To meet emission targets, an estimated 53% of steel production must switch to greener technology. This requires scrap metal – and thus a restructuring of supply chains and transportation routes, according to a preprint by CSH and ASCII. Yet, Europe is currently primarily focused on exporting scrap metal.
The steel industry is responsible for about 7% of global CO2 emissions, making it a crucial player in tackling the climate crisis. To produce greener steel, significantly more scrap metal is needed. However, a preprint by the Complexity Science Hub (CSH) and the Supply Chain Intelligence Institute Austria (ASCII) suggests that scrap could become a scarce resource in international markets.
In line with EU climate goals, 80-95% of CO2 emissions from steel production should be cut by 2050. “A key measure to achieve this is transitioning to greener steelmaking technology,” says Peter Klimek, CSH scientist and ASCII director. “This is particularly important for countries with a strong steel industry, like Austria, where steel production accounts for 16% of CO2 emissions, India where it’s 12%, Japan where it’s 14%, or South Korea where it’s 13%.”
A critical element of this transition is replacing conventional, carbon-intensive basic oxygen furnaces with electric arc furnaces powered by electricity. These can use scrap metal to produce steel, turning waste into a resource.
THE WORLD'S STEELMAKING CAPACITY
2023
62% uses the more carbon-intensive basic oxygen furnaces
29% uses the greener electric arc furnaces
Planned
43% electric arc furnaces
Needed by 2050 (to meet emission targets):
53% electric arc furnaces (or 400 TWh of CO2-free electricity)
COMPETITION FOR SCRAP METAL
The success of this potential depends on each country’s scrap trade flows and the presence of relevant trade enterprises. “Greener steel production will depend on the market availability of scrap and the necessary infrastructure for its transport,” Klimek explains.
“Initial results from our research indicate that scrap could become a limiting factor in Europe,” says Klimek. The CSH and ASCII team analyzed 15 years of trade data (2007-2021) alongside information on over 5,000 scrap metal trading companies. Their conclusion: Ensuring future steel production and securing supply requires a significant restructuring of global and European scrap trade and substantial adjustments in the corporate landscape.
CHINA: A STEP AHEAD
To produce 1,000 tons of steel, annual scrap imports need to increase by 550 tons and exports decrease by 1,000 tons. The researchers believe scrap will become a strategic resource, leading to massive supply chain restructuring.
This shift is already evident in China, the world’s largest steel producer, where scrap trade flows have largely decoupled from the global market. “Meanwhile, many European countries are currently focusing on scrap metal export, risking the loss of a valuable raw material for their own industries,” Klimek explains.
Every additional scrap company in the EU could enable the production of about 79,000 tons of steel using electric arc furnaces. “Extrapolating this, several hundred new companies might be needed, potentially employing around 35,000 workers,” says CSH President Stefan Thurner.
JOINT PROJECT WITH VOESTALPINE
To explore the feasibility of green steel production in Austria, the Complexity Science Hub and ASCII are planning a joint project with voestalpine. The project will investigate market dynamics, including scrap availability, and potential logistical challenges.
About the preprint
The preliminary study “Circular transformation of the European steel industry renders scrap metal a strategic resource” is available for download on the preprint server arXiv.
