni: If you ask me, we’ll ultimately need to kick-start a small revolution. In the steel industry and also here at thyssenkrupp. What we’ll ultimately need to do is replace our coal-based blast furnaces, which have been in place for many, many years and decades, even centuries, with direct reduction plants. These direct reduction plants no longer work with coal, but instead with hydrogen. This means that we’ll need vast, massive quantities of green hydrogen. And we’ll need large amounts of green power here in Duisburg. These have to be available in the first place, and of course they have to ultimately be available at a competitive price. All of this means that we have to work on this in collaboration with our partners today. You can’t achieve this within the scope of the normal supplier-provider-customer relationship. Instead, we have to work with each other and think a little differently in this case, and that’s what we’re doing right now. With our customers, but also with our suppliers. This is necessary to ensure that we can procure the new feedstocks and then produce green steel here.
Ute Neuhaus: Now when it comes to direct reduction, companies have experience, I believe, with electric arc furnaces. What’s the situation with this at thyssenkrupp? After all, you actually use a completely different technology. Can you briefly explain what the differences are? What’s your idea?
Dr. Marie Jaroni: So we have a direct reduction plant. This is the initial basis for us to emit less CO2. The direct reduction plant produces sponge iron, a fully reduced iron, which then goes to our smelter. The smelter also has a reducing atmosphere and in the smelter the sponge iron is melted again, somewhat modified in terms of quality, and the pig iron then comes out of this smelter. The pig iron is actually exactly the same as when it came out of a blast furnace. So let’s just call this “pig iron 2.0.” And this pig iron 2.0 then follows exactly the same path as the pig iron from the blast furnace did before, namely it goes to the steel mill next and on to the further processing steps. This has tremendous advantages, because we can offer exactly the same levels of quality as we can today because the only change we’re making to our entire process is where the carbon emissions are actually generated. A total of 90 percent of today’s carbon emissions are generated in the blast furnace, and that’s exactly what we’re replacing with the direct reduction plant plus smelter. The rest of the process in the mill remains the same.
Ute Neuhaus: In other words, the established processes, the quality-controlled processes, will remain unchanged, and carbon emissions will simply be avoided at certain points in a micro-operation that’s not really a micro-operation at all?
Dr. Marie Jaroni: Exactly.
Ute Neuhaus: Okay, so as you said earlier, collaborations play a key role, but beyond that, green hydrogen is a vital component. And it isn’t available yet. You mentioned that the first direct reduction plant is currently in the planning stage and should be completed by 2025. And yet green hydrogen still won’t be available. How do you plan to bridge the gap?
Dr. Marie Jaroni: So we’ll have the first direct reduction plant here in Duisburg in the mid-twenties. And for the time being, we will also be able to operate it using natural gas. How quickly we can then switch to green hydrogen is a question of availability. But we are in talks with numerous partners, our hydrogen partners, and, of course, we’re also partly dependent on pipelines. So we’re also in talks with pipeline network operator partners. Nevertheless, we also have partners that are located close to our plant, and this would make it possible to obtain a supply of green hydrogen sooner, since we would not need large pipeline connections to Rotterdam or other ports. So we have a variety of options available when it comes to obtaining hydrogen here, and so we also hope to be able to switch from natural gas to hydrogen-only operation very quickly.
Dr. Heino Buddenberg: We just need to keep in mind that natural gas, which is what is used today, is essentially methane. And methane has one carbon atom and four hydrogen atoms. This means that when natural gas is used, it’s already a major step towards the hydrogen economy, which is something that is always quickly forgotten. And hydrogen will end up playing a key role in the transformation of the entire energy industry. We need to anticipate that electricity will serve as the primary energy source in the future. After all, renewable energy is electricity, and it doesn’t matter if it comes from wind or solar sources. And this hydrogen will also play an extremely important role in the conversion of electricity consumption as a buffer medium – because the wind doesn’t always blow and the sun doesn’t always shine. And this conversion of the entire energy system is going to keep us busy until 2045.
Ute Neuhaus: Natural gas as a stopgap technology. That seems difficult to imagine from today’s perspective, against the backdrop of the war in Ukraine and the shortages in Europe. What impact does that have on the transformation, how do you view this at thyssenkrupp Steel?
Dr. Marie Jaroni: It obviously has an impact on us as well. First of all, in the short term, operationally. And if we look ahead to the transformation, then we are actually working with our hydrogen partners to try to answer the questions of how we can get hydrogen here to Duisburg more quickly and how we can use it more quickly so that we can minimize the amount of natural gas that we need and the length of time that we’ll need it. This is something we’re working on. But we always work with the philosophy that we won’t stop transforming simply because there’s a gas crisis, but instead will keep pressing forward. After all, climate change isn’t waiting – we have to keep going, and we are.
Ute Neuhaus: Okay, so I’ve read that by 2030, the steel industry will need up to 660,000 tons of green hydrogen. Then on top of that, the chemical industry will need some more, then private households will need some more... How will it be possible to achieve this necessary transformation at all? I mean, we’re talking about gigantic quantities that will be required.
Dr. Heino Buddenberg: The German government plans to produce just over 400,000 tons of hydrogen in Germany by 2030. But we have to get away from the idea that the future hydrogen economy will remain purely a domestic affair. We’ll be part of an international energy market, just as we are today. And Dr. Jaroni just mentioned the connection to the Port of Rotterdam, which has established itself as a major hub for imported energy commodities and will also be the hub for imported hydrogen sources in the future. Whether that will be hydrogen via pipeline networks from North Africa, or whether that will be hydrogen sources coming from Australia via the vehicle ammonia, only time will tell. This all needs to be developed. And this is necessary within the energy network to ultimately set the future course.
Ute Neuhaus: You just said it, the key word here is once again “networks.” Dr. Jaroni, you mentioned partnerships, and if you take this idea a step further and think about what the whole thing could look like from 2045 onward, these will certainly go far beyond national partnerships.
So we’ve learned that the steel of the future will be produced with green hydrogen. And this requires hydrogen technologies, which in turn are also emission-free, and innovative production processes, such as the direct reduction process, and these are all absolutely essential if the transformation of the steel industry is to be successful at all.
I’d like to thank my two guests, Dr. Jaroni and Dr. Buddenberg, very much for their time and for these extremely interesting insights into the future of green steel.
Dr. Marie Jaroni: Thank you very much, Mrs. Neuhaus, thank you very much, Mr. Buddenberg. This was a really interesting conversation and I look forward to hopefully speaking with you again in the future.
Dr. Heino Buddenberg: Yes, sincere thanks to both of you from my side as well. I enjoyed it.
Ute Neuhaus: And I’d also like to thank you, dear listeners, for your interest, and I’m very glad you were able to join us.
Today we looked at the transformation of steel production. In our next episode of the Steel to Zero podcast series, we’ll be taking a look at how important green steel is for carbon neutrality at the other end of the value chain. And we’ll be speaking with a company that has been systematically focusing on sustainability for more than 100 years.
Ute Neuhaus: Stay in the know with Steel to Zero, the sustainability podcast by Waelzholz. Listen now with just one click at waelzholz.com/steeltozero. And remember: Waelzholz with AE.