Energy and steel

As with the environment, the summer of 2019 saw the future of the firm British Steel hang in the balance. Two buyers jossled for position, with both claiming that they could convert the assets to make "Green Steel".

One was Liberty House, who wanted to shutdown at least one of Scunthorpe's two blast furnaces down, and replace it with an electric arc furnace. Unlike the existing technology, which burns coal to produce virgin steel, their chosen technology is ideal for melting down steel for recycling.

The other was the pension fund of the Turkish military. According to an article in the FT (paywall), this buyer wants to convert at least half of Scunthorpe production to run on Natural Gas, rather than coal, and ultimately on hydrogen.

But which would be greener? That's hard to say without running the detailed numbers, but let's look at the logic.

Today, like many steel producers, the steel is produced through the consumption of vast amounts of a type of coal called Metallurgical Coal. Sometimes called Coking Coal, this is a very high grade of coal, superior to the 'black'  (Anthracite) - and even more so 'brown' (Lignite) - coal burnt by power stations. The FT once quoted miner Glencore as saying that "every tonne of steel... requires 800 kilogrammes of metallurgical coal..." So, just as aluminium is sometimes dubbed 'solid electricity', we could view steel as 'metallic coal'.

Coal, of course, is the dirtiest fossil fuel, producing many times the CO2 of combusting natural gas, not to mention acid rain and air laced with arsenic, mercury and even uranium.

To some extent, the bidders plans overlap. Natural Gas is the largest single fuel for power production in the UK, frequently responsible for over half of electricity being output. So the electric arc furnaces - major electricity consumers - would be, to a large extent, powered indirectly by natural gas.

So natural gas, or electricity _maybe_ made with natural gas. Tricky. But transporting gas direct to the site, as opposed to electricity, might have a lower impact given that there would be lower grid transmission loss. It really boils down to the future carbon intensity of the local grid electricity and our sources of natural gas (i.e. LNG and/or fracked sources, vs biomethane made from waste vs pipeline gas from Europe). 

Well, of course it's the local grid electricity that can make a difference, and Scunthorpe is maybe thirty miles from Drax Power Plant (full disclosure: I financially benefit from Drax) where several gigawatts (GW) of capacity is from combusting biomass, which is technically renewable.

Natural Gas is often called a bridge fuel, so what's the longer term potential here? In the  FT article mentioned earlier, it confirms that the Turks have mentioned wanting to transition to hydrogen. This might not be all that age off - maybe a decade - and there are already steel makers demonstrating this on a small scale, with the Austrian manufacturer Voestalpine being at the forefront. Drax, too, have publically stated that they want to build an industrial hydrogen economy in the Humber region.

Whichever buyer - and technology - prevails, we need to do something if we're to avert a runaway climate crisis. We can also push our politicians to support a singular carbon pricing scheme, including maintaining our links to the EU Emissions Trading Scheme (EU-ETS) aftr Brexit. The more players trade in an ETS, the more effective it is, and now the huge volumes of free permits have ended, the carbon price is starting to reach genuinely-motivating levels.

But whilst the politicians talk (and talk), we can certainly act individually and consume less steel (not to mention aluminium). Less metal, less carbon - and methane - emitted.