(98c) Transition Toward a Decarbonized Steel Industry: A Supply Chain Analysis for the United States

The iron and steel industry, traditionally known for its substantial energy use, is now navigating a pivotal transition towards net-zero production. The combined use of direct reduction (DR) and electric arc furnaces (EAF) with green hydrogen—namely the green H-DRI-EAF system—emerges as a key strategy for decarbonizing the steel industry. It has been demonstrated that emissions from green H-DRI-EAF could be as low as only 2.8% of those from the energy-intensive blast furnace-basic oxygen furnaces (BF-BOF) route [1].

The shift to green H-DRI-EAF requires a holistic supply chain analysis to effectively incorporate novel technologies and capitalize on renewable energy and regional assets, such as abundant wind energy and iron ore reserves. However, there is a notable gap in green steel supply chain analysis for the United States, the world’s fourth-largest steel producer [2]. Given its iron and steel industry's reliance on mini-mills—small-scale EAFs primarily using scrap steel—for nearly two-thirds of production [3] and the need to consider unique iron ore qualities [4], a customized approach to integrating the green H-DRI-EAF system is essential.

In this work, we developed a supply chain planning model to provide a roadmap for integrating the green H-DRI-EAF system and phasing out traditional, carbon-intensive processes. The model spans multiple time periods to reflect changes in parameters such as steel demand and emission reduction goals over time. It incorporates critical parameters including capital, transportation, and purchasing costs, resource availability, and current production capacities. Results from solving the proposed supply chain optimization model for a planning horizon of up to the year 2050 provide insights into the strategic co-location of processes, such as the placement of iron production in regions with high renewable energy capacity, as well as the trade-off between production and transportation costs. The study reveals trends in the phase-out of existing BF-BOF plants and the expansion of EAF operations, making use of existing mini-mills. Furthermore, the sensitivity of the results on key parameters, including emission reduction targets and carbon tax rates, has been investigated to assess their effects on the overall long-term strategy for the transition towards green steel production in the United States.

References

[1] V. Vogl, M. Åhman, and L. J. Nilsson, “Assessment of hydrogen direct reduction for fossil-free steelmaking,” J. Clean. Prod., vol. 203, pp. 736–745, Dec. 2018, doi: 10.1016/j.jclepro.2018.08.279.

[2] World Steel Organization, “2022 World Steel in Figures.”

[3] Congressional Research Service, “Domestic Steel Manufacturing: Overview and Prospects,” R47107, May 2022.

[4] L. Bloomquist, “Iron Range endowed with more than enough ore,” Mesabi Tribune, Oct. 30, 2019. Accessed: Aug. 28, 2023. [Online]. Available: https://www.mesabitribune.com/mine/iron-range-endowed-with-more-than-eno...