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Climate Action
Report 1
May 2019
“ Our ambition
is to significantly
reduce our
carbon footprint.”
ARCELORMITTAL CLIMATE ACTION REPORT 2018
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“ Central to a successful
transition will be supportive
policy to ensure a global
level playing field, access
to renewable energy at
affordable prices and
access to finance.”
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Contents
SECTION 1
SECTION 2
SECTION 3
INTRODUCTION
CLIMATE ACTION REPORT
ANNEXES
02
04
41
02 Introduction from our
04 Chapter 1: Our climate action at
41
Annex 1: The steelmaking process
Chairman and CEO
a glance
44
Annex 2: Glossary
06 Chapter 2: The future of materials:
growing, circular, sustainable
10 Chapter 3: The carbon challenge
for steel
14 Chapter 4: Low-emissions technology
pathways and policy scenarios
20 Chapter 5: ArcelorMittal strategy
towards low-emissions steelmaking
30 Chapter 6: Policy recommendations
32 Chapter 7: Carbon performance
and targets
36 Chapter 8: Governance and risk
40 Chapter 9: Alignment with TCFD
recommendations
About this report
Our reporting
This report outlines the analysis behind ArcelorMittal’s strategy
Our portfolio of corporate reports aims to engage stakeholders
on climate action, summarised in its Integrated Annual Review
on material aspects of our financial and non-financial
2018. As such it is the company’s first comprehensive response performance. In addition to our statutory requirements, we
to the recommendations of the TCFD for climate disclosures.
publish an Integrated Annual Review and a Fact Book containing
It reflects the views of the ArcelorMittal group in May 2019.
in-depth data on our business. Our Basis of Reporting explains
Data on ArcelorMittal’s carbon emissions are for financial years
the methodology behind our metrics, and our Reporting Index
up to and including 2018. All financial values given in dollars are references a range of different frameworks we use in preparing
US dollars, and those given in Euros are where funding has been our reports. These reports can be downloaded from
received in that currency.
annualreview2018.arcelormittal.com
Integrated Annual
Fact Book
Reporting Index
Basis of Reporting
Annual Report
20F
Review
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Introduction from our Chairman and CEO
Our work on low-emissions technologies underpins
our ambition to significantly reduce our carbon
footprint by 2050 in line with our commitment
to the Paris Agreement.
Dear stakeholders,
Welcome to ArcelorMittal’s first Climate Action report. Now that the unintended consequences of using
We are publishing this because we understand the
fossil fuels have become clear, the world needs to
enormity of the climate challenge for society and the find a new way of doing things that enables further
responsibility of ArcelorMittal as an emitter of CO
economic and social development while minimising
2
to reduce our carbon footprint. We also acknowledge environmental damage. Steel is prevalent in our
the interest of our stakeholders in understanding how society because it has a combination of properties
we plan to do so and the requirement for additional
that make it ideal for building much of the
disclosure in line with TCFD.
infrastructure we need. As the world continues to
In December 2015, world leaders adopted the Paris
develop, with an increasing population aspiring to
Agreement, which aims to keep the global average
achieve improved living standards, demand for steel
temperature increase to well below 2ºC and pursue
and materials generally is only expected to further
efforts to hold the increase to 1.5ºC. Clearly, success increase. Indeed, our forecast indicates demand
will require unprecedented levels of coordination
rising from 1.7 bil ion tonnes in 2018 to 2.6 bil ion
on a global level. There are no borders in the sky,
tonnes in 2050.
so every region and country will need to make
This means we need to significantly reduce the
a meaningful contribution.
carbon footprint of steel, which requires finding
The industrialisation of the world has been powered by new ways to make steel in a less emissions-intensive
fossil fuels. In the steel industry this has involved using process. Scrap, unfortunately, is not a sufficient
coal-based products, such as coke, to reduce iron ore
answer as there is not enough scrap available in the
in the blast furnace. While steel may have a lower
world to simply make all steel through the electric
carbon intensity than many other materials, the large
arc furnace process.
volumes of steel produced globally mean that the
industry emits over three gigatons of CO annually.
2
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So, we need to develop breakthrough low-emissions
This report does not have all the answers because
steelmaking technologies. We are working on the
we do not yet have all the answers. But as the world’s
technologies for several potential pathways including
leading steel company, we are committed to the
circular carbon and clean power, and these underpin
objectives of the Paris Agreement and I want to
our ambition to significantly reduce our carbon
reassure our stakeholders that we will do our best
footprint by 2050. We are in the process of running
to contribute effectively to a low-carbon world and,
pilots of these different technologies at various plants in doing so, help them manage their own risks
in Europe, where regulation today is most advanced,
and ambitions.
and where we have an ambition to reach carbon
neutrality by 2050. This work will enable us next year
to publish a more specific 2030 reduction target.
The suite of technologies we are developing gives us
confidence that we are well positioned to align with
Lakshmi N. Mittal,
the science-based trajectory for our sector. But we
Chairman and Chief Executive
cannot solve the problem by ourselves. Central to
May 2019
a successful transition will be supportive policy to
ensure a global level playing field, access to renewable
energy at affordable prices and access to finance.
The dynamics of the global steel industry need to
be fully understood, and support provided at levels
similar to those which have enabled the growth of
renewables in the energy sector.
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1 Our climate action at a glance
ArcelorMittal’s readiness to advance the low-carbon
economy can be seen throughout its operations, from
the breakthrough technologies it is demonstrating to
the solutions it offers its customers.
Circular carbon technologies
Clean power technologies
In 2018, we launched a €40 million Torero
ArcelorMittal is exploring iron ore reduction technologies using
demonstration project at Ghent, Belgium, to convert
hydrogen and electrolysis, both of which could deliver significant
120,000 tonnes of waste wood into biocoal for use in
carbon reductions if powered with clean electricity. In March 2019,
iron ore reduction in place of fossil fuels. The technology
we launched a €65 million pilot project in Hamburg, Germany to
has the potential to work with a variety of society’s
test hydrogen steelmaking on an industrial scale, with an annual
waste streams. We’ve also been running an industrial
production of 100,000 tonnes of steel. At the same time, we
pilot of IGAR technology in Dunkirk, France since 2017
have been exploring direct iron ore reduction using electrolysis
to reform waste carbon gases so they too can be reused
for a number of years. We lead the EU-funded Siderwin project,
for iron ore reduction. Both technologies will reduce the
which is now constructing an industrial cell to pilot the technology.
amount of coal and coke needed in the blast furnace
See chapter 5
and lower associated CO emissions.
2
At our steelworks in Ghent, Belgium, we are building
a €120 million industrial-scale demonstration plant
2050
for technologies developed with LanzaTech1 to both
capture carbon offgases and convert them into the
Carbon ambition
Carbalyst® range of products. Capable of producing
Our ambition is to significantly reduce our CO emissions by 2050
2
80 million litres of ethanol per year, this project alone
and, in Europe, to achieve carbon neutrality by this date, in line
has the potential to annually reduce CO equivalent
with the objectives of the Paris Agreement and the science-based
2
to 600 transatlantic flights.2
trajectory for our sector. Supportive policies will be central to
achieving this ambition. We are building a strategic roadmap
See chapter 5
based on potential improvements and our suite of breakthrough
technologies, and in 2020 we will set a 2030 reduction target.
1 This project is also known as Steelanol.
2 https://corporate.arcelormittal.com/news-and-media/our-stories/capturing-and-utilising-waste-carbon-from-steelmaking
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Green border adjustment
ArcelorMittal has been publicly calling for a green border
adjustment since early 2017. We believe it is an essential policy
that needs to be applied wherever carbon policy exists to
ensure that steelmakers bearing the structurally higher costs
of low-emissions technologies can compete on a level playing
Steligence®
field with imports from higher-emissions steelmakers. This
In 2018, ArcelorMittal launched the Steligence® concept to
forms a central part of our policy scenario analysis.
facilitate the next generation of high-performance buildings
See chapter 6
and construction techniques for our customers. Built into
the holistic Steligence® approach is a broad range of thinner,
lighter, high-performance steel solutions. Demonstrating
the potential to reduce the embedded carbon footprint of
$728m
a building by 38%, the Steligence® approach can also enhance
Energy efficiency
its flexibility and economics. Considering the share of global
emissions from the built environment, the impact of
Each year we spend large amounts of capex to modernise
Steligence® could be particularly significant.
our plants with the latest technology. $728 million has been
allocated in the past three years alone.
Comprehensive climate-related disclosure
We have been making annual climate change disclosures to
CDP since 2010, and in 2018 our disclosure was rated B.
We report comprehensively on the methodology and scope
of our CO emissions, and ensure that we measure the
2
carbon intensity of our steel in a way that includes all the
processes involved in steelmaking rather than simply those
we own and operate. In 2018, we became a supporter of the
Task Force on Climate-related Financial Disclosures’ (TCFD)
recommendations. This Climate Action Report represents our
first comprehensive response to these recommendations.
See chapter 7
S-in motion®
S-in motion® is a set of advanced high-strength steels
launched by ArcelorMittal in 2010. Since then, S-in motion®
steels have been providing the lightness and strength
carmakers need to make mobility solutions ever more
sustainable. It enables a reduction in vehicle lifecycle
emissions of 14.5%,3 while at the same time ensuring the
safety of vehicle users at an affordable cost.
3
https://corporate.arcelormittal.com/news-and-media/our-stories/cutting-carbon-ensuring-safety-serving-customers-s-in-motion
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2 The future of materials:
growing, circular, sustainable
Our world, and our lifestyles, have been built around the use of
a variety of materials. Al industries making these materials face
the same issue: meeting the global demands of a growing
population while significantly reducing their climate impact.
The world’s materials challenge
Materials are an integral part of modern society, human
development and well-being. Global consumption of materials
has grown significantly over the past 30 ye
ars (see box 1),
RE
and has been instrumental in the economic development which
G
CY
has lifted over one billion people out of poverty. Today, the
Materials
SIN
CL
production of the main material groups globally account for over
recovery
EU
IN
19% of global CO emissions.4 The majority of these emissions
R
G
2
come from using mostly fossil fuel-based energy to transform
primary raw material sources into the materials we use (iron ore
Circular
for steel, bauxite for aluminium, oil for plastics, etc.). Producing
materials
materials from secondary sources (i.e. recycling materials at
their end of life) represents a small proportion of material
production today, mainly because the strong growth of demand
for materials outstrips the stock available for recycling, but also
Materials
Materials
due to the fact that most materials – steel being an exception –
production
world
cannot be fully recycled (
see box 1).
Materials demand is forecast to continue growing for several
decades as emerging economies pursue the infrastructure
R
needed to achieve the United Nations’ Sustainable Development
E D U CIN G
Goals, and as the world transitions to low-emissions sources
of energy. In this context, primary sources will continue to be
essential to meet the world’s material needs. Therefore, the
challenge for materials producers is to lower the carbon
In the long term, the world will transition towards a stable
footprint of materials production whilst meeting continuing
demand for materials in a fully circular economy, where
demand growth. Contributions will come from improvements
efficiently designed products are reused repeatedly, and
in energy efficiencies and production yields, and the move
ultimately recycled into new products. This means for each
from today’s prevalent linear use-and-dispose model towards
application, manufacturers and designers will increasingly
a circular reduce-reuse-recycle model. What will be critical,
choose materials based not only on their physical characteristics
however, is to develop and deliver low-emissions technologies
such as weight, strength and flexibility, but also for their ease of
for materials production.
reuse, recovery and recyclability. This will be enabled by policies
aimed at restricting landfill and incineration. Effective recovery
and recycling of materials from different waste streams at their
end of life will be vital to the transition to a circular economy.
In addition, segregation of materials to avoid degradation and
loss of recycling capability will be important.
4 ArcelorMittal estimates of main material groups’ CO emissions as percentage of World Bank reported global CO emissions; material groups included:
2
2
cement, steel, aluminium, other metals, plastics and fibres, glass, bricks, and cardboard and paper.
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Box 1: materials production and recyclability
Global materials production has grown significantly over the past three
decades; steel is the only manufactured material that can be fully recycled.
Figure 1: global production (1990=100)
Table 1
Made from
end-of-life
400
1
Material group
Recyclability*
material
2
1 Plastics and
synthetic fabrics
5-10%
3
300
2 Cement5
0%
4
3 Aluminium
21%
200
5
4 Steel
22%
100
5 Paper and
cardboard
50-60%
*Ability to make same material again at end of life
Ful y recyclable, low risk of downcycling
0
Highly recyclable, risk of downcycling
1990
1995
2000
2005
2010
2015
Partial y recyclable, risk of downcycling
Little or no recyclability
Source: ArcelorMittal corporate strategy
5 Concrete, made from cement, is recyclable to a limited extent in the form of aggregate.
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The future of materials: growing, circular, sustainable
With its high rate of recyclability, steel is the ideal material
for a sustainable, circular economy. It is also a key enabler
for CO emission reductions.
2
Bright future for steel
Even today, there are fewer CO emissions embedded in the
2
production of steel in many applications in comparison with
We believe that steel is the only major material group today
other materials. For example in the automotive sector, for
that can meet tomorrow’s challenge of a fully circular economy. the structural ‘body-in-white’ of a vehicle, the CO emissions
Steel’s recyclability is unmatched by any other major material
2
associated with an automotive part made of advanced high-
group. Today, up to 85-90% of steel products are recovered
strength steel are less than half of those associated with an
at their end of life and recycled to produce new steel. The
equivalent aluminium automotive part, and less than a third
magnetic properties of steel make it easy to segregate from
of those associated with a part made of carbon fibre
other materials, so whereas other materials are often
reinforced plastic.
downcycled, steel retains all of its original properties, making
it stand out as one of the most easily recycled materials.
Steel is also a key enabler as a core material in many leading
technologies for global CO emissions reductions. These
In the very long term beyond 2070, once there is a sufficient
2
technologies include offshore wind turbines, efficient
stock of steel to meet the needs of a fully developed world,
transformers and motors, and lighter-weight vehicles. A study
the majority of steel products will be made from recycled
by BCG and VDEh found that on average, the CO emissions
end-of-life steel. We believe that as societies transition towards
2
reductions enabled by steel outweigh emissions from steel
a sustainable circular economy, steel will be increasingly favoured production by 6 to 1.6 It is hard to imagine a future where steel
over other less circular materials in overlapping applications.
is not a critical material in a sustainable circular economy.
6 BCG and VDEh (2013), Steel’s Contribution to a Low-Carbon Europe 2050.
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Figure 1: comparative CO emissions from production of steel vs other materials for selected applications*
2
BOTTLE
0.75l
1,800g CO
350g CO
2
2
Glass
Steel
420g
177g
PIPING SYSTEM
YACHT
3 metres of 6” schedule 80
46’ trawler
60kg CO
260kg CO
27t CO
33t CO
2
2
2
2
Plastic (PVC)
Steel
Fibreglass
Steel
27kg
130kg
10.4 tonnes
16.3 tonnes
Steel vs
other materials
BUILDING STRUCTURE
AUTOMOBILE
One storey 5x8m
Body in white
5t CO
5t CO
5.6t CO
1.8t CO
2
2
2
2
Concrete
Steel
Aluminium
Steel
32 tonnes
2.6 tonnes
470kg
900kg
Icons represent the level of recyclability as in Table 1 on page 7.
*Figures relate only to emissions from production of material from primary (virgin) sources, not lifecycle CO emissions of different materials.
2
Source: ArcelorMittal corporate strategy
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3 The carbon challenge for steel
The steel industry currently generates approximately 7%
of the world’s CO emissions. With demand for steel forecast
2
to continue growing for several decades to come, the carbon
challenge is significant.
Continuing need for primary steel production
Although steel is less carbon-emitting per application than many
other materials from primary sources, the sheer scale of global
Global steel demand has more than doubled since 1990 as
steel production means the industry contributes over three
societies across the world (China and the developing world
gigatons of CO to global emissions annually. Global steel
especially) have increased their steel stocks in products,
2
demand is forecast to increase from 1.7 billion tonnes in 2018
equipment, buildings and infrastructure. Steel can essentially
to over 2.6 billion tonnes by 2050 under current consumption
be made using either primary sources or secondary sources.
patterns. This will be driven primarily by continued growth in the
Today the majority of steel is made via the primary (iron ore
developing world, as well as increased steel demand to support
based) route, the first step of which is to smelt or reduce iron
the global energy transition, since more steel will be needed per
ore. Nature has dictated that separating oxygen from iron
unit of renewable electricity than conventional technologies.7
requires a substantial amount of energy, because there are
strong chemical bonds between oxygen and iron in iron ore.
Time for transition
That energy today comes primarily in the form of carbon.
Carbon dioxide, or CO emissions are the result.
The global steel industry therefore faces the challenge of
2
reducing CO emissions in line with the ambition of the Paris
Steel produced via the secondary (scrap based) route, which
2
Agreement whilst at the same time responding to the growing
uses electricity as the main energy input to melt end-of-life
demand for steel. According to the Intergovernmental Panel
scrap, and has lower CO emissions, has increased in recent
2
on Climate Change (IPCC), in order to limit global warming
decades. However, although steel stock in maturing economies
to 2ºC or less, the world needs to reach net zero CO emissions
has plateaued, the strong demand growth for steel in the
2
around 2070. Achieving a limit of 1.5ºC brings this date forward
developing world means that end-of-life scrap is only sufficient to around 2050.8 While help will come from continued energy
for a modest share (approximately 22%) of metallic input for
efficiency gains and yield improvements in steel production,
global steel production. The availability of end-of-life scrap is
as well as society’s shift to a circular economy, achieving this
forecast to grow, and this will support the increased use of
ambitious goal will require a fundamental transition to low-
scrap-based steelmaking. When powered with clean electricity, emissions technologies. This essentially means either capturing
this will further reduce the carbon intensity of steelmaking.
and storing the emissions, or utilising a different, lower-emission
However, the availability of end-of-life scrap lags demand for
energy source to extract the iron from the iron ore.
steel by several decades, typically 10-50 years or more after
production depending upon application. This means the world
will still be reliant on primary steelmaking from iron ore until
nearer the end of this century.
7 Source: ArcelorMittal global R&D
8 IPCC (2018), Summary for Policymakers. In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above
pre-industrial levels and related global greenhouse gas emissions pathways, in the context of strengthening the global response to the threat of
climate change, sustainable development and efforts to eradicate poverty.
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Box 2: growing demand for steel
Global demand is forecast to increase from 1.7 bil ion tonnes in 2018 to over
2.6 bil ion tonnes by 2050 under current consumption patterns. Yield improvements
and circular economy dynamics are likely to moderate this growth.
Construction
Energy
Packaging
A significant share of growth in steel
As the transition to a low-emissions
Pressure to reduce plastic waste and
demand will come from the construction economy unfolds, reduced steel demand
use more recyclable materials is leading
sector, particularly in developing
from the oil and gas sector will be more
to growth in demand for steel in the
countries for new buildings and
than offset by growth from the renewable packaging sector.
infrastructure.
energy sector.
Transport
Steel use for transport will significantly increase due to economic growth in developing
countries. The use of high-strength steels for lightweighting helps automakers
improve vehicle emissions while maintaining safety standards. We take a neutral
view on the impact of electric vehicles (EVs) on steel demand. We see significant
opportunities for steel in EVs due to additional uses and recovery in traditional ones,
given the cost and lifecycle CO advantages of steel. Growth in the automotive sector
2
may be moderated by the emergence of automated vehicles in the long term.
Figure 2: steel demand outlook (million tonnes)
3,000
Yield
improvement
2,500
Business as usual – BAU Circular
economy
(see page 11)
2,000
1,500
Adjusted
steel
1,000
demand
500
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
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The carbon chal enge for steel
Box 3: the role of end-of-life scrap in low-emissions steel transition
Global steel production will continue to rely on
primary sources (iron ore) until around 2100.
Today, most primary sources of iron (iron ore) used to make
direct reduced iron (DRI) process using natural gas or gasified
steel are processed through a blast furnace (BF) for ironmaking coal. Although both these routes partially add scrap to make
and subsequently through a basic oxygen furnace (BOF) for
steel, most scrap used globally is processed into steel directly
steelmaking, using coal-based products such as pulverised
through an electric arc furnace (EAF), using electricity as the
coal and coke as energy inputs to reduce the iron ore.
main energ
y input (see annex 1).
To a lesser extent, steel from iron ore is also produced via the
Scrap used in steelmaking comes from two different sources:
Global steelmaking by (1) production route,
• Pre-consumer scrap, arising from yield losses in iron and
steelmaking and manufacturing of steel-based products.
(2) metallic input, (3) source of iron
• End-of-life scrap, arising from the recovery of steel-based
End-of-life scrap
products at the end of their operational life, typically
10-50 years or more after production, depending upon
application. As a result, the availability of end-of-life scrap
Scrap
lags steel demand by several decades.
EAF
Although the availability of end-of-life scrap is forecast to
Steel
grow (see graph below), global steel demand growth means
DRI-EAF
end-of-life scrap will meet less than 50% of steel needs by
2050. As living standards improve and infrastructure across
the globe matures, demand for steel will eventually plateau.
DRI
BF-BOF
1
After that, enough end-of-life scrap will be available to meet
Pig iron
the bulk of steel demand, leading to a fully circular steel value
2
Iron ore
chain. Since this transition is unlikely to become reality much
3
before the end of the century, iron and steelmaking from iron
ore will continue to play an important role in meeting global
steel demand well beyond 2050.
Steel demand outlook (million tonnes)
3,000
2,500
Business as usual – BAU
End-of-life
scrap
2,000
1,500
1,000
Iron ore
500
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Source: ArcelorMittal Corporate Strategy
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Meeting the carbon challenge for steel will require continued
energy and yield improvements, a shift to a circular economy,
and the adoption of low-emissions technologies.
Business as usual (BAU)
Energy efficiency
This projection of CO emissions shown in figure 2 below
Over the last 50 years, the steel industry has reduced its energy
2
is based on the BAU steel demand outlook, which includes
consumption per tonne of steel by 61%.9 A recent World Steel
the increasing volumes of end-of-life scrap forecast shown
Association study shows potential for a further 15-20%
in
box 3 on page 12.
reduction in energy intensity.
Steelmaking yield improvement
Adoption of low-emissions technologies
Continued improvements in the steel supply chain, particularly
Steel production will continue to depend on primary sources
through the digital revolution and evolving manufacturing
(iron ore) to meet future demand, as shown in figure 4.
technologies, will drive continued yield improvement from
To achieve the Paris Agreement objectives, this primary steel
crude steel production to final steel in products, equipment,
production will have to transition to low-emissions technologies
buildings and infrastructure. This will reduce the amount of
for iron ore reduction. This will entail a transition to low-emissions
steel production needed for the same products, equipment,
energy sources through a combination of use of clean power,
building and infrastructure under a BAU scenario.
circular c
arbon (see box 4 on page 15), and continued use
of fossil fuels with carbon capture and storage. Detailed
Circular economy
descriptions of low-emissions technology pathways for the
steel industry are giv
en in chapter 4, and ArcelorMittal’s
Products, equipment, buildings and infrastructure designed to
innovation programme to demonstrate such technologies is
use less steel will all moderate the growth rate of steel demand
described in
chapter 5.
compared to a BAU scenario. The transition to a circular
economy – with new business models focused on greater
sharing of our material world (homes, cars, etc.), extended
product longevity and reuse at end of life – will also reduce
demand for steel compared to a BAU scenario.
Figure 2: Indicative CO emissions outlook for steel
2
Business as usual – BAU Yield
improvement
Circular
economy
Energy
efficiency
Adoption of
low-emissions
technologies
Remaining CO2
2020
2025
2030
2035
2040
2045
2050
9 World Steel Association (2019), Steel’s Contribution to a Low Carbon Future and Climate Resilient Societies.
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4 Low-emissions technology pathways
and policy scenarios
Low-emissions steelmaking will be achieved through the use
of a combination of clean power, circular carbon, and fossil
fuels with capture and storage (CCS).
Future energy inputs for primary steelmaking
The steel industry has made significant improvements in energy
a) Clean power used as the energy source for hydrogen-based
and yield efficiency, reducing the emissions intensity of steel
ironmaking, and longer term for direct electrolysis ironmaking,
production during recent decades. Further technological
and also contributing to other low-emissions technologies.
innovation should lead to continued reductions in emissions
b) Circular carbon energy sources including bio-based and
intensity over the next decade.
plastic wastes from municipal and industrial sources and
However, to accelerate emissions reduction and align with the
agricultural and forestry r
esidues (see box 4).
demanding objectives of the Paris Agreement, the steel industry c) Fossil fuels with carbon capture and storage (CCS)
will have to transition to one or more low-emissions technology
enabling the continued use of the existing iron and steelmaking
pathways. These are illustrated on pages 14-15. They include
processes while transforming them to a low-emissions pathway.
transitioning to new energy inputs in the form of a) clean power,
This shift would require national and regional policies to create
b) circular carbon and c) fossil fuels with carbon capture
the necessary large-scale infrastructure network for the
and storage.
transport and storage of CO .2
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Circular
Carbon
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
Box 4: the importance of circular carbon
While climate change needs to tackle the increased
More of society’s waste – including construction wood,
concentration of carbon-based gases in our atmosphere,
agricultural and forestry residues, and plastic waste – can
carbon is and will remain an essential building block of
potentially be used sustainably as a valuable source of circular
nature and our material world. Circular carbon treats carbon
carbon. The steel sector has the potential to be one of the
as a renewable resource that can be reused indefinitely.
most efficient users of the limited quantity of circular carbon
available in society.
Today over half of the renewable energy used in Europe
already comes from circular carbon in the form of renewable
Furthermore, the carbon gases that result from iron and
biomass and bio-waste. Increased use of renewable biomass
steelmaking with circular carbon can be captured and converted
globally is also a critical enabler to three of the four IPCC
into recyclable products. At the end of their use, these products
pathways to 1.5ºC in their latest report.10
will themselves become sources of circular carbon, closing the
loop and creating an endless cycle of carbon.
10 IPCC (2018), Summary for Policy Makers
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Low-emissions technology pathways and policy scenarios
Box 5: possible low-emissions technology pathways using different energy sources
All technology pathways to low-emissions steelmaking entail higher
costs and require time, investment and clean energy infrastructure.
Incremental costs
to produce steel*
Commercial
Energy infrastructure
Energy technology
Steel technology
Energy sources
Low-emissions steelmaking technology pathways
(OPEX and CAPEX)
horizon
challenge
challenge
challenge
Iron electrolysis
Power infrastructure
Iron
exists – to be expanded
Electrolysis
e-
electrolysis
EAF Develop iron ore electrolysis
To be determined
20-30 years
to accommodate
ironmaking
from clean electricity
steelmaking needs
Water
electrolysis
Green hydrogen DRI
Clean
Green hydrogen economy
Lowering green
Hydrogen
H
Power
2
H DRI-EAF
2
Develop hydrogen-based DRI
+60-90%
10-20 years
needs to be created –
hydrogen
ironmaking
production from clean electricity
can be done incrementally
production costs
H2
BF-BOF
Smart carbon
Circular carbon and
Develop commercial
Commercial combined
Produce steel with circular carbon
hydrogen economy
bio-coals, bio-cokes
carbon and hydrogen
CO H2
and hydrogen, and manufacture
+20-35%
5-10 years
expansion – can be
and bio-gases for
steelmaking; upside of
Circular
carbon-based products from
Plastic
Fuel
done incrementally
steelmaking
carbon capture and use
Carbon
H
waste gases
2
Chemicals
Fabrics
CCS
Blue hydrogen DRI
Develop large commercial
natural gas-based
Hydrogen
H2
H DRI-EAF
2
Develop hydrogen-based DRI
+35-55%
10-20 years
hydrogen and carbon
ironmaking
production from reformed natural gas
storage projects
CCS
DRI with carbon capture
Develop economy-wide
commercial carbon
Commercial CO
CO H2
DRI-EAF
Use existing technology incorporating
+35-55%
5-10 years
2
transport and storage
capture technologies
carbon capture and storage
Fossil Fuels
CCS
infrastructure
with CCS
Blast furnace with carbon capture
Develop economy-wide
commercial carbon
Commercial CO
CO H
BF-BOF
2
Use existing technology incorporating
+30-50%
5-10 years
2
transport and storage
capture technologies
carbon capture and storage
CCS
infrastructure
A successful transition to low-emissions steelmaking will require policies
that offset higher costs, provide access to sufficient clean energy and
financial support to accelerate technology innovation.
Policy needs
The viability of different low-emissions steel technology
• National and regional policies regarding energy infrastructure
pathways at each steelmaking site is likely to differ by region,
and allocation by sector. These may affect the availability of
depending on three aspects of policy:
green and blue hydrogen, circular carbon (bio-waste, waste
plastic, and agricultural and forestry residues), and large-scale
• Policies to ensure steelmakers compete on a level playing
carbon transport and storage infrastructure.
field. Where carbon policy drives steelmakers to adopt
low-emissions technologies, involving structurally higher
operating costs, mechanisms such as a green border
adjustment enable steel from these producers to compete
fairly with imports from higher emitting steelmakers.
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Box 5: possible low-emissions technology pathways using different energy sources
All technology pathways to low-emissions steelmaking entail higher
costs and require time, investment and clean energy infrastructure.
Incremental costs
to produce steel*
Commercial
Energy infrastructure
Energy technology
Steel technology
Energy sources
Low-emissions steelmaking technology pathways
(OPEX and CAPEX)
horizon
challenge
challenge
challenge
Iron electrolysis
Power infrastructure
exists – to be expanded
Electrolysis
Develop iron ore electrolysis
To be determined
20-30 years
to accommodate
ironmaking
from clean electricity
steelmaking needs
Green hydrogen DRI
Green hydrogen economy
Lowering green
Hydrogen
Develop hydrogen-based DRI
+60-90%
10-20 years
needs to be created –
hydrogen
ironmaking
production from clean electricity
can be done incrementally
production costs
Smart carbon
Circular carbon and
Develop commercial
Commercial combined
Produce steel with circular carbon
hydrogen economy
bio-coals, bio-cokes
carbon and hydrogen
and hydrogen, and manufacture
+20-35%
5-10 years
expansion – can be
and bio-gases for
steelmaking; upside of
carbon-based products from
done incrementally
steelmaking
carbon capture and use
waste gases
Blue hydrogen DRI
Develop large commercial
natural gas-based
Hydrogen
Develop hydrogen-based DRI
+35-55%
10-20 years
hydrogen and carbon
ironmaking
production from reformed natural gas
storage projects
DRI with carbon capture
Develop economy-wide
commercial carbon
Commercial CO
Use existing technology incorporating
+35-55%
5-10 years
2
transport and storage
capture technologies
carbon capture and storage
infrastructure
Blast furnace with carbon capture
Develop economy-wide
commercial carbon
Commercial CO
Use existing technology incorporating
+30-50%
5-10 years
2
transport and storage
capture technologies
carbon capture and storage
infrastructure
Source: ArcelorMittal internal estimates for transition to low-emissions steelmaking in Europe based on current factor prices.
*Compared with average annual net income of steel industry, which between 2010-2017 was 2% of revenues.
• The level of private and public investment support.
In view of these needs, we believe steel companies need to
This will dictate the speed of development of low-emissions
maintain a flexible technology innovation roadmap to adapt to
innovation projects in order to assess their commercial
the various technology development timelines, clean energy
viability; and, where such projects are successful, for the
and policy landscapes of the future. Conversely, policy certainty
roll out of low-emissions technologies across different
from national and regional governments and institutions will be
steel plants.
instrumental in supporting the steel industry to decarbonise at
a pace commensurate with supporting the objectives of the
Paris Agreement.
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Low-emissions technology pathways and policy scenarios
We have developed four policy scenarios to assess the implications of
different levels of policy commitment for the steel industry’s ability to
meet the carbon challenge. We have used this analysis to inform our
policy recommendations presented in chapter 6.
Policy scenarios: driving the transition
STAGNATE
to low-emissions steel
• Lack of access to sufficient and affordable clean energy
A concerted public and private investment effort is essential to
• No mechanism to address high risk that steel production is
accelerate the pace of development and roll out of commercial
made structurally uncompetitive across countries/regions
low-emissions technologies and advance the timeline to make
• Slow development of low-emissions steelmaking technologies
the steel industry ‘technology ready’ to meet the objectives of
• No meaningful reduction in global steel CO emissions as
2
the Paris Agreement.
production shifts to less carbon-regulated jurisdictions
• Insignificant global progress to goals of Paris Agreement
Steel is a global material traded directly across countries and
continents in the form of sheets and bars for steel products,
equipment, buildings and infrastructure. It is also embedded in
WAIT
the imported goods consumers buy, such as cars, appliances, etc.
• Technology makes encouraging progress and is potentially
ready for significant deployment within 10-20 years
Countries and regions that introduce a cost of CO emissions,
2
• But only fragmented access to affordable clean energy
but with neither supportive energy policies nor effective
• No mechanism to address high risk of steel production being
mechanisms to maintain the competitiveness of low-emissions
structurally uncompetitive in affected countries/regions
versus higher-emissions steel, will fail to decarbonise their steel.
• Marginal steel CO reductions globally as production shifts
What is more, it may in fact disadvantage their steel industry
2
to less carbon-regulated jurisdictions
as production will migrate to other countries and regions
• Limited progress towards goals of Paris Agreement
that do not support decarbonisation, thereby exacerbating
the carbon challenge globally (Stagnate scenario).
ACCELERATE regionally
Even in jurisdictions actively providing financial support
• Technology makes encouraging progress and is potentially
to develop and roll out low-emissions technologies, the
ready for significant deployment within 10-20 years
steel industry will need further support. Without effective
• Access to sufficient and affordable clean energy in supportive
mechanisms to offset the structurally higher operating costs
countries/regions
of deploying these technologies, and affordable access to the
• Regions with more active climate legislation ensure
clean energy they need, the steel industry will be unable to
mechanisms are in place to enable steel production to remain
make the necessary shift needed to meet the goals of the
competitive, e.g. green border adjustment
•
Paris Agreement (Wait scenario).
Significant reductions in steel CO in supportive countries/regions
2
• Partial global progress to goals of Paris Agreement
Countries and regions developing supportive energy policies,
and establishing a fair mechanism to offset the structurally
ACCELERATE globally
higher costs of low-emissions steel producers, will succeed
• Technology makes encouraging progress and is potentially
in transitioning to low-emissions steelmaking (Accelerate
ready for significant deployment within 10-20 years
scenarios). They will reap the benefits of a positive steel
• Access to sufficient and affordable clean energy globally
industry that contributes to their economies and to the
• Low-carbon legislation in place in the majority of countries,
carbon challenge. But only if such mechanisms are applied
ideally with a common global framework or mechanism to
globally can this acceleration take place on a global scale and
ensure steel production remains competitive globally
the steel industry become a successful partner in meeting the
• Significant global reductions in steel CO2
objectives of the Paris Agreement.
• Global industry alignment with goals of Paris Agreement
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Box 6: policy scenarios and their effectiveness in driving de-carbonisation of the steel industry
Figure 3
ACCELERATE
HIGH
Globally
echnologies
ACCELERATE
sions t
Regionally
yment of low-emis
WAIT
STAGNATE
e of deplo
Pac
LOW
Level of policy RESPONSE
HIGH
Table 2
Policy challenge
Structurally
Ineffective mechanism
Ineffective mechanism
Mechanisms to maintain
Common global
higher
in place to offset
in place to offset
competitive market by
framework is
operating
structural y higher
structural y higher
offsetting structural y
implemented to
costs of
operating costs of
operating costs of
higher operating costs of
maintain competitive
low-emissions
low-emissions
low-emissions
low-emissions
market to offset
steelmaking
steelmakers versus
steelmakers versus
steelmakers versus
structural y higher
higher-emissions
higher-emissions
higher-emissions
operating costs of
steelmakers
steelmakers
steelmakers and imports
low-emissions
set in some countries
steelmakers versus
and regions, e.g. green
higher-emissions
border adjustment
steelmakers
Clean energy
No concerted policy
No concerted policy
Support for clean
Support for clean
infrastructure
in any market to
in any market to
energy to steelmaking
energy to steelmaking
and allocation
incentivise and al ocate
incentivise and al ocate
industry from clean
industry from clean
by sector
clean energy to steel
clean energy to steel
power, circular carbon
power, circular carbon
sector
sector
and carbon capture and
and carbon capture and
storage infrastructure
storage infrastructure
provided in only some
provided globally
countries and regions
Investment in
Limited public support
Accelerated public
Accelerated public
Accelerated public
low-emissions
for R&D to bring
support for R&D to
support for R&D to
support for R&D to
steelmaking
technologies to
bring technologies to
bring technologies to
bring technologies to
technologies
commercialisation
commercialisation
commercialisation
commercialisation
(development
maturity
maturity; some
maturity; high levels of
maturity; high levels of
and roll out)
investment support for
investment support for
investment support for
rol out of technologies
rol out of technologies
rol out of technologies
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5 ArcelorMittal strategy towards
low-emissions steelmaking
Energy efficiency, increased use of scrap, technology
innovation and policy engagement are the four
components of our climate action strategy.
Over the last 150 years, the steel industry has seen significant
1. Energy efficiency programme
energy efficiency and yield improvements.11 While incremental
Over the last decades, the steel industry has significantly
improvements will continue, far more is needed to meet the
reduced the carbon intensity of steel, by focusing on energy
objectives of the Paris Agreement.
efficiency gains and yield improvements.
Significant emissions reduction requires creative and innovative For example, ArcelorMittal is today a leader in industrial gas-
thinking, which is at the heart of our €250 million low-emissions injection technology. This has enabled us to increasingly replace
steelmaking innovation programme.12
metallurgical coke with alternative sources of carbon such as
ArcelorMittal’s low-emissions strategy has four components:
pulverised coal or natural gas. Some of our most advanced blast
furnaces are now injecting 50% of the total carbon required for
1.
Energy efficiency in our steelmaking operations across
the process using this technology – with the effect of reducing
the globe to help meet our medium-term emissions
the total amount of fossil fuels required. This capability to use
reduction targets.
the blast furnace as a large-scale ‘gasifier’ in industry puts us in
2. Consideration of opportunities for further steel production
a good position for the adoption of low-emissions technologies
using end-of-life scrap based on its availability in the
for steelmaking.
regions where we operate.
Our business segments are now required to prepare CO
2
3. A flexible, integrated innovation programme to develop
reduction plans as part of the annual planning cycle, making
the technologies for steelmaking in a low-emissions
use of a range of existing and innovative approaches.
circular future.
To support them, our global R&D team is continually innovating
4. Policy analysis and engagement to understand and
to deliver energy efficiency and yield improvements. In 2018,
advocate for the policies that will support the transition
we deployed 19 new processes to this end. However, many
to a low-emissions future in the different geographies
plants are approaching the physical limits of energy efficiency,
where we operate.
and a transition to low-emissions technologies is needed to
deliver further substantial emissions reductions.
Each year our Investment Allocation Committee (IAC) allocates
capital to investment projects that improve energy performance.
Proposals to the IAC are required to assess the CO benefit of the
2
project, enabling an assessment with a suitable carbon price to
reflect the local context.
$728m
In 2018, ArcelorMittal made capital allocations totalling
Capex allocated to energy efficiency
$247 million for 26 projects aimed at improving energy
improvements in the last three years
efficiency, bringing the three-year total to $728 million.
11 By 50% in about 75 years, based on DEH data of consumption of reducing agents used in blast furnaces in Germany (including Eastern Germany from 1991).
12 This is the multi-year budget covering our low-carbon development and demonstration programme with partners, aimed at building industrial pilots and
demonstrations and is additional to our annual R&D expenditure.
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2. Further opportunities for secondary
steelmaking
The availability of end-of-life scrap is projected to increase
globally over the coming decades as increasing amounts of
building structures and equipments approach their end of life.
By 2050, there will be sufficient supplies to feed some 50%
of global steel production. As this availability increases in
regions where we operate, we will consider creating additional
opportunities for secondary steelmaking in electric arc furnaces.
ArcelorMittal currently operates 32 electric arc furnaces
across the world, of which 13 are located in Europe. In 2018
we produced 19% of our steel from these furnaces.
Blast furnace facilities and electric arc furnaces
Blast furnaces*
11
22
6
12
Electric arc furnaces
10
13
7 2
NAFTA
Brazil
Europe ACIS
*The 2018 BF footprint presented above is not including the Ilva remedies (Ostrava and Galati). Including these assets the total number of BFs is 58.
link to page 16 link to page 32 link to page 32 link to page 32 link to page 32 link to page 32 link to page 32 link to page 32 link to page 32
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ArcelorMittal strategy towards low-emissions steelmaking
3. Flexible, integrated, circular approach to
Figure 4
innovation
Circular
Carbon
The global challenge posed by the transition to low-emissions
Torero
steelmaking is large and complex, and will require multiple
Carbalyst®
solutions. Our innovation approach is focused on providing
flexibility to adapt to different possible clean energy futures
IGAR
in different regions and countries, whether it is clean power,
Carbon2value
circular carbon, or fossil fuels with CCS, or a combination of
all three.
The strength of our €250 million research and demonstration
programme is its breadth and flexibility. While each of our
Low-emissions
technologies can be stand alone and scaled up individually,
we can also integrate them to deliver significant advantages
steelmaking
for the various low-emissions steelmaking pathways.
Fossil Fuels
Clean
with CCS
Power
The key technologies in this programme are represented
in Figure 4.
Siderwin
In addition, our innovation approach supports three key
H2 Hamburg
underlying principles of a low-emissions circular economy:
• Supporting the advancement of renewable energy by
developing technologies that can make use of intermittent
renewable power from wind and solar (either directly
4. Policy analysis and engagement
or indirectly through hydrogen), thus helping to reduce
We have analysed the energy resources, costs and infrastructure
grid instabilities.
•
needed for each low-emissions technology pathway and
Accelerating the circular economy by developing
assessed the implications of different policy scenarios on the
technologies that enable waste streams to be reused
pace of deployment of these technologies (
see chapter 4).
commercially, turning them into materials and feedstock
This analysis forms the basis for our policy recommendations
for other industries and sectors.
•
to accelerate the transition to low-emissions steelmaking,
Creating industrial symbiosis between the steel, chemicals
which are presented in
chapter 6.
and cement industries through a logistics network to share
To build an understanding of the need for policy support,
and reuse CO as a feedstock for the production of chemicals.
2
ArcelorMittal engages with customers and investors as well as
The logistics network can be expanded further to transport
policymakers and global organisations regarding our outlook for
and store CO , for example in depleted oil fields.
2
low-emissions steelmaking. This includes organisations such as
the We Mean Business coalition, the World Business Council for
Sustainable Development, CDP, the Science-Based Targets
Initiative and the International Energy Association.
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There is no ‘one size fits al ’ solution to move away from
emissions-intensive steelmaking. Our technology portfolio
enables us to pursue the full range of possible technology
pathways, depending on which becomes the most viable
in the countries and regions where we operate.
ArcelorMittal’s low-emissions innovation
Figure 5: From iron ore to iron for primary steelmaking
programme
Today, the reduction of iron ore to iron is predominantly achieved
using high temperature carbon monoxide (CO), sourced from
fossil fuels – coke and pulverised coal – which is also used as an
affordable source of energy.
Iron ore
Science has given us three alternatives to this: deriving CO from
circular forms of carbon, applying the process of electrolysis,
or using high-temperature hydrogen gas.
The latter two pathways require vast amounts of electrical
energy, which would all need to come from clean sources.
High-temperature
Electricity
gas
Such quantities of clean power will not become available to
the steel industry overnight at affordable prices.
To reduce emissions within the timeframe needed, therefore,
ArcelorMittal is exploring opportunities to combine technologies
CO
H
that use more clean power with those that involve circular
2
sources of carbon, alongside carbon capture, carbon utilisation
and carbon storage.
Our portfolio of technologies offers us the ability to respond
to whichever energy sources are made affordable by the policy
frameworks in place. Our key projects are outlined in detail over
the pages that follow.
Carbon monoxide
Hydrogen
gas reduction
gas reduction
Reduction by
electrolysis
Iron
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ArcelorMittal strategy towards low-emissions steelmaking
With its high-tech gasification technology, the modern steel
industry is the ideal sector to advance the circular economy
Circular
Carbon
by reusing bio-waste, plastic waste, and agricultural and
forestry residues.
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
Torero: reducing iron ore with waste carbon
Figure 6: the Torero process
Today, most blast furnaces reduce iron ore using a high-
temperature, synthetic gas derived from coal and coke. This
makes the modern blast furnace with its high-tech gasification
Blast furnace
technology ideal for replacing fossil fuels with ‘circular carbon’
inputs, such as bio-waste, including agricultural and forestry
residues, and even waste plastics.
Biocoal
Our Torero project targets the production of bio-coal from
waste wood to displace the fossil fuel coal that is currently
injected into the blast furnace. We are developing our first
large-scale Torero demonstration plant in Ghent, Belgium.
In this €40 million project (with €12 million funding from
EU Horizon2020) we aim to convert 120,000 tonnes of
waste wood annually into bio-coal. This source of waste wood
Torrefaction
is considered hazardous material if burnt in an incinerator
as harmful gases would be emitted, but in the blast furnace
no such pollutants can be formed.
Future projects would see expansion of sources of circular
carbon to other forms of bio-based and plastic waste.
Waste
biomass
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Waste CO can be reformed into a synthetic gas suitable for
2
reducing iron ore, giving it a second life. Our ultimate goal is
Circular
Carbon
to use clean power and waste plastics for low-emissions
circular carbon steelmaking.
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
IGAR: reforming carbon to reduce iron ore
Figure 7: IGAR process
The IGAR13 project aims to capture waste CO from the blast
2
furnace and convert it into a synthetic gas (syngas) that can
be reinjected into the blast furnace in place of fossil fuels to
Blast furnace
reduce iron ore. Since the amount of coal and coke needed
in steelmaking is reduced, this process helps to reduce
CO emissions.
2
The syngas we need is made up of carbon monoxide (CO) and
hydrogen (H ). To form this, waste CO is heated with natural
2
2
gas (CH ) to very high temperatures using a plasma torch –
4
a process called dry reforming.
In future, we hope to use bio-gas or waste plastics in place of
natural gas, furthering the use of circular carbon. And with the
plasma torch running on clean power, the entire process enables
CO
substantial emissions reductions.
CO+H2
2
The IGAR project has seen a number of phases. Last year, to
overcome the corrosive effects of the high-temperature syngas
involved, our R&D labs in Maizières, France, developed both the
specialist metals and refractories needed.
Today in Dunkirk, France, ArcelorMittal is running a €20 million
project, supported by the French ADEME, to construct a plasma
Plasma torch
torch. To test-use the hot syngas created by the plasma torch,
a pilot project is also running at the same plant.
Electricity
Biogas
Plastics
13 Injection de Gaz Réformé
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ArcelorMittal strategy towards low-emissions steelmaking
The carbon-intensive gas produced in ironmaking is an ideal
feedstock for biotechnology. With our partner Lanzatech we
Circular
Carbon
are working on a family of novel recycled chemicals: Carbalyst®
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
Carbalyst®: capturing carbon gas and recycling
Figure 8: Carbalyst® technology
into chemicals
The waste gases that result from iron and steelmaking are
Blast furnace
composed of the same molecular building blocks – carbon
and hydrogen – used to produce the vast range of chemical
products our society needs. Today most waste gas is
incinerated, resulting in CO emissions.
2
With our partner Lanzatech, supported by the EU Horizon2020
Steelanol project, we are building the first large-scale plant to
capture the waste gas and biologically convert it into bio-ethanol,
the first commercial product of our Carbalyst® family of
recycled carbon chemicals. Thanks to a lifecycle analysis study,
we can predict a CO reduction of up to 87% compared with
2
fossil transport fuels, so this bio-ethanol can be used to support
CO
the decarbonisation of the transport sector as an intermediate
solution during the transition to full electrification. In the future,
we will expand the family of Carbalyst® products to other
biochemicals and biomaterials.
Construction started recently on a €120 million demonstration
facility in Ghent, Belgium. Once completed in 2020, the facility
Plastic
Chemicals
Fuel
Fabrics
will capture around 15% of the available waste gases at the
plant and convert them into 80 million litres of ethanol per year.
This result will be a CO reduction equivalent to 100,000
2
electric vehicles or 600 transatlantic flights per year.
Carbalyst®
Ethanol
process
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We are integrating breakthrough technologies to bring down
the costs of capturing, purifying and liquefying CO from our
Circular
Carbon
2
waste gases. Liquid CO can be made available to other
2
industries for reuse, or transported for storage underground.
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
Carbon2Value: capturing fossil fuel carbon for
Figure 9: fossil fuel carbon capture and storage
storage or reuse
Developing cost-effective technologies to capture and separate
Blast furnace
CO from our waste gases, and liquefy it for subsequent
2
transport and storage or reuse, could be key to the transition
to low-emissions steelmaking. Combining this with a circular
carbon energy input would further reduce CO emissions.
2
A pilot plant to capture CO has been built in Ghent, Belgium,
2
together with Dow Chemicals as part of the Carbon2Value
project supported by INTERREG2Seas.14
Additionally, at Dunkirk, France, a €20 million industrial pilot
to capture CO using only low-temperature waste heat is under
2
construction with our partner IFPen, supported by the French
administration ADEME. This pilot project is aimed at achieving
the cost reductions required to make such processes
commercially viable.
CO2
CO2
CO2
CARBON CAPTURE
CO2
CO2
CO2
Storage
Transportation
14 Interreg2Seas: North of France, Flanders, South of Netherlands and UK
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ArcelorMittal strategy towards low-emissions steelmaking
Abundant and affordable clean power would also enable
low-emissions steelmaking with ‘green hydrogen’. We are
Circular
Carbon
preparing a demonstration project in Hamburg to test this
on a large scale.
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
H Hamburg: reducing iron ore with hydrogen
2
Figure 10: reducing iron ore with hydrogen
Today, in a Direct Reduced Iron (DRI) furnace fed with natural
gas (CH ), approximately 50% of the reaction comes from
4
hydrogen (H ), and the remainder from carbon monoxide.
2
Technologies can be developed to increase the proportion
of hydrogen used up to 100%.
Iron ore
We are planning a new project at our Hamburg site to use
hydrogen on an industrial scale for the direct reduction of iron
ore in the steel production process. Project costs amount to
around €65 million.
Waste gas
processing
The project will allow us to develop an understanding of how
our existing DRI plants could take advantage of green hydrogen
(generated from renewable sources), should this become
available and affordable at some point in the future. While
theoretically the reduction of iron ore with pure hot hydrogen
H2
is understood, a large number of practical roadblocks still exist.
Hydrogen
gas reduction
These can only be studied when the process is running on a large
H
scale, which has until now not been done due to the lack of
2
hydrogen infrastructure.
Green
hydrogen
The process of reducing iron ore with hydrogen will first be
tested using hydrogen generated from gas separation. We aim
to achieve the separation of H with a purity of more than 95%
2
from the waste gas of the existing plant, using a process known
Iron (DRI)
as ‘pressure swing absorption’. In the future, the plant should
also be able to run on green hydrogen when it is available in
sufficient quantities at affordable prices.
The experimental installation at the Hamburg DRI plant will
demonstrate the technology with an annual production of
100,000 tonnes.
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Once affordable clean power is abundantly available, direct
electrolytic iron ore reduction becomes a very attractive route.
Circular
Carbon
With the Siderwin project, we are building an industrial pilot.
Low-emissions
steelmaking
Fossil Fuels
Clean
with CCS
Power
Siderwin: reducing iron ore via electrolysis
Figure 11: the Siderwin process
In principle, iron can be reduced from iron ore (Fe O or Fe O )
2
3
3
4
through direct electrolysis. When iron ore is introduced into an
electrolytic bath (a bath with an electrical current running
through two electrodes), the iron (Fe) will be attracted to one
electrode and the oxygen (O) to the other.
Iron ore
Our R&D laboratories in Maizières, France, have developed
the first electrolytic cell prototype, proving the viability of
iron electrolysis. It also showed that the process can operate
in a highly flexible start/stop mode, ideal for power grids
Electricity
dependent on large amounts of intermittent renewable power.
Moreover, our tests have shown that less power is required
than is needed to make hydrogen from water using electrolysis.
ArcelorMittal is the lead company of the Siderwin project, which
is further developing this technology. Together with 11 partners
and with €7 million funding from EU Horizon2020, a three-
–
+
metre industrial cell is under construction and various types
of iron ore sources (including waste sources) will be tested.
Fe
O2
With sufficient access to affordable clean power, the
development of this process will pave the way to zero-
emissions iron ore reduction.
Electrolytic bath
Iron
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6 Policy recommendations
ArcelorMittal advocates the development and
implementation of carbon regulations and market
mechanisms to enable the rapid deployment of
low-emissions steelmaking that will deliver the
global objectives of the Paris Agreement.
Global recommendations
Box 7: ResponsibleSteel™
1. Global level playing field. A global framework to create
ArcelorMittal has taken a leading role in forming
a level playing field is needed to avoid the risk of carbon leakage,
ResponsibleSteel™, the steel industry’s first multistakeholder
for example, through green border adjustments. This is to
global certification initiative. ResponsibleSteel™ aims to give
ensure that steelmakers bearing the structurally higher
businesses and consumers confidence that steel certified
operating capital costs of low-emissions technology can
under this standard has been sourced and produced
compete with imports from higher-emissions steelmakers.
responsibly at all levels of the supply chain: from mining to
2. Access to abundant and affordable clean energy. Policies
production processes, to final stage sales and distribution.
giving the steel industry access to abundant and affordable
The certification standard includes requirements on carbon
renewable electricity will be key to scaling up the Clean Power
alongside other air emissions, water responsibility,
pathway. For acceleration of the circular carbon pathway, the
biodiversity, human rights, labour laws, local communities,
steel industry requires priority access to biomass and waste.
business integrity and supply chain management.
3. Facilitating necessary energy infrastructure. In addition to
The carbon standards within ResponsibleSteel™ are
abundant renewable electricity, policies to support investments
undergoing consultation in 2019 and are expected to be
in hydrogen infrastructure will be needed to advance large-scale
in line with the Paris Agreement. So whilst this initiative
hydrogen-based processes. Similarly, for the Fossil Fuels with
will not compensate steelmakers for the structurally higher
CCS pathway, enabling policies are also important to accelerate
costs of low-emissions steelmaking, it could play an
the development of carbon transport and storage infrastructure
important role in driving the commitment of steel
and services.
companies to achieving the Paris objectives.
4. Access to sustainable finance for low-emissions
steelmaking. The scale of the challenge requires an acceleration
of technology development and roll out. Breakthrough
steelmaking technologies need to be identified as a key priority
area for public funding.
5. Accelerate transition to a circular economy. Materials
policy should divert waste streams from landfill and incineration.
It should focus on driving recycling and reuse of all waste
streams and incentivise the use of waste streams as inputs in
manufacturing processes. It should reward products for their
reusability and recyclability.
Given that our most substantial climate-related risks are located
in the EU, we present specific policy recommendations for this
region in
box 8.
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Box 8: long-term EU climate policy recommendations for steel
To reduce the risk of carbon leakage, the EU Emissions Trading
first step. The best way to do this in the framework of the EU
Scheme (ETS) includes a system of free allocation of emissions ETS is to implement a green border adjustment, where steel
allowances. The amount of allowances allocated to each facility importers pay for the embedded CO emissions of imported
2
is based on a benchmark, which should mean that the top 10% steel at the same rate as European manufacturers. This would
best performing plants are not faced with additional carbon
safeguard the competitiveness of the European steel industry.
costs. However, the benchmark currently determined for
We are engaging with European governments on the
integrated steel plants means that even the best performing
implementation of a green border adjustment, a position
plant in the world must purchase emissions allowances.
also supported by the European Steel Association (Eurofer).
In Phase 4 of the EU ETS, we could face an increase in marginal 2. Access to abundant and affordable clean energy.
production costs by around €50 per tonne of steel15 with €5
This is currently not available nor economically viable in
billion in potential cumulative costs as a result (
see chapter 8). Europe. Improvements are therefore needed in the EU state
aid rules for energy and environment to enable the roll out
At the same time, steel is also imported into Europe, often
of low-emissions steelmaking.
from countries without a comparable carbon cost. This means
that EU producers absorbing the structurally higher structural 3. Access to sustainable finance for low-emissions
costs of breakthrough technologies are competing against
steelmaking. Some of our current R&D projects are funded
more carbon-intensive manufacturers with lower operating
by EU Horizon 2020. Accelerating and rolling out low-emissions
costs. A recent study estimated that about a quarter of global steelmaking will need further public funding through, for
CO emissions are embedded in products that are traded
example, the EU ETS Innovation Fund. Definitions of projects
2
across national boundaries, a substantial share of which
eligible under the draft EU Sustainable Finance legislation
contain steel.16
should consider their contributions to the low-carbon circular
economy. In particular, the development of smart circular
Without a green border adjustment, the lowest-cost approach carbon loops should be incentivised.
to reduce GHG emissions within the EU ETS is to import steel
from outside the EU (carbon leakage).
4. Update the benchmark methodology for free allocation
in Phase 4 of the EU ETS to make it technically feasible.
In addition to the global policy recommendations, therefore,
the following are needed in the European context:
5. Accelerate transition to a circular economy. EU climate
and materials policy should be integrated, taking a lifecycle
1. Green border adjustment to ensure level playing field.
perspective to ensure that materials are used in as circular
To incentivise long-term investments in carbon efficiency and way as possible.
low-emissions technologies, a level playing field is an essential
15 Assuming an EU Emissions Al owance price of €25/t CO and a carbon intensity of about 2 tonnes of CO /t primary steel.
2
2
16 KGM, GEI and ClimateWorks Foundation (2018), The Carbon Loophole in Climate Policy.
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7 Carbon performance and targets
ArcelorMittal is making more primary steel, but emissions intensity
remains constant.
Carbon intensity improvements
The overall average carbon footprint intensity of all our
By comparison, the global average carbon footprint intensity
steelmaking routes was 2.12 tCO per tonne of crude steel
is 1.83 tCO per tonne of crude steel.19 ArcelorMittal’s higher
2
2
in 2018.17 As shown in figure 14, this has remained relatively
average intensity is due to our higher use of the emissions-
stable since 2007 (although when looking at the sites we own
intensive primary steelmaking route: in 2018, we used this
today that we operated in 2007, there is a 6% improvement
route for 78% of our steelmaking, compared to a global average
over the same period). During this period, the share of primary
of about 72%.20
steelmaking in our production increased from 73% to 78%
as we responded to changes in structural market demand.18
Figure 13: carbon emissions and our changing portfolio
Primary steelmaking using coke and coal to reduce iron ore is
more carbon-intensive than secondary steelmaking using scrap
Steel Production
Average CO intensity
2
powered with electricity. The increase in the primary:secondary
(million tonnes of crude steel)
(tCO /tonne of crude steel)
2
production ratio would, other things being equal, lead to an
120
2.5
increase in the average carbon intensity of our steel. However,
as shown in figure 14, this is not the case, and our carbon
100
intensity has remained relatively constant. During this period,
we have seen improvements in energy and yield efficiencies in
80
our primary steelmaking plants, and a reduction in the carbon
intensity of the electricity grid used in our EAF plants. These
two factors are effectively negated by the increased proportion
60
2.0
of primary steelmaking, leaving the overall average carbon
intensity of our steel in 2018 at a similar level to 2007.
40
20
0
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Average CO intensity
BF-BOF
DRI-EAF
EAF
2
17 This carbon intensity covers all plants which were in our operational control in the reporting year. Using worldsteel methodology, data covers scope 1 and
scope 2 CO emissions, as well as those scope 3 emissions covering purchased pre-processed materials or intermediate products. Comparison is thus of CO
2
2
emitted for each tonne of steel made within a uniform boundary, and may relate to a broader perimeter than is represented in other steel company data.
18 The financial crisis in 2007/8 led to a protracted decline in demand for steel, particularly from the construction industry in developed countries. In response,
we gradual y reduced our steel production from EAFs in Europe and North America, which serve these markets. We have also seen a relative rise in the
demand for flat products over this time, which are mainly made from the primary BF-BOF route.
19 World Steel Association,
Sustainable Steel: Indicators 2018 and industry initiatives. 20 World Steel Association, World Steel in Figures 2018.
link to page 22
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Our carbon target
Our total CO footprint across our steelmaking sites was
ArcelorMittal’s current target is to reduce our average carbon
2
194 million tonnes of CO in 2018. ArcelorMittal also has
footprint intensity by 8% by 2020 against a 2007 baseline.
2
mining activities which had a carbon footprint of nearly
This target relates to those sites we operate today that we
9 million tonnes of CO equivalent in 2018.
owned back in 2007, and therefore excludes acquisitions
2
and divestments.
Our pursuit of this target since 2007 has focused on efficiency
and process improvements, many of which have been capital-
Figure 14: CO emissions from steelmaking 2018
intensive (
see chapter 5). By the end of 2018, we had achieved
2
(million tonnes)
a 6% reduction since 2007.
Towards a new carbon target
3
2
We are now focusing on building a roadmap which will underpin
a new 2030 carbon reduction target for our steelmaking
Total
operations. This will incorporate both the potential for further
194.12
technical efficiencies across our portfolio and a limited
deployment of breakthrough technologies from our
Scope 1: 167.35
innovation programme.
Scope 2: 12.12
1
Scope 3: 14.65
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Carbon performance and targets
ArcelorMittal’s underlying carbon efficiency is improving.
Carbon efficiency
Figure 15: carbon efficiency improvement per tonne
hot rolled coil (2007=100)
Steelmaking is dependent on a number of external factors
influencing the carbon footprint intensity of steel. In order
Carbon efficiency
105 100=2007 level
to understand the underlying carbon performance of our
sites, ArcelorMittal created an internal metric in 2007.21
This normalises the carbon inputs and outputs of each process
100
to understand the performance gaps between our different
sites. The sheer number of sites in our portfolio enables us to
use this metric to benchmark the carbon efficiency of each one.
-9%
95
This process standardises the major external factors that
influence carbon emissions such as raw material quality, scrap
and slag reuse, and the emissions intensity of national electricity
90
grids. These factors are mainly related to market forces and
government policies, which we have limited ability to change
while remaining competitive in the global steel market.
85
In the absence of these factors, our carbon efficiency metric
allows us to monitor the performance of our sites in relation
to those factors which we do directly control, such as the way
80
our staff manage and reuse energy and carbon onsite, and the
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
technologies we deploy.
The metric shows a 9% improvement in the carbon efficiency
of our sites since 2007, as shown in figure 16. This is mainly
due to our continued investment in process and efficiency
improvements. It is notably greater than the progress we have
made in our overall average carbon footprint intensity, which
is influenced by the external factors described above.
21 NB This is a different metric to that used for our carbon intensity target.
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Summary of key metrics
Metric
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Steel production
113.9
102.3
73.1
92.5
92.2
88.6
90.9
93.4
92.7
90.4
92.9
91.5
(Mt crude steel)
BF-BOF / DRI-EAF /
77:8:15
77:8:15
79:7:15
78:7:15
79:8:14
79:8:13
79:8:13
80:8:12
81:7:11
85:6:9
84:7:9
83:7:10
scrap-EAF ratio
Total CO emissions
244
227
164
201
194
189
195
196
198
193
196
194
2
(MtCO ) – steel only22,23
2
Scope 1
203
189
135
167
163
159
162
167
168
167
170
167
Scope 2
24
23
18
19
18
17
18
14
14
12
13
12
Scope 3
17
15
11
15
13
13
16
14
15
14
13
15
Avoided CO emissions
11
10
7
8
9
9
10
10
10
10
11
11
2
from slag used in cement
(MtCO )
2
Avoided CO emissions
53
44
33
41
40
38
40
40
38
35
38
37
2
from use of scrap steel
(MtCO )
2
Average CO intensity
2.14
2.22
2.25
2.18
2.10
2.14
2.14
2.10
2.14
2.14
2.12
2.12
2
(kgCO / t crude steel)24
2
Average BF-BOF CO
2.44
2.54
2.57
2.48
2.38
2.40
2.41
2.35
2.37
2.33
2.31
2.33
2
intensity (kgCO / t
2
crude steel)
Average scrap-EAF CO
0.74
0.67
0.65
0.66
0.67
0.66
0.70
0.63
0.61
0.53
0.60
0.66
2
intensity (kgCO / t
2
crude steel)
Change in crude steel
0.0%
3.3%
2.6%
0.3%
-4.3%
-4.1%
-3.3%
-5.8%
-4.1%
-5.2%
-6.2%
-5.6%
carbon intensity since
2007 (target – 8%
by 2020)
% sites below
13%
19%
22%
28%
31%
33%
30%
38%
38%
42%
50%
44%
ArcelorMittal carbon
efficiency benchmark
Approvals for energy
–
–
–
–
–
–
–
180
11
108
373
247
efficiency capital
investment projects
(mil ion USD)25
22 Using worldsteel methodology, which ensures that CO emissions for each tonne of steel are measured for the same set of steelmaking processes, whether or
2
not they are owned by the reporting company.
23 Our mining footprint was under 9 mil ion tonnes CO equivalent in 2018.
2
24 The boundary for this metric covers all of our sites; it is different to the boundary for our carbon reduction target, which only includes sites we have owned
since 2007.
25 Before 2014, reporting on capex approvals was not broken down by type.
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8 Governance and risk
Board of Directors
Chaired by CEO and Chairman Lakshmi Mittal.
The Board and Chairman have overall responsibility for the
governance and strategic direction of ArcelorMittal, which
includes taking into account the effects of climate change.
The Board has two
committees with further oversight and
responsibilities on climate-related issues. Risks are also
considered by boards of subsidiaries worldwide.
Appointments, Remuneration, Corporate
Audit & Risk Committee
Governance and Sustainability (ARCGS)
Committee
Chaired by non-executive independent director
Chaired by lead independent director
Karyn Ovelmen.
Bruno Lafont.
The Audit & Risk Committee ensures that
the interests of the company’s shareholders
The ARCGS oversees the implications of
are properly protected in relation to risk
sustainability issues under five sustainability
management, internal control and financial
pillars, of which one is climate change. The chair
reporting. It oversees both the identification
of the ARCGS also liaises closely with the chair
of risks to which the ArcelorMittal group is
of the Audit & Risk Committee.
exposed, via regular senior management reports,
The Committee considers the implications of
and the management response to these risks.
climate change for the business and oversees the
company’s strategic planning in response to the
risks and opportunities that arise. It receives
regular reports from senior management, led by
executive officer Brian Aranha, on stakeholder
expectations, the company’s low-emissions
technology strategy, climate-related policy
engagement and carbon performance.
Risk identification and reporting
ArcelorMittal identifies, assesses and manages risks – including
The company uses a risk management framework based on
climate-related risks – on an ongoing basis. The group level
a blend of a COSO, ISO 31000 and an in-house model. Sites
strategy, R&D and sustainable development functions, and
assess risks by assigning them a probability of occurrence and
segment level experts where appropriate, assess social,
a potential financial impact and/or non-financial consequence
environmental, regulatory, stakeholder and technological trends
such as environmental harm. The corporate risk officer works
on an ongoing basis. In the medium to long term, climate change with the environment team to track and strengthen site-level
poses a number of risks to the business, as identified on pages
understanding of environmental risks. The corporate risk officer
34-35. Key risks are analysed by building models and developing uses Monte Carlo simulations to conduct a stress-testing exercise
scenarios to understand potential financial impacts, such as our
for the consolidated top ten short-term risks above a $50 million
exposure to the EU ETS in Phase 4.
materiality threshold. This exercise quantifies the financial impacts
for each top risk to an appropriate confidence level, and the
Short-term risks within a 12-month timeframe are identified
outcome is shared with the Audit & Risk Committee.
through a bottom-up process by site management teams.
Business segments consolidate the identified risks and report
the top risks to the CEO office quarterly.
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Group executive management
The CEO office (chief executive officer, Mr. Lakshmi N. Mittal, committee. Responses are determined by each business
and president and chief financial officer, Mr. Aditya Mittal)
segment, on the basis of the markets they serve and
works closely with relevant e
xecutive officers and members national or regional regulatory trends.
of the senior management on key strategic issues.
Business segment CEOs report quarterly to the CEO office
Executive officer Brian Aranha oversees the Group’s strategy
on climate change. Europe Flat Products currently faces the
on climate change and emissions reporting, as well as relevant most significant climate-related regulatory risk due to
corporate functions covering strategy, technology, R&D,
its exposure to the EU ETS. Executive vice-president and
communications and corporate responsibility.
CEO ArcelorMittal Europe Flat Products, Geert Van Poelvoorde
reports on the strategy and performance of this business
Climate-related risks and group-level strategy are
segment.
discussed regularly at the group-wide management
Investment Allocations
Climate & Environment
Global Breakthrough
Government Affairs
Committee
Working Group
Technology Council
Council
(GBTC)
Chaired by executive
Chaired by executive
Chaired by Carl de Mare,
Chaired by Frank Schulz,
officer Brian Aranha.
officer Brian Aranha.
VP, technology strategy.
VP government affairs.
This committee also
The group is responsible for
The GBTC consists of
This group is responsible
includes VP technology
informing and shaping the
regional/project based
for aligning local climate
strategy and VP head of
company’s climate change
R&D officers. GBTC
change policy strategies
strategy. This committee
strategy. Members of
coordinates progress on
with the overall Group
makes capex decisions,
the group include VP
the low-emissions
strategy. This ensures
which includes investment
government affairs, VP
technology programme.
consistent engagement
to improve environmental
corporate communications
activities on climate-
performance, energy and
& CR; VP head of strategy;
related issues across
carbon efficiencies.
VP technology strategy;
the Group.
GM, head of SD.
This group links to the
GBTC via VP technology
strategy.
Risk management and strategic planning
Climate-related trends and risks identified by management
Central to our approach to mitigating our key climate-related
are used to inform the company’s strategic outlook, led by
risk – policy risk – is our adoption of a low-emissions technology
executive officer Brian Aranha. This is discussed on a regular
strategy. Integral to this is our work to engage policymakers
basis by the Group management committee.
on supportive frameworks to enable significant emissions
reductions to be viable, as outlined in this report. At the same
To develop our response to our longer-term climate-related
time, all our business segments are required to prepare CO
risks and opportunities, we assess long-term market trends
2
reduction plans as part of the annual planning cycle.
such as scrap metal availability, develop alternative low-
emissions technologies, undertake cost analysis of these
This report, and the assessment of the resilience of our business
technologies, engage continuously with key stakeholders,
to the transition and physical risks described in this report, has
and analyse the implications of different levels of policy
been discussed and approved by executive officer Brian Aranha;
support through the scenario analysis outlined in this report.
president, group CFO and CEO ArcelorMittal Europe Mr. Aditya
Mittal; lead independent director and ARCGS committee chair
Bruno Lafont; and chairman and CEO Mr. Lakshmi N. Mittal.
link to page 16 link to page 32 link to page 16 link to page 22 link to page 22 link to page 22
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Governance and risk
Managing climate-related risks
At ArcelorMittal, we review our risk universe regularly, including specific climate-related risks. In summary, we have identified and
are managing the following top climate-related risks:
TRANSITION RISKS Type & status
Response
Policy &
Our most substantial climate-related policy risk is the EU ETS, which
We are developing a range of
Regulation
applies to all our European plants, making up 44% of our total capacity.
low-emission technologies,
The risk concerns our primary steelmaking plants which are exposed to
and many of these to
this regulation and yet unprotected against competition from imported
demonstration stage.
steel. We have evaluated this risk against a carbon price of €15 per
However, significant long-
tonne of CO , and the cumulative risk exposure26 for our European
term mitigation requires
2
business over 2021 to 2030 stands at more than €3 bil ion, rising
supportive policies to ensure
to €5 bil ion under a carbon price of €25 per tonne of CO .
the roll out of our low-
2
We are also tracking carbon market policy developments in South
emissions technologies is
Africa, Mexico, Brazil, Kazakhstan and Canada, where a further 30%
viable. We have analysed the
of our production capacity resides. We consider that the financial risks
implications of different policy
arising from these are less immediate. Furthermore, we are also closely
and technology scenarios
monitoring policy developments in the United States, which has shifted
(see chapter 4) and this has
from federal climate policy to more decentralised policies at the state
informed our policy positions
and local levels.
outlined in
chapter 6.
In the medium term, we are
developing an emissions
reduction roadmap to support
a new 2030 carbon target.
Reputation
Our stakeholders’ views on our response to the climate chal enge affect
We respond to CDP annual y.
the ratings we receive from investors. In the context of the transition
We also engage with
to a low-emissions economy, our social licence to operate is defined
stakeholders on climate risk
by several key factors including: our transparency on carbon emissions,
issues and we hope that this
our ability to communicate on a complex subject, and our ability to
Climate Action Report helps
make a credible commitment to meeting the objectives of the
to build further understanding
Paris Agreement.
of our climate-related
commitments and current
constraints.
Technology
As the world acts to mitigate GHG emissions, investments in
See chapter 4 on low-
technological innovations such as Carbalyst® and Torero are vital to our
emissions technology
long-term resilience and competitiveness. The risk of these technologies pathways and policy scenarios.
not becoming viable for us in the medium to long term is dependent on
See chapter 5 on
the development of the technologies, the availability of investment to
ArcelorMittal’s low-emissions
implement them, access to sufficient renewable energy to support
innovation programme.
them, and policies that promote these conditions. Novel technologies
require a long timeline to be scaled up. The risk is increased by the slow
and uncertain development of policies needed to create sufficient
incentives to exploit these opportunities. A key problem is that current
policies are based on a linear economic model; by contrast, the novel
technologies we are already advancing adopt a circular approach to
reusing resources and so both energy and materials policies need to
be integrated.
26 Non discounted with current technologies
link to page 7
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TRANSITION RISKS Type & status
Response
Market
We have faced the risk of substitution from competing materials
We continue to grow
displacing steel in particular applications. We have seen this from
opportunities in all these
aluminium and cement due to an excessive focus on emissions from
markets, for example via our
products in their use phase only (where the lightest weight wins)
S-in motion® and Steligence
rather than on a whole lifecycle basis (cradle to grave). However,
programmes
(see page 5).
as customers deepen their understanding of embedded and lifecycle
emissions of the materials, steel compares favourably, and so we see
this risk diminishing.
With the switch to electric vehicles, we see opportunities for
high-strength steels for battery protection and electrical steels.
We also project that the move to wind and solar power generation
wil require more steel per unit of electricity generated compared
to conventional technologies.
PHYSICAL RISKS Type & status
Response
Acute
Adverse weather events, such as extreme low temperatures in North
Our risk management process
physical risks
America, very high winds in Europe and flooding in Spain have on
enables us to build resilience at
occasion hampered our supply and distribution routes. Our Calvert JV
our plants and in supply chains
plant is in an area prone to hurricanes and tornadoes, and wildfires are
where extreme events already
a risk to our sites in Kazakhstan and South Africa. With 3 to 4°C of
occur; this may need further
warming, hurricanes are projected to increase in intensity – along with
development where extreme
associated increases in heavy precipitation – but not in frequency.
events are currently rare,
but may be more frequent
or intense in the future.
Chronic
Water is crucial to our steelmaking processes and where plants are in
Where these risks exist, such
physical risks
areas of water stress, this is even more important. Some facilities are
as in South Africa and Brazil,
at risk of being affected by long periods of drought conditions.
we have developed local
resource management plans
to ensure that operational
water requirements can be
met. We are ful y engaged with
local stakeholders on this issue.
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9 Alignment with TCFD recommendations
Further information
TCFD Recommended Disclosures
Chapter
(where applicable)
Governance
A) Describe the board’s oversight of climate-related risks and
8
opportunities.
B) Describe management’s role in assessing and managing risks
8
2018 CDP Climate Change
and opportunities.
response C1.2
Strategy
A) Describe the climate-related risks and opportunities the
2, 3, 8
2018 CDP Climate Change
organisation has identified over the short, medium, and
response C2.1, C2.2c, C2.3a,
long term.
C2.4a
B) Describe the impact of climate-related risks and
5, 8
P13 – 15 Form 20f Item 3
opportunities on the organisation’s businesses, strategy,
Section D. Risk Factors27
and financial planning.
2018 CDP response C2.3,
C2.5, C2.6
C) Describe the resilience of the organisation’s strategy,
4
2018 CDP response C3.1
taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Risk Management
A) Describe the organisation’s processes for identifying and
8
2018 CDP response C2.2b
assessing climate-related risks.
B) Describe the organisation’s processes for managing
8
2018 CDP response C2.2d
climate-related risks.
C) Describe how processes for identifying, assessing, and
8
managing climate-related risks are integrated into the
organisation’s overall risk management.
Metrics and Targets
A) Disclose the metrics used by the organisation to assess
7
2018 CDP response C4.1b
climate-related risks and opportunities in line with its
strategy and risk management process.
B) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
7
2018 CDP response C5.1,
greenhouse gas (GHG) emissions, and the related risks.
C6.1, C6.3, C6.5
C) Describe the targets used by the organisation to manage
7
2018 CDP response C4.1b
climate-related risks and opportunities and performance
against targets.
27
https://corporate.arcelormittal.com/~/media/Files/A/ArcelorMittal/investors/20-f/2018/form-20f-2018.pdf
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10 Annex 1: The steelmaking process
Steel is a material that consists almost completely of iron, with
small shares of carbon and even smaller shares of other elements
such as manganese and nickel. Today, steel is primarily made using
two different technologies: the integrated steel plant and the
electric arc furnace (EAF).
We use an integrated steel plant to make primary steel
(i.e. virgin steel) mostly from iron ore, which is extracted
from mines, and a small share of scrap steel. As iron ore –
a compound made up of iron and oxygen – is found in nature,
it is chemically a very stable compound. Iron is not alone in this
respect – most metals from aluminium to uranium are found in
nature bound to oxygen. In primary steelmaking, we use energy
and carbon to separate iron from oxygen in a blast furnace, and
in subsequent steps, we adjust the product chemically and
physically into the final desired form with characteristics such
as strength, flexibility and corrosion tailored to the needs of the
end user.
In contrast, in an electric arc furnace (EAF), we use scrap steel
and/or scrap substitutes such as direct reduced iron (DRI).
We melt these materials using electrical energy, thus entirely
replacing all of the steps up to and including the energy-
intensive blast furnace. Similar to the integrated steel plant
route, we cast, and then shape or roll the liquid steel produced
from the EAF into its final form.
These two steelmaking routes are outlined in more detail on the
following two pages.
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The steelmaking process
Figure 16: steelmaking at an integrated steel plant (using iron ore)
CO
CO
Main inputs
2
Main outputs
Blast
furnace
Coke
1 tonne steel
Coke oven
Coal
Pulverised coal
CO
CO
2
2.3 tonne CO *
2
Sinter
Oxygen
Sintering
furnace
Iron ore
plant
Waste gases
Hot metal
Slag
* Source:
Scrap
Energy Transitions
Commission
Integrated steel plant
Preparation of materials for the
Ironmaking in the blast furnace
Steelmaking in a basic oxygen furnace
blast furnace
In the blast furnace, we load sinter, coke
To make steel, we need to adjust the
The first steps in the primary steelmaking and lime into the top, and we inject hot air chemical composition of the liquid hot
route are to prepare the materials used
from the bottom. We also inject pulverized metal in a basic oxygen furnace (BOF).
in the blast furnace – coke and sinter.
coal into the blast furnace to reduce the
We charge the furnace with 15-25%
Coke is a material high in carbon made
amount of coke used, which reduces costs scrap steel and 75-85% liquid hot metal.
by heating metallurgical coal at high
as well as CO emissions. The hot air reacts We also inject oxygen into the furnace,
2
temperatures in a coke oven in the
with the coke and coal to form carbon
which reacts with carbon and other
absence of oxygen. The process of
monoxide (CO), which is the reducing
impurities in the liquid hot metal. In the
making coke also results in the production agent that separates the elements of iron
BOF, the process converts the impurities
of a hydrogen-rich synthetic gas (coke
ore: iron and oxygen. When CO extracts
into slag, which floats on top of the liquid
oven gas) which we can use as an energy oxygen from iron ore, CO is formed.
steel, and into waste gases (or BOF gas),
2
source to heat coke ovens. Alternatively,
Carbon is therefore essential in the
which mostly consists of CO.
we can use blast furnace gas to heat the
integrated steel plant and CO is an
2
We tap the liquid purified steel into a steel
coke oven. Combustion of these gases
inevitable by-product of the chemical
ladle, where we can further adjust the
in the coke oven creates CO .
reactions. The waste gases from the
2
steel chemistry. We then transport it to
process contain equal amounts of CO and
Sinter is an agglomeration which is
a continuous caster for casting and we
CO , as well as hydrogen and nitrogen.
produced from a mixture of all kinds of
2
further shape or roll the steel into its
iron ores, coal and coke particles. We
Heat is also generated in the blast
final form. Various finishing or coating
ignite the coal/coke particles in the
furnace, which is essential to melting the
processes may follow this casting and
mixture using coke oven gas, blast
reduced iron ore to form liquid hot metal
rolling. The steel slag is tapped into
furnace gas or natural gas. This results in
(molten iron). The impurities react with
another vessel to be cooled down and
sinter cake, which we later crush and cool. lime to produce slag, which floats on top
prepared for external use.
CO is a by-product of the sinter plant.
of the liquid hot metal and contains
2
Sinter accounts for about 70 to 90% of
impurities in the iron ore, coke and coal
the metals loaded into the blast furnace;
ash. Slag has a chemical composition
the remaining part of the burden consists similar to clinker, which is used to make
of pellets and lump ore.
cement. This means that slag can be used
as a substitute for clinker.
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Figure 17: EAF steelmaking (using scrap or DRI)
Main inputs
Main outputs
Main inputs
Main outputs
CO
CO
2
2
Electric arc furnace
Electric arc furnace
1 tonne steel
Iron ore
1 tonne steel
0.4 tonne CO *
1.5 tonne CO *
2
2
Direct reduced
Scrap
iron
Slag
Slag
* Source:
Electricity
Natural gas
Energy Transitions
Commission
Electric arc furnace
Most electric arc furnaces (EAFs)
The quality of secondary steel produced
We can also charge EAFs with DRI. DRI is
are charged with scrap steel to make
by the EAF route is primarily limited by
made by reducing iron ore (i.e. separating
secondary or recycled steel. As the
the quality of the metallic raw materials
iron and oxygen) using natural gas;
process is mainly one of melting scrap
used in steelmaking, which in turn is
by-products of the process include CO .
2
steel using electricity and not separating
affected by the availability of high-quality Steel made using this route can reach the
iron from oxygen, carbon’s role is not as
scrap. As described in chapter 3, we
qualities obtained by an integrated steel
dominant as it is in the integrated steel
currently do not have enough scrap to
plant, since DRI has fewer impurities than
plant. In an EAF, direct CO emissions are
meet demand for steel. This means that
scrap steel. In 2017, DRI accounted for
2
mainly associated with the consumption
today, it is most efficient to make lower
about 7% of primary iron production, with
of the carbon electrodes, and indirect
grades of steel in an EAF, which have
the remainder of iron produced via the
CO emissions are produced from the
fewer constraints on impurities.
blast furnace route.28
2
carbon intensity of the electricity grid.
As with the integrated route, slag is also
a by-product of EAF steelmaking.
28 World Steel Association (2018), Steel Statistical Yearbook 2018.
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11 Annex 2: Glossary
Basic oxygen steelmaking
The process whereby hot metal and steel scrap are charged into a Basic oxygen furnace (BOF).
High purity oxygen is then blown into the metal bath, combining with carbon and other elements
to reduce the impurities in the molten charge and convert it into steel.
Blast furnace (BF)
A large cylindrical structure into which iron ore is combined with coke and limestone to produce
molten iron.
Circular carbon
Circular carbon energy sources include bio-based and plastic wastes from municipal and industrial
sources and agricultural and forestry residues. The term may also refer to the reuse of carbon in
circular flows throughout the economy, for example, in the production of plastics made from
waste carbon.
Coal
The primary fuel used by integrated iron and steel producers.
Coke
A form of carbonised coal burned in blast furnaces to reduce sinter, iron ore pel ets or other
iron-bearing materials to molten iron.
Coke ovens
Ovens where coke is produced. Coal is usual y dropped into the ovens through openings in the
roof, and heated by gas burning in flues in the walls between ovens within the coke oven
battery. After heating for about 18 hours, the end doors are removed and a ram pushes the
coke into a quenching car for cooling before delivery to the blast furnace.
Crude steel
Steel in the first solid state after melting, suitable for further processing or for sale. Synonymous
with raw steel.
Direct reduction
A family of processes for making iron from ore without exceeding the melting temperature.
No blast furnace is needed.
Electric arc furnace (EAF)
A furnace used to melt steel scrap or direct reduced iron.
Iron ore
The primary raw material in the manufacture of steel made up of iron and oxygen.
Limestone
Used by the steel industry to remove impurities from the iron made in blast furnaces.
Magnesium-containing limestone, called dolomite, is also sometimes used in the purifying process.
Pellets
An enriched form of iron ore shaped into small balls.
Pig iron
High carbon iron made by the reduction of iron ore in the blast furnace.
Sintering
A process which combines ores too fine for efficient blast furnace use with flux stone.
The mixture is heated to form lumps, which al ow better draught in the blast furnace.
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