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Circular economy and carbon constraint in steel industry

4/15 2024

Author: Masashi Yamamoto

There is no doubt that the steel industry is one of the key industries in the Japanese economy. In fact, the steel industry alone explains almost 10% of GDP in the manufacturing sector and employs approximately 220,000 workers. At the same time, the steel industry is one of the leading CO2 emitting industries in Japan's manufacturing sector. Annual CO2 emissions are approximately 130 million tons, accounting for 35% of CO2 emissions from the manufacturing industry.

There are two main types of steel making processes. One is to feed iron ore, the virgin mineral, into a blast furnace. Although this method can produce high-quality steel products, it also emits large amounts of CO2 because of the chemical process of reducing iron ore using cokes. For this reason, various CO2 reduction technologies are being developed.

Changes in the price of Iron and Steel Scrap
Figure 1. Changes in the price of Iron and Steel Scrap

Source: https://www.japanmetal.com/memberwel/marketprice/soba_h2
Note:The upper (bottom) line shows the highest (lowest) price in each month.


The other method is to recover scrap iron from the market and recycle it by feeding it into an electric furnace. It is said that CO2 emission through electric furnace is only 25% compared to blast furnace. This is the biggest reason that changes in the price of steel scrap (see Fig 1) shows a steady upward trend since the then Prime Minister of Japan, Yoshihide Suga, has declared to neutralize Japanese economy in terms of carbon emission in October 2020.

We all know steel is so important that we can not maintain the current lifestyle without steel products. For example, light and strong high-end steel plates, which are products from a blast furnace, are essential for fuel-efficient automobiles. To pursue CN, it is inevitable to develop a new technology to reduce CO2 emission through a blast furnace. Meanwhile, it is easy and promising decision to produce more through electric furnaces for middle and low-end products. Thus, high demand for iron and steel scrap will remain for a while.