Posted on 25 Feb 2022
One of the highlights of the 2021 SEAISI Sustainability and Construction Fortnight e-Event are the CEO panel discussions, where the C-suite level leaders from the ASEAN Steel Industry share their views in the discussion.
During the opening session of the Sustainability week of the Fortnight e-Event, Dr Hana Mandova, an Energy Analyst at International Energy Agency (IEA) and Ms Åsa Ekhdal, Head of Environment and Climate Change at World Steel Association were the main speakers.
Dr Hana had earlier presented a paper on the Iron and Steel Technology Roadmap, with the key messages:
Based on the IEA report, the World Steel Association is focusing on 3 areas towards net zero:
However, the main issue is costs. Low carbon emission steel will be more expensive. Competing against conventionally produced steel is a first mover disadvantage, needing a strong partnership among the steel industry, governments and other stakeholders to overcome these challenges.
The steel industry will work towards mitigating carbon emissions while create partnerships for transfor-mation and be transparent in reporting and measurement.
Worldsteel has called for:
Following the two very interesting and relevant presentations, Mr Win Viriyaprapaikit, President of Sahaviriya Steel Industries, Thailand and Mr Stephen Porter, General Manager & Head of Sustainability, Innovation and Trade at InfraBuild Steel, Australia, joined the CEO Panel Discussion.
Steel Industry Readiness for Climate Change
As an opening, Mr Win acknowledges the monumental task ahead of the ASEAN Steel industry as the industry is lacking in sophistication and in technological capa-bility. Mr Porter added that there is an immediate concern about measurement and reporting of data as the market is going to demand proof of climate change efforts by industry players.
Decarbonisation will Make Steel More Expensive, But Will Steel Lose Out to Alternative Materials?
The steel industry recognises that there will always be competition. With decarbonisation, steel prices are expected to increase, losing competitiveness; this is something the industry should be watch out for. However, other alternative products and sectors have their own challenges to face, according to Mr Win. Ms Asa agreed, citing the potential challenges that timber has in terms of availability and sustainability. The choice of materials will depend on specific purpose at that time.
Measurement, Reporting and Monitoring of Data
Dr Hana highlighted that to be life cycle assessment (LCA) of products is going to dictate the transition to a different substitute of materials either to steel or away from steel. Ms Asa acknowledged that the adoption of LCA is still very much behind, even though Worldsteel has an LCA programme since the early 90s. However, the new initiative on Green Public Procurement is starting up and is likely to focus on Environmental Product Declaration (EPD) for the construction sector.
Future Scrap Demand
Ms Asa highlighted that the demand for scrap will continue to rise. It takes some time for scrap to come back after its first use. Building and infrastructure projects lifespan is about 100 years although on average, it is around 40 years.
Developed countries have been using steel for a long time, therefore the replacement is ongoing and scrap is continuously being generated. However, for developing countries, investment into and development of infrastructure has started not so long ago and it takes time for scrap to come back into the system.
Mr Porter also pointed out that the current trend is towards longer building life (with smarter design) and the use of high strength steel, which means less steel used and less carbon emissions. Design & engineering and the construction market play a key role to facilitate this trend.
He also pointed out that he has seen designs that actually takes demolition efforts into consideration. How steel will be used would depend on the type of steel, its origin, grade and many other factors, including yield and how the material is actually recycled through a circular economy.
On the other hand, Mr Win also questioned whether scrap can become a potential feedstock in the next age of steelmaking. Developed countries have huge scrap reservoir and have so much in excess that they are exporting them. However, ASEAN scrap reservoir is still quite small. Steel intensity in most ASEAN countries are below 100kg/capita and will continue to have the issue of not having sufficient metallic source, whether it is iron or whether it is scrap.
Who Owns the Initiative to Reduce the Use of Steel and to Have it Recycled Back?
Mr Porter is of the view that Governments will play a role in policy and direction, but the effort will be market driven. This will be likely to start from those who are funding the construction projects, such as super funds, finance sector, insurance sector and that’s where the green efforts are gaining momentum.
The market is pushing the construction industry to come up with lower embedded carbon solution and the pressure is on steel producers, design engineers, and contractors. Likewise, the general consumers are very aware about climate change and will also want their homes to be economically friendly, energy efficient, etc.
How Does ASEAN Catch Up on the Sustainability Front?
The European Union is taking the lead in terms of finding a unified approach on sustainability, trying to build consensus around the framework and around governments should do; the ASEAN Steel Industry can learn from EU’s efforts, according to Mr Win. However, there are many challenges:
However, ASEAN countries have a big advantage in terms of biomass feedstock and possibly other energy sources in biomass or biogas, biomethane or biohydrogen, which could be the region’s competitive advantage. However, there is a need to find these pathways and to develop these sources.
There remains, according to Mr Porter, the risk of low emissions market versus high emission steel products for the steel industry. As such Mr Win’s response was the industry will have to work together to try to develop the technology, to advocate the government or the relevant government to come out with some kind of common frame work and supporting policies. This is an area where the ASEAN Steel industry should look into.
How Do Companies Manage in a Low Emissions Market vs High Emissions Steel Products?
Ms Asa shared a few early initiatives around the globe:
Implications of the Carbon Border Adjustment Mechanism (CBAM) Efforts
Mr Porter pointed out that while the EU and US are working on the Carbon Border Adjustment Mechanism. These jurisdictions do have policies in place and support from domestic industry. They are very mindful that there are large costs to perform this transition and the industry needs return on investment and they need support from government policies to ensure that the first move is managed well. With this, everyone in the market actually can successfully move to low emission economy, without the threat from offshore competition that are not investing in technologies to reduce emissions.
However, he also expressed concerns that with the current investments in blast furnace projects in ASEAN, the transition towards low carbon emissions may be put off for some time, potentially leading towards a tension between low emission and higher emissions steel manufacturers.
Energy Policies and Governments
Mr Porter feels that it may be necessary to engage with the ASEAN governments on energy policies, especially what renewable energy sources has been built into the grid. Steel industry players usually have direct energy generation or they use the national grid. This will have different outcome in particularly for EAF manufacturers that rely on the national grid for power.
Implications of New Technologies
Ms Asa also acknowledged that new technologies to reduce emissions are not proven yet. There are other implications, such as raw materials as hydrogen based pellets are different from the conventional ones.
So, there you have it, a discussion between industry experts from the International Energy Agency and Worldsteel Association and the Directors of SEAISI from Thailand and Australia, highlighting the issues, implications and considerations in the ASEAN Steel Industry.
While there are many challenges ahead, the global steel industry is no stranger to challenges and upheavals. Through continuing partnership among industry players, stakeholders and governments, the Steel industry will continue to forge forward, working towards a sustainable future for the industry, our customers and for the betterment of the world.
