Pathways for deep decarbonization of the Brazilian iron and steel industry

Abstract

Steel production is one of the major sources of greenhouse gas (GHG) emissions. Brazil is one of the largest steel producers in the world and its main energy sources for steel production are coal, electricity, and charcoal. The latter shows a peculiarity of Brazil in relation to other countries: the use of biomass. This study has developed an optimization bottom-up model describing the steel industry to explore pathways for the decarbonization of the Brazilian steel industry. The model minimizes the mitigation costs, considering a set of measures (energy efficiency technologies and innovative production routes), constrained by the availability of raw materials and the diffusion of new technologies. In addition, the model stands out by incorporating crucial elements for a circular bioeconomy strategy: scrap and biomass supply, as well biomass-based production technologies. We developed four scenarios: business-as-usual (BAU) and three mitigation scenarios aligned with different GHG mitigation goals in 2050: 0% (no emission increase scenario – NIS); 42% (sustainable development scenario – SDS) and 88% (deep sustainable development scenario – SDS+). Results show that GHG mitigation in the short term can be achieved by the adoption of well known technologies (energy efficiency, charcoal-based BF-BOF, and EAF) at negative mitigation costs (between −35.3 and - 1.5 $/tCO2e). Innovative routes play a key role in reaching emission goals but increase the mitigation costs until 2050 (between 23.4 and 43.4 $/tCO2e). Smelting reduction with charcoal is present in all scenarios, reaching up to 24% of steel production in 2050 (SDS+). Direct reduction (DR) is applied to reach more ambitious levels of GHG mitigation in SDS and SDS+. In SDS, DR with natural gas is implemented in 2029, reaching its higher share of production in 2050 (21%). In SDS + natural gas has a transition role. It starts to be used in DR in 2025, increasing until 2043, when hydrogen begins to replace it. By 2050, charcoal becomes the main energy source in all decarbonization scenarios. The results and insights provided by this study can help policymakers towards decarbonization.