Undertaking high impact strategies: The role of national efficiency measures in long-term energy and emission reduction in steel making

Highlights

• Evaluate long-term effects of national energy efficiency in steel making.

• Use bottom-up optimization for projection in China, India and the U.S.

• The effects include changes in steel production, energy use, emissions, and costs.

• Three emission targets induce different structural changes and investments.

• Projected energy and CO₂ intensity declines in each country from 2010 to 2050.

Abstract

In this paper, we applied bottom-up linear optimization modeling to analyze long-term national impacts of implementing energy efficiency measures on energy savings, CO₂-emission reduction, production, and costs of steel making in China, India, and the U.S. We first established two base scenarios representing business-as-usual steel production for each country from 2010 to 2050; Base scenario (in which no efficiency measure is available) and Base-E scenario (in which efficiency measures are available), and model scenarios representing various emission-reduction targets that affects production, annual energy use and costs with the goal of cost minimization. A higher emission-reduction target generally induces larger structural changes and increased investments in nation-wide efficiency measures, in addition to autonomous improvement expected in the Base scenario. Given the same emission-reduction target compared to the base scenario, intensity of annual energy use and emissions exhibits declining trends in each country from year 2010 to 2050. While a higher emission-reduction target result in more energy reduction from the base scenario, such reduction can become more expensive to achieve. The results advance our understanding of long-term effects of national energy efficiency applications under different sets of emission-reduction targets for steel sectors in the three major economies, and provide useful implications for high impact strategies to manage production structures, production costs, energy use, and emission reduction in steel making.

Introduction

Collective steel production and consumption in China, India, and the U.S. increased significantly over the last few decades. Among the world’s leading steel producers, China, India, and the U.S. produced 626.7 million tonnes (Mtonnes), 68.3 Mtonnes, and 80.5 Mtonnes of crude steel in 2010, respectively [1]. In particular, the total annual production by the two major emerging economies (i.e., China and India) is expected to grow in future years, largely due to the continued growth in global demand for new buildings and infrastructure in the course of ongoing global urban expansions. Iron and steel production processes are highly intensive in energy and carbon dioxide (CO₂) emissions, and contribute significantly to industrial energy and emissions; therefore, it is important to advance understanding of opportunities for reducing the sector’s energy use and emissions in major and emerging economies and to develop strategies and policy recommendations for emission reduction in steel making.

Typical energy issues addressed in industry sectors focused on sectoral and processes-specific energy use [2], [3], [4], [5], [6], [7], [8], [9], [10], [11] and its efficiency [12], [13], [14], [15] across industries in different countries. Widely recognized as a major means for reducing CO₂ emissions, various tools and policy studies on improving energy efficiency have been developed to promote climate change mitigation efforts [16], [17], [18], [19]. Recent studies indicated that application of various energy efficient technologies could lead to a continuous improvement in energy efficiency in different industry sectors [20], [21], [22], [23]. These studies developed cost curves for the mitigation technologies and concluded that significant potentials exist in cost effective energy savings and CO₂ emission reduction. However, there was inadequate representation for interactions between efficiency technologies and the rest of the production systems (e.g., raw material). For example, efficiency measures can often bring about additional non-energy benefits or costs besides energy savings and cost reduction. Such non-energy benefits or costs may in turn affect productivity, production structure and costs over time.

Bottom-up approaches adopted in energy optimization models commonly require detailed technological representation in projecting future trends [24], [25], [26], [27]. Earlier, we recently modeled how steel demand is balanced under various alternative emission-reduction strategies such as energy efficiency measures, commodity trading, and carbon trading to meet a particular emission restriction target in the U.S. iron and steel sector via Industrial Sector Energy Efficiency Modeling (ISEEM) framework [28]. The results compared long-term impacts of different policy instruments aiming at reducing CO₂ emissions by 20% from the business-as-usual scenario for steel-making in the U.S. It is found that corresponding to 20% emission-reduction target is 11–19% annual energy reduction in the medium term (i.e., 2030) and 9–20% annual energy reduction in a longer term (i.e., 2050). With the same emission-reduction target (i.e., 20% reduction), national energy efficiency strategy appears to have a higher impact on reducing energy and emission intensity than the other mitigation strategies such as commodity or carbon trades do in the U.S.

While national scale energy efficiency measures influence all countries differently, long-term impacts of such efficiency measures on production, structures, energy use, emissions, and costs are not yet fully understood, especially with moving emission-reduction targets in major economies such as China, India, and the U.S., of which collective annual steel production account for 55% of the world’s production [1]. The goal of this paper is to advance understanding of long-term impacts of national scale energy efficiency measures as a mitigation strategy on energy and emission reduction in China, India, and the U.S.’ iron and steel sectors from 2010 to 2050. The specific technical objectives in this paper are to:

• Examine the country-specific production and structure changes over time.

• Quantify the magnitudes and intensity of country-specific annual energy consumption and emissions.

• Estimate country-specific annual production cost and annual carbon abatement cost.

• Understand how production, energy and emission intensity and costs respond to variations in emission-reduction targets.