Balancing Sustainability and Profitability in the Steel Industry

-Andrew Bissot

Like many of our Nation’s most important legacy industries, the steel industry is currently facing the difficult challenge of meeting sustainability goals while maintaining the output of critical infrastructure and processes. This challenge, however, has presented the steel industry with an opportunity to drive innovation into our business like never before. 

Blast Furnaces & Electric Arc Furnaces

Changes to the production process and assets are complex. We’ve been making steel in a routine and specific way for a long time. Furthermore, when a steelmaking facility is built, it is intended to make steel for decades. Not surprisingly, industries like ours are slow to adopt and adjust, and there is little time to slow down production to make drastic shifts. Still, the process and assets have shifted and will continue to as we move toward decarbonization.

Over the past 30 years , the steel industry has seen the skyline transition from carbon-intensive blast furnaces to more resource-recyclable electric arc furnaces (EAF). The cost and flexibility of the EAF versus the rigidness and raw material requirements of a blast furnace have helped usher in this change.

In 1990, domestic crude steel production was approximately 100 million tons, 57 blast furnaces operated, and EAFs scattered throughout the United States. Today, approximately 12 blast furnaces contribute to 100 million tons or ~30% of the total domestic volume; the last time anyone built a new blast furnace in the United States was in 1980. 

Instead, capital for additional capacity has been invested into the less carbon-intense EAF. This transition has significantly improved the carbon footprint of domestic steelmaking. How much more efficient? According to the Steel Manufacturer’s Association (SMA), EAF steelmaking produces 75% fewer CO2 emissions and less environmental impact than traditional steelmaking.

The writing has been on the wall for some time about this change in approach. Executive leadership saw the transition on the horizon in the late 1990s. Paul Wilhelm, former president of the then USX Corp’s U.S. Steel Group, made his vision of the steelmaking landscape clear before the turn of the century. “If we were going to build additional capacity, it would not be a blast furnace. It doesn’t mean we’re going to walk away from the ones we have. If we expand, we would probably do it through the electric furnace route.” Clearly industry leadership has understood this was a way to reach cleaner and less carbon-intensive steel.

Sustainability Challenges and Opportunities in Steelmaking Assets

Assuming that federal support will continue to limit imported steel, approximately 100 million tons of steel will be produced domestically. Blast furnaces are still necessary to meet this volumetric demand because of their cost competitiveness to EAFs, and will be for some time. Still, the decarbonization challenge remains central to the industry’s evolution, all while being in parallel to profitability. Considering that, the opportunity to reduce the carbon-footprint of blast furnaces through bolt-on solutions has also helped companies further their sustainability goals.

For example, over the last ten years, there has been an insurgence of hydrogen versus natural gas for  blast furnaces. Additionally, leveraging the availability of natural gas, capital projects for direct reduced iron (DRI) and pig iron are significantly decreasing the existing blast furnace carbon footprint for the decades to come compared to historical performances. As the cost competitiveness between the blast furnace and the EAF remains, these investments are intended to keep the blast furnaces in the race from a carbon footprint perspective.

What About EAFs?

Reaching sustainability goals in steelmaking will require innovation from all sides of our process. Steel Making Association (SMA) reports that more than $17.8B is being spent between 2022 and 2025, bringing more than 16 million tons of additional capacity onto the market. With these investments and the decommissioning rates of blast furnaces, the carbon footprint is improving with each ton from an EAF entering the market. While blast furnaces are being enhanced under the lens of sustainability and doing so in parallel with new EAFs coming online, the question becomes: is there room for improvement of EAFs?

From a carbon footprint perspective, an EAF from 20 years ago is fairly similar to a newly commissioned EAF. The last 20 years has seen iteration that allow them to become exponentially safer, able to yield higher production rates, and significantly more complimentary to a culture using big data and advanced analytics to drive improvements. However, more innovation and technology will be needed to improve power-on time, decrease alloy consumption, and improve waste heat recovery within the steelmaking facilities. 

Externally to these steel-making facilities, a distinctive benefit of an EAF over blast furnaces is that an EAF can quickly turn on and off to reduce the strain on an electrical grid. This is recognized as a benefit to the electrical grid because the EAF has both a high demand and flexibility as more electrification and data centers are coming online within the next decade. Therefore, technology will be needed to support the oscillating production tendencies of EAFs in parallel to more demand being placed on the electrical grid. The steel industry requires collaboration amongst steel manufacturers in conjunction with innovation inside and outside of the facilities.

Takeaway

The steel industry is working diligently to address the challenges of meeting demand and pursuing sustainability goals. It is clear that companies must invest in themselves and emerging technologies, establish strategic and financial partnerships, and pursue government support to continue to adapt as an industry and work to reach sustainability goals. We’ve come a long way as an industry, and we have proven we are up for the sustainability challenges to come.

Andrew S. Bissot is the Vice President of Engineering, Manufacturing Excellence, and Reliability at Metallus. With over 20 years of experience, he specializes in lean management and continuous improvement initiatives. Andrew previously held leadership roles at Outokumpu and United States Steel Corporation. He holds a bachelor's degree in mechanical engineering from The University of Alabama and a master's degree in organizational leadership from Duquesne University. Andrew is actively involved in industry organizations, serving on the AIST Foundation Board of Trustees and advising for the U.S. Research Impact Alliance.