EuroWire January 2025

Technical Article

On the road to decarbonisation: the importance of the electric arc furnace route in steel production By Helmut Freiherr von Fircks, Swiss Steel Group

The steel industry is facing an epochal challenge: decarbonisation. With growing pressure to reduce greenhouse gas emissions and the need to mitigate climate change, steel manufacturers must find alternative ways to make their production more environmentally friendly. In this context, the electric arc furnace route is becoming increasingly important and promises a more sustainable future for the steel industry. Traditionally, steel has mainly been produced by the blast furnace route, which is based on smelting iron ore with coke. However, this process is extremely energy-intensive and results in significant CO 2 emissions. In response, the electric arc furnace (EAF) route has gained popularity in recent years. This still innovative approach (the first patents were filed as early as 1878) uses electricity to produce steel from scrap or directly reduced iron, drastically reducing CO 2 emissions. The blast furnace route still has to follow this path and requires considerable investment for this transformation, which is only feasible with government support. The desired method has not yet been tested on an industrial scale and it remains to be seen whether the required qualities can be offered at competitive prices. On a smaller scale, in so-called direct reduction plants, it works. Here, the iron ore is reduced by natural gas; in future, this is to become green hydrogen, which from today’s perspective contributes to very considerable costs. The process, known as direct reduction, has been known for a long time and has hardly been used in the past precisely because of its enormous costs. At this point, the question of distortion of competition must also be asked. Since the blast furnace route receives very high

subsidies to enable it to use a technology that the electric arc furnace route has been using successfully for a long time, the question of balance arises. The EAF route must also shoulder considerable costs as part of the transformation in order to maintain and expand its prominent role in the CO 2 balance of steel manufacturing companies and thus make its contribution to reducing emissions. We cannot and do not want to stand still on this route either, and the question must be allowed as to why the state does not support those who are technologically ahead. One example is the Swiss Steel Group, with its plants in Switzerland, Germany, France, the USA and Canada, which has decided to make the electric arc furnace its main production route. The company is the winner of the 2024 German Sustainability Award – probably the most important award of its kind in Europe. By using electric arc furnaces in all of its plants, the company can produce steel without the use of coal or coke, resulting in significant savings in greenhouse gas emissions. Only the electrodes are made of graphite and the slag is foamed with carbon wire. But here, too, work is already underway on emission-saving innovations. For example, electrode cooling and foaming using recycled plastic. In addition, the flexibility of this process enables the efficient use of recycled scrap as a raw material, which contributes to the circular economy and reduces dependence on iron ore from environmentally harmful open-cast mining. In 2022, for example, the company recycled two million tonnes of scrap, making it one of Europe’s leading recycling companies. Another flexible advantage of the electric arc furnace route is that the furnace can be switched off, while a blast furnace has to run 24/7. This means you can react to fluctuating demand and energy situations and adjust production. This also applies to surpluses in the grid. The EAF route can relieve the grid of peaks by using its furnaces in a targeted manner – a point that is worth being seen and evaluated much more clearly by the public. Scrap – a valuable raw material Scrap is the basis of the electric arc furnace route and is therefore a very important and valuable raw material. Steel is not consumed, but is used again and again. The circular economy leads to greater resource efficiency. The question therefore arises as to whether a region such as Europe should build up scrap reserves in the same way as with other systemically important raw materials. This would also be a response to the increasing demand for scrap in Europe and on the global market, and could contribute to greater price stability.

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January 2025