A Study on Carbon Dioxide Emission Reduction Potential in the Iron

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					    A Study on Carbon Dioxide Emission Reduction Potential in the Iron
                      and Steel Industry in Korea
                            Heesung Shina,*, Jongchul Honga, Younggu Parkb
            Korea Institute of Energy Research, 71-2 Jang-dong, Yusung-ku, Daejeon 305-343, Republic of Korea
        Korea Energy Management Corporation, Pungdeokchen-2-dong, Yongin, Gyeonggi 449-994, Republic of Korea

   The reduction potential of carbon dioxide emission in iron and steel industry in Korea is studied in the
carbon tax scenarios with technology options. The MARKAL model is used for the technology
assessment with five scenarios such as the base case, technology options only, carbon taxes of 30 USD,
60 USD and 90 USD per carbon ton with technology options. And 62 kinds of existing technologies and
48 future technologies are considered as technology option. The reduction potential of CO2 emission in
iron and steel industry in Korea is estimated about 5.1% with technology option scenario without carbon
emission tax and about 36% under 90 USD/TC carbon tax scenario with technology options in 2030.

1. Introduction

   Korean economy has grown rapidly since 1970s and was somewhat slowing down due to the 1997-
1998 economic crises in Asia, but it was recovered in 1999-2000. The GDP growth in 1999 was more
than 10% and is expected to grow about 4% in 2003. There is a huge plant industry in the background of
Korea’s rapid growth such as iron and steel, refinery, petrochemical, and so on, but energy consumption
level of Korea is very high in the world because of energy intensive industrial structure.
   In 2000, Korea was ranked 10th in terms of total energy consumption with total energy consumption
of 8,075 PJ on the basis of primary energy, and 6th in terms of petroleum consumption in the world.
However, Korea depends on the energy imports up to 97% as the destitute country of energy source, and
Korea is the world’s 4th petroleum importer and 2nd LNG importer in 2000.
   Korea’s iron and steel industry was ranked 6th in the world on the basis of the production of crude
steel, and the amounts of production was 43.1 million tons in 2000. In addition, Korea has the world’s
1st ranked company POSCO on the basis of the production of crude steel. The production of crude steel
in Korea was increased by 17.2% in 2000 comparing with 36.8 million tons in 1995 and was increased
by 1.3% comparing with 42.6 million tons in 1997. The low increasing rate between 1997 and 2000 was
caused by decreased demand due to the economic crises of Asia in this period.
   The main facility of Korea’s iron and steel industry is considered as the iron producing facility, which
has the total 11 blast furnaces with the capacity of 26,010 thousand tons/year. The steel-making facilities
are 12 basic oxygen furnaces with the capacity of 26,180 thousand tons/year and electric arc furnaces
with the capacity of 23,475 thousand tons/year. The proportion of electric arc furnace to the total steel
making was 47.3% in 2000 and is continuously tending upwards. Besides the continuous caster with the
capacity of 47,760 thousand tons per year are equipped. Almost all of the facilities of iron and steel
industry in Korea are evaluated as most excellent one in the world in terms of energy efficiency. The
products of iron and steel industry are various from plate, hot rolled coil to stainless steel products, and
the various production lines are ready to produce many kinds of product. Fig. 1 shows the production
route of main products of iron and steel industry and it is the Reference Iron & Steel System that is
designed by searching and analyzing whole process of the main company in Korea for model operation.
   The energy consumption of iron and steel industry sector in Korea was about 696.3 PJ, which was
about 11% of the total final energy consumption, the portion of coal was 530 PJ in 2000. The carbon
dioxide emission of iron and steel sector in Korea was estimated 14.3 million t-c and it is about 12% of
the nationwide carbon dioxide emission and 34% of the industrial sector emission in 2000 [1].

*   ∗
        Corresponding author. Tel.: +82 42 860 3011; fax: +82 42 860 3302.
        E-mail address: hsshin@kier.re.kr (Heesung Shin).
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Fig. 1. Iron and Steel Production Route in Korea
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  Iron and steel industry is important comparing with the other industry in Korea for the GHG emission
control because of the huge amount of energy consumption that is the primary source of carbon dioxide
emission. Therefore, new technologies are important factor in this field, which are to preserve energy
continuously and to minimize the environmental effect. This study is to evaluate the reduction potential
of carbon dioxide emission in iron and steel industry in Korea with new technology options and
applying carbon tax to fuel for mid and long-term based on the study of technology assessment [2]. This
study emphasis on;
  - Analyzing the state of technology in Korea’s iron and steel industry
  - Evaluating the competitiveness of new technology options in iron and steel industry in Korea
  - Finding the cost-effective technology options considering the environmental cost arising from
       carbon dioxide emission

2. Assessment of CO2 emission reduction potential

2.1 Methodological approach

   The iron and steel industry has been lasting a rapid growth but it is recently showing stable state. The
whole economics of Korea, however, is still growing, and the nationwide GHG emission in industry is
expected to increase for short- and mid-term prospect. And iron and steel industry plays an important
role in nationwide GHG emission. However, iron and steel industry is already on the high level in
technology and environment concern, therefore it is not easy to find the additional reduction options of
GHG emission in iron and steel industry in Korea.
   This study applies the MARKAL (MARKet Allocation) model for evaluation of the technical options
in iron and steel industry in Korea. The MARKAL model is an optimization model with detailed energy
system engineering data. The MARKAL model was developed in 1979 by IEA/ETSAP (International
Energy Agency/Energy Technology System Analysis Programme), and more than 77 institutions in 37
countries use this model in the world [3]. This study selected the MARKAL-MATTER model with
special regard to the characteristics of iron and steel industry that is able to do the Material Flow
Analysis (MFA) among the various types of MARKAL models [4]. The MARKAL-MATTER is able to
evaluate various technologies including the flows of products and materials through their all life cycles,
so-called ‘from the cradle to the grave’. It is, therefore, very suited to evaluate the cost competitiveness
of technology with the consideration of materials availability and GHG reduction possibility under
various circumstances. The constraints considered are the limitation of possible resources such as the
demands of iron and steel products, the time of introducing new technology options, the energy and
materials availability, and political considerations on price and so forth.
   For technology database, 62 kinds of existing technologies were selected on the base of the
production line layout of iron and steel industry in Korea as shown in Fig. 1. In addition, 48 kinds of
new technologies were introduced as new technology options and they were mainly selected through the
literatures. As a result, the 110 kinds of technologies were evaluated in total. The technology data are
defined in terms of the amount of energy and materials input and output, cost, and characteristics of
carbon dioxide emission. A statistical data related to iron and steel industry was used for the estimation
of installation year and capacity of facilities. [5], [6]. The properties of the energy and materials, cost,
and carbon dioxide emission of the other existing technologies are partially introduced by the materials
of actual company, but almost all of them are introduced from other country’s literatures owing to the
shortage of statistical data in Korea. The technology characteristic data of the new technology options is
also introduced from the overseas materials such as IISI [7], [8]. And the carbon dioxide removal
technologies are included to the technology option in addition to the traditional and new technology.
One study [9] suggested that the costs for CO2 capture would be about 35 USD/t CO2 in iron and steel
industry. This cost is about twice as high as the estimate of IGCC for power plants. However, the carbon
dioxide removal technologies for the iron and steel sector are analyzed in various viewpoints in this
study, and the Selexol (dimethylether of polyethylene glycol) based CO2 removal is also included as an
applicable technology option. Table 1 presents the cost characteristics of the CO2 removal technologies
used in this study [10], [11], [12], [13].

Table 1 CO2 capture, transportation and storage costs, using the Selexol
                      Conventional       Oxygen blown blast     COREX         CCF             DRI
                      blast furnace            furnace
    Electricity            0.38                   0.7              0.7         0.7            0.21
   [GJe/t CO2]
    Investment              25                    20               25          25               1
 [US$/t CO2.yr]
    O&M costs              1.25                    2              1.25        1.25            0.05
   [US$/t CO2]
  Storage costs             10                    10               10          10              10
   [US$/t CO2]
  CO2 emission            0.038                  0.07             0.07        0.07           0.021
 Ele. Production
  [t CO2/t CO2]
    Total costs            21.0                  27.0             26.9        26.9            14.5
   [US$/t CO2]
Assumptions: electricity cost - 15 USD/GJ, 12% of depreciation rate, 25 years of life span for the CO2
capture installation, total costs range from 15 USD for DRI to 24 USD for Corex and CCF.

  The year 1995 is selected as the base year because of the convenience of available data, and the time
span of model is divided into nine time periods that has an equal length of 5 years, therefore, the total
time span of the model is 1995~2035 (45 years). In the characteristics of MARKAL model, the year
1995 means the mid-period year of the start period.
   The demands for iron and steel products as the basis for evaluation are classified by 22 products. The
demands for the year 1995 and 2000 are used the actual production results, 38,367 and 44,776 thousand
tons each [14]. The total demand of iron and steel products at the year 2035 is estimated up to 50,000
thousand tons according to the domestic production trend, and the distribution ratio for each product is
defined maintaining the same ratio of the year 2000. The prices of energy and materials are assumed
maintaining the same price of the year 2000 without a particular price scenario after that period [15].
   The reduction potential of carbon dioxide emission is evaluated on the basis of the carbon dioxide
emission coefficient of IPCC for each energy and material. In this study, a discount rate of 12% has been
applied. This high discount rate is introduced because of the uncertainty of Korean economy for the
future as a developing country.

2.2 Assessment Scenarios

   The various and detailed alternative scenarios are prepared in the step of preliminary evaluation, and
five scenarios are selected through preliminary evaluation as follows.
     BASE(Base case): This scenario is assumed that the trend of the basic year 1995 and 2000 will
     continue for the whole period of evaluation. However, the efficiency of technology improvement
     and changing the ratio of material supply are considered by means of reflecting Autonomous
     Energy Efficiency Improvement (AEEI), and the major AEEI reflecting ideas are as follows.
         pulverized coal injection (PCI) of a blast furnace would be continuously extended up to 150
         kg/t irons until the year 2035.
         improvement of the self-generation efficiency using by-product gas would be up to 30% for the
         year 2000, and 35% for the year 2035.
         the material losses of the rolling process would be low down up to 5% until the year 2035.
     TECH(Technology Option Scenario) : All technology options are applied.
     CTAX-30 (carbon tax 30 USD/TC) : carbon tax 30 US dollar will be applied per ton of carbon
     dioxide emission.
     CTAX-60 (carbon tax 60 USD/TC) : carbon tax 60 US dollar will be applied per ton of carbon
     dioxide emission.
     CTAX-90(carbon tax 30 USD/TC ) : carbon tax 90 US dollar will be applied per ton of carbon
     dioxide emission.

3. Results

In this section, the output of the model running will be discussed emphasyzing on three major points.
        Energy consumption in Korea’s iron and steel industry from 1995 to 2035.
        Carbon Dioxide emission.
        Carbon dioxide emission reduction potential with major technology options.

3.1 Energy consumption of iron and steel industry

  Table 2 shows the results of energy consumption for 5 scenarios, at the year 1995, 2000, 2010, 2020,
and 2035 respectively. The energy consumption of BASE has been increased from 615 PJ(1995) to 718
PJ(2035). In terms of the weight of each energy resource, the consumption of steam coal is increased
while cocking coal is decreased, and these changes are from the increase of steam coal injection to the
blast furnace.

Table 2
Energy consumption in iron and steel industry for 5 scenarios, 1995-2035
  Scenario         Energy              Unit       1995        2000       2010        2020       2035
   BASE      Total Consumption (PJ/year)           615         682        694         699        718
                    SEC             (GJ/ton)      16.03       15.22      15.00       14.64      14.36
   TECH      Total Consumption (PJ/year)           615         682        662         657        684
                    SEC             (GJ/ton)      16.03       15.22      14.31       13.76      13.68
 CTAX-30 Total Consumption (PJ/year)               615         682        662         657        684
                    SEC             (GJ/ton)      16.03       15.22      14.31       13.76      13.68
 CTAX-60 Total Consumption (PJ/year)               615         682        662         638        655
                    SEC             (GJ/ton)      16.03       15.22      14.31       13.36      13.10
 CTAX-90 Total Consumption (PJ/year)               615         682        656         637        656
                    SEC             (GJ/ton)      16.03       15.22      14.18       13.35      13.12

  The energy consumption of TECH has shown 1.30% decrease in 2005, 4.62% in 2010, and 6.14% in
2030 comparing to BASE. This reduction could come from the effects of extended direct input of steam
coal and the effects of various technology adaptation. Also, much more decreasing caking coal
consumption and increasing steam coal use was noted comparing to BASE.
   In case of the CTAX that considers the cost of carbon dioxide emission in the model, there was not
any notable change on the energy consumption especially in the case of 30 USD/TC comparing to the
TECH. This is seamed that the present technologies, which belong to the technology options, do not
affect to energy consumption in spite of the additional cost of 30 USD/TC. In the CTAX -60, it is
decreased by 9.75% in 2030 and in CTAX-90 case, it is decreased by 9.62% in 2030 comparing with
BASE scenario.
  In TECH scenario, it shows a significant decrease of energy consumption comparing with the year
1995, and energy consumption per unit production can be improved up to 13.68 GJ/t in 2035 using new
technologies. In case of the CTAX, the energy consumption has significantly decreased comparing with
the BASE but does not have much difference from the TECH. This indicates that even though the cost
of carbon dioxide emission is imposed, the total energy consumption has not been much effected by the
cost. Thus more innovative technologies are required.

3.2 CO2 emission

   According to the evaluation results, in case of the BASE, the carbon dioxide emission is increased
from 14.9 million TC in 1995 to 16.8 million TC for the year 2035. Fig.2 illustrates the comparisons of
total emission for each scenario.

            00 0 81

            00 0 71

            00 0 61

           00 0 51                                                                            ESAB
                 C                                                                            HCET
           000410 0                                                                       03 -XATC
                  1                                                                       06 -XATC
           00 0 31                                                                        09 -XATC
            00 0 21

            00 0 11

                                                                         00 0 01
            5 3 02 0 3 02 5 20 2 0 20 2 5 10 2 01 0 2 50 0 2 00 0 2 5 9 91

                                  Fig. 2. CO2 emission trends by scenarios

  In case of the TECH, the reduction of emission ranges from 0.67% in 2005 to 5.15% in 2030. And in
the CTAX case, the cost of 30 USD is not affected comparing with the TECH, and this means that the
cost of 30 USD is not a significant level for carbon dioxide emission since the iron and steel industry, is
capital-intensive industry. In case of high tax application, it shows a very sensitive response for carbon
dioxide emission. The carbon dioxide emission will be decreased by 3.4% in 2010 and 29.0% in 2035 in
case of the CTAX-60, and by 11.4% in 2010 and 37.9% in 2035 comparing with BASE.

3.3 Analysis on CO2 emission reduction potential by major technology options

  It is difficult to present the reduction potential of carbon dioxide for each technology by a quantitative
way, because of various conditions such as the possibility of market enters, costs, usable resources, and
so forth. Besides, various uncertainties could be involved due to the lack of reliability of the input data
used. Most of evaluators sometimes do not pay attention to the uncertainties of evaluation result. They,
however, tend to be very sensitive to a slight difference of numerical values. This leads to limit the
selection of technology options. Therefore, the degree of the carbon dioxide emission reduction
potential is divided into several levels based on the contribution of reduction for each scenario. The
reduction potential of introducing technology is computed on the base of competitiveness under the
given scenarios and conditions.
   The degrees of reduction potential are divided into 3 levels, such as low, medium, and high for each
scenario. The level is given according to the production weight of each technology among technologies
which produce the same products. The level of each technology is defined according to the usage of this
technology such as low if the usage rage is 0~10%, medium if the range is 10~30%, and high if the
range is beyond 30%.

    Low: weight 0 10%  ∼
     Medium: weight 10 30% ∼
     High: weight beyond 30%

    The result is analyzed on the base of the year 2020 since the result was most significant to figure out
in term of the introducing new technology options. The technology that belongs to the new technology
options are marked by * onto the name of technology in the tables below.

Table 3
CO2 emission reduction potential – preprocess technologies
            Name of Technology              BASE         TECH   CTAX-30   CTAX-60   CTAX-90
  Sintering - Ecotech*
  Cocking - Plastic Waste*
    Coking - Wood Waste*
    Oxygen Production

Table 4
CO2 emission reduction potential – iron-making technologies
            Name of Technology              BASE        TECH    CTAX-30   CTAX-60   CTAX-90
  Blast Furnace - Conventional
  Blast Furnace - Coal Injection (150kg)
  Blast Furnace -Maximum Coal
  Injection (200kg)*
  Blast Furnace - Gas Injection*
    Blast Furnace - Plastic Waste Injection*
    Blast Furnace for Foundry Iron
    Direct Reduction - Gas Based*
    Direct Reduction - Coal Based*
    Oxygen Enrichment*
    Cyclone Converter Furnace*
    COREX + DRI*

Table 5
CO2 emission reduction potential – steel-making technologies
          Name of Technology                 BASE       TECH    CTAX-30   CTAX-60   CTAX-90
  Basic Oxygen Furnace
  Basic Oxygen Furnace - Ecotech*
    EAF/DRI - Double Electrode DC Furnace*
    Electric Arc Furnace (Scrap)– Conventional
    Double Electrode DC Furnace-
    Continuous Charge*
    EAF-Preheating (Contiarc Process)*
    EAF -Scrap Based for Stainless Steel

Table 6
CO2 emission reduction potential – CO2 removal technologies
          Name of Technology               BASE        TECH     CTAX-30   CTAX-60   CTAX-90
  CO2 Removal from BF*
  CO2 Removal from COREX*
  CO2 Removal from CCF*
  CO2 Removal from DRI*

    s i 0 9 - X A T C d n a 0 6 - X A T C e ht n i l a i t n e t o p n o i t c u d e r h g i h e ht f o n o s a er n i a m e h T
s n a e m tI . y g o l o n h c e t l a v o m e r e d i x oi d n o b r a c e ht f o n o i t c e l e s e ht o t d e t a l e r yl e s o l c
e ht m o r f g n i t r a t s e v i t i t e p m o c y r e v e m a c e b y g o l o n h c e t l a v o m e r e d i x o i d n o b r a c e ht t a h t
.0 6 -XATC          eh T          n ob rac   edixoid        lavom er          seig o lonhc et         er a    d etn uoc ca         htiw     e ht
n o i s s i m e e d i x o i d n o b r a c f o t s o c e h t d n a , s e i t r e p o r p , t s o c y g o l o n h c et f o n o i t a r e d i s n o c
t u o s n r ut I R D d n a e c a nr uf t s a l b e ht n i l a v o m e r e d i x o i d n o b r a c e h T . y g o l o n h c e t h c a e f o
e ht n i l a i t n e t o p w o l a s a h ti t u b , d e s o p m i s i t s o c e d i x o i d n o b r a c n e h w e l b a c i l p p a e b o t
.FCC dna XEROC eht f o sesac
   From the results, the carbon dioxide removal technology will be competitive with new production
technology if the emission tax imposed more than 60 USD/TC. The possibility of application is not fully
supported by the actual data of domestic industry but it is very important to try the new evaluation
method for the carbon dioxide removal technology in various aspects.

4. Conclusion and future study
   According to the results using the designed technology system and technical properties, the reduction
potential by the technology options will be at most 7~8% between 2020 and 2035 in case of excepting
the removal technology. But the reduction potential including the carbon dioxide removal technology
will be at most 38% in 2035 for the CTAX-90. Table 7 shows the reduction potential of each scenario.
And table 8 represents the reduction effects of removal technologies in each scenario.

    Table 7
    CO2 emission reduction potential iron and steel sector                                                                     (Units: %)
                1995      2000        2005      2010       2015                               2020           2025          2030     2035
     TECH                 0             0           -0.7          -3.4          -4.4          -4.7           -4.6           -5.1         -3.7
    CTAX-30               0             0           -0.7          -3.4          -4.5          -4.7           -4.6           -5.1         -3.7
    CTAX-60               0             0           -0.7          -3.4          -7.2          -12.2          -28.5         -29.7        -29.0
    CTAX-90               0             0           -0.7         -11.3         -11.5          -13.3          -32.5         -35.9        -37.9

 Table 8
  CO2 emission reduction by removal technologies                                                                         (Units: 1,000TC)
              1995      2000     2005       2010                               2015           2020           2025         2030       2035
    CTAX-60               0            0            0             0             96            747         3,429           3,470        3,499
    CTAX-90               0            0            0            749           749            902         4,050           4,532        5,019

  Considering carbon dioxide emission for the iron and steel products of one ton, it is decreased up to
0.32 TC/T-S in 2035 in case of TECH. In case of the CTAX-90, it has the maximum decrease up to 0.21
TC/T-S in 2035. Fig.3 shows the state of carbon dioxide emission for the iron and steel products of one
ton for each scenario.

                          54 .0

                          04 .0

                          53 .0                                                                                          ESAB
                      -                                                                                                  H C ET
                      03 .0 C/                                                                                      03 - X A T C
                      T                                                                                             06 - X A T C
                          52 .0                                                                                     09 - X A T C

                          02 .0

                              51 .0
                          5991        0002   5002    0102     5102     0202    5202    0302    5302
                                                              r a ey

                                        Fig. 3. CO2 emission trends by T-S(ton of steel)

  The limitation of this study is the lack of detailed information of technology propagation and the
technical properties data for the iron and steel industry. These are the common problems in the fields of
Korea’s energy industry, and they are considered as big obstacles for the more accurate decision making
related to energy technology. In order to get more information of technology data, the project of ETD
(Energy Technology Database) had launched by the government of Korea in 2001 and is expected to
complete by 2005. The Korea-MARKAL model will be improved along with the ETD project and it will
contribute to national energy policy development related to technology.


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