The use of scrap metal in steelmaking must double globally to achieve lower than 7pc carbon emissions by 2050, Wood Mackenzie’s latest report recommends.
Scrap recycling rates will need to grow to around 95pc from 80-85pc globally to meet this need, the report stated, adding that this could be achieved only if scrap supply chains in India and China developed significantly by 2030.
The report released on Tuesday also noted that emerging economies, while slower to adopt to carbon emission norms will account for a large share of the 23pc increase in steel demand between 2020 and 2050. Steel demand is expected to rise to 2,300mn mt during this period. With steelmaking accounting for at least 7pc of global carbon emissions, the report put the onus of prioritizing CO2 emission reduction on advanced economies.
Mihir Vora, a senior analyst at Wood Mackenzie, noted in the report that it would be a challenge for the steel industry to balance decarbonization with the growth in demand. Moreover, advanced economies would need to find innovative ways to achieve the former since emerging economies’ contribution towards decarbonization would be much lower.
Apart from the increased use of scrap metal, the report also recommended tripling the output and consumption of direct reduced iron (DRI), reducing the intensity of electric arc furnace (EAF) emissions by 70pc and of basic oxygen furnace (BOF) by 30pc, and storing around 500mn mt or 40pc of residual carbon emissions.
Decarbonization initiatives will increase the use of DRI, which would raise the trading of this material. According to Rohan Kendall, head of iron ore research at Wood Mackenzie, this would boost opportunities for premium iron ore suppliers, especially in Australia and Brazil.