EUROFER position paper on waste gases - October 2008

The background

• Steel making from iron ore (“integrated steel making”) unavoidably gives rise to “waste gases”. It is not possible to produce steel by this route without producing “waste gases”.

• Electricity production from “waste gases” releases roughly 50 % of the overall CO2-emissions of integrated steel making.

• The huge volumes of “waste gases” produced do not allow for storage of gas production of more than a few minutes. It must therefore be used immediately or be flared.

• The use of “waste gases” (instead of flaring) mitigates CO2 (it can substitute natural gas equivalent to a CO2-emission of up to 50 Million tons per year).

The consequences of the Emissions Trading Directive

• The Emissions Trading Directive will force steel makers to buy emission rights (by auctioning) for the gases used for electricity production.

• Full auctioning to the waste gases, which are transformed into CO2 in power plants, at a CO2-price of 50 Euro will burden the EU steel industry with annually 6 Billion Euro.

• Since waste gas production is unavoidably linked to steel making from iron ore, this cost penalty directly hits steel making.

• Results are either cost-pass-through or reduction of steel production. Both will be accompanied with currently unforeseeable possibly catastrophic consequences.

The solution

• CO2 connected to electricity produced from “waste gases” shall not be subject to auctioning.

• For allocation purposes the carbon content in the “waste gases” must be allocated by benchmarks to the installation, where the respective “waste gas” is produced.

• All provisions must be written into the revised Emissions Trading Directive.

Figure 1: Schematic explanation of “waste gas” generation, “waste gas” use and related

electricity production (copyright with Salzgitter AG)

Figure 2: Typical example for the source of CO2 and the point of discharge