Steelmaking: Greater Efficiencies, Reduced Emissions
I thought I’d let you know that I’m just finishing up a writing project for a client, concerning one of the most exciting set of technologies I’ve come across in a long while. When implemented, this will drive incredible improvements to both the energy efficiency and the emissions profile associated with the manufacture of steel, and give rise to an entirely new industry: carbon-neutral synthetic fuels.
A quick summary goes like this:
China produces approximately 10 times more steel than the U.S. annually, due to the heavy Chinese subsidies that make it impossible for others to compete on price. However, if the cost of iron feedstock could be lowered, market forces (rather than tariffs and trade wars) would immediately shift, restoring the U.S. to its former prominence in the industry.
More than 90% of raw iron feedstock is currently produced via the blast furnace process, which is the most energy intensive step in steelmaking, and releases large amounts of carbon dioxide as well as toxic pollutants. The technology will replace blast furnaces, greatly reducing both costs and emissions, by:
• Generating hydrogen more efficiently than ever before, using patented “Nested-Flow Technology,” developed at Sandia National Labs. This improves energy efficiency for both steam methane reforming and water-gas shift reaction, resulting in an increase of the overall efficiency of hydrogen production from 63%-73% to ~90%.
• Using that hydrogen to replace coke and carbon oxides in the production of iron, in a process called Flash Iron Technology (FIT). Under development at the University of Utah, FIT is an innovative high-intensity ironmaking process that directly reduces fine iron ore concentrates, such as magnetite concentrate from taconite, to primary iron. This process has been demonstrated in a small pilot plant, and reduces the total energy consumed by 55%.
All this gets even more interesting when you realize that one of the products in both the reformation of methane and the water-gas shift reaction is CO2, which becomes available at extremely high concentrations. This, of course calls to mind the projects that 2GreenEnergy has performed over the years to promote CO2–>fuels, specifically WindFuels.
As shown on the WindFuels site, CO2 and H2 are combined in a series of endothermic reactions using off-peak power to create gasoline, diesel and jet fuel. Until this concept came along, Windfuels contemplated using the CO2 from coal and cement plants, which are typically under 40% concentrations; here we are talking about something north of 90%.
Amazing stuff. More later.
As usual, anyone who wishes to get involved in any manner should feel free to contact me.
Hi Craig,
It’s good to see you once again taking an interest in emission reduction technology.
You are quite correct, Steel production represents about 7% of the total man made climate change emissions, which when added to emissions from the rest of the metal refining and processing industries of another 6%, means any reductions through the introduction of new clean(er) technology would be significant.
The US lost preeminence in Steel production not because of subsidies by the Chinese government(although that doesn’t help) , but due the fact that the Steel industry is a capital, labour and energy intensive industry with expensive supply and distribution logistics.
The US Steel industry was almost driven out of existence by a lack of investment for modernization.
Investment is the key factor in the demise of the US steel industry.
The US metals industry in general, is very neglected and unprofitable.
Over the last 4 decades, Chinese steel makers have gained a huge advantage from possessing the world’s largest domestic demand for Steel.
This factor has provided China with a huge advantage in economies of scale.
The neglected, aging US Steel industry was already losing to nations like India, Japan,South Korea, Germany, Russia, Brazil, Turkey, and Ukraine with the US being relegated to 4TH or 5th producer decades ago.
Every year, exciting new “clean(er)” technologies promising ‘revolutionary advances’ are announced by researchers in laboratories and academic institutions. In addition their are a myriad of hopeful “green” start-ups.
Regrettably, most of these proposed technologies are economically impractical, rely on “carbon credits” or other artificial inducements.
In order to meet Paris Agreement objectives, the global Steel industry would have to achieve 70% emission reduction by 2050. In reality, there are no commercially available technologies today which can achieve the Paris targets.
Steel making is a low profit, capital intensive industry.
Research and development investment budgets for emerging decarbonization technologies is limited. US Steel corporations struggling with rising costs and intense competition simply don’t have the funds to invest in major restructure.
China doesn’t care as they only ever paid lip service to the agreement anyway ! Since China produces just over 50% of the world’s basic Steel production, the incentive to spend a lot of capital introducing expensive new “clean(er) technology doesn’t exist.
To the credit of South Korea, both POSCO and Hyundai Steel are regarded as the world’s most progressive Steel makers, both maintaining relatively large R&D investment and posting annual emission assessments.
At the lowest end of carbon disclose is Tata Steel and US Steel. Both these corporations are barely profitable, in particular US steel would have collapsed without the support of the Trump administration.
(Chinese Steel companies have solved the problem of “carbon emission reporting”, by simply not disclosing any data due to “security concerns)!
Despite a reprieve by the Trump Administration, the US steel industry is still barely surviving!
For years the industry has struggled to remain competitive while successive governments, both state and federal, either ignored the ignored the industry’s desperate plight, or in the case of the Obama administration were actively hostile.
“Dirty” industries like Steel making, are difficult for investors. Although “essential”, these industries are politically unpopular. Without the ability to generate attractive profits, investment becomes difficult to obtain. Investors seek either safe, secure reliable dividends, or increases in share prices.
Ni ether are available from industries vulnerable to economic downturns, increases in labour costs, law suits, continual need for capital intensive upgrades etc.
In addition, the US Steel industry is beset by fierce competition from nations with natural or government created advantages.
Fortunately, a combination of trade tariffs and greater domestic demand created by the economic policies of the Trump administration, have reignited interest by some investors in the US metals industry.
Confidence in the Trump administration’s measures, combined with a booming US economy has created higher domestic demand. Infrastructure renewal, especially for pipelines etc, has attracted growing confidence among investors.
Unfortunately, not everyone is on board with rebuilding the American Steel industry !
As the US Steel industry takes the first steps to profitably and survival, investment is once again threatened by political adversaries.
Shrill demands from “progressive left” commentators, Unions and mainstream media outlets have begun demanding profits should be immediately paid in higher wages and better benefits to US workers, in preference to attracting capital investment for newer plant and equipment to make the US industry more competitive, .
Despite U.S. Steel offering workers an immediate raise of 4%, followed by 3% annual raises, this is not enough for the “never Trumpers”.
Soaring health-care costs projected to rise to $20,000 per employee by 2019. Such demands deter investor confidence in an industry already falling behind.
Democrat and leftist activists have been campaigning among US Steel workers demanding unrealistic wages and health benefits for US steel workers.
Claims that US workers are exposed to toxic substances such as hydrochloric, sulfuric and chromic acids, tin, zinc. chromium etc, have merit.
Claims the Steel industry is potentially a dirty, dangerous, potentially unhealthy workplace are equally valid. This is true also true for workers in mining ore, shipping, transport and nearly every facet of the industrial process.
The problem for employers and investors, is these facts are equally true for competitors from China, India, South Korea, Japan, Brazil and many other countries.
Regrettably, consumers are unwilling to pay higher prices to buy US Steel so US producers can pay very high healthcare costs for their workers.
In the real world, investment capital goes where it’s most welcome and where lies the greatest returns.
So far the President’s actions have ‘rescued’ the US industry from obliteration, but it may be some time before sufficient investor confidence (and profits) returns for the sort of investment required to recapitalize, re-equip and modernize this very run down US industry.
Funding for R&D, especially for new technology requires investor confidence. Investor confidence requires lower risk and higher profits.
While you are correct in asserting new advanced Clean(er) technology will be essential if the US steel industry is to reduce pollution, reduce the cost of labour and raise the quality of production, it remains a complex problem, requiring not one, but a range of very complex solutions.
IMO, investment is the key factor. Investment requires profits. It would be wrong to assume clean technology solutions are being pursued solely in the US.
What has doomed the US industries (be it steel, auto, petrochemical, etc) is the greed for profits and poor quality products.
Using auto industry as an example, they cranked out high priced shoddy gas guzzling products, which had no resale value and with poor 0&M records. The entry price point was high to make a quick buck. Such tricks did not work, resulting in manufacturing lots looking like grave yards. To push out those products they cut down the prices. No wonder factories had to shutdown and lay off folks. And then, they were slow to automate!
On the contrary, Japanese companies cranked out cars, which had higher initial prices, but outperformed US cars in several areas – reliability, with limited thirst for gasoline, low on maintenance, higher resale value, etc.
These comparisons can be extended to other consumer products too.
GREED for profit, short term thinking, slow to automate, lack of innovation, big fat salaries were the principal drivers for the demise of manufacturing industries.
Foreign countries are no push overs. They have their share of intellectuals and constantly innovate. The argument that industries in other countries are subsidized is an argument for the faint of heart. US companies have got their fare share of government subsidies in the form of tax breaks, R&D subsidies (eg aircraft mfg through military and space programs).
TRUMP will not be able to move the needle with his kind of thinking. His promise to bring back manufacturing high paying jobs is a pipe dream. Even if he incentivized industries, the products will be expensive and affordability will be an issue. His bilateral approach to trade negotiations is a losing proposition. We need to get back on the global stage and compete on price and product quality, by setting aside the greed for higher margins promoted by Wall Street and reducing the salary disparity between management and workers.
AFairTexan
Thank you for your comment.
You are correct when you say no President can do it alone. However, President Trump’s policies are working, the proof is evident in the US economy where a dramatic turnaround has happened in losses of employment,(especially blue collar) coupled with an increase in domestic manufacturing and production.
All policies take time before the effects become evident, but wages growth is beginning to become evident as the labour market starts to grow and because the economic revival is more sustainable, inflation remains low.
Asking for “global competitiveness” without having a level playing field is not realistic.
Kudos Margo Polo and also Fair Texan
You both know much about what you are talking about.
Learned that there is no single silver bullet.
Whst is.needed is carefully thought out policy that addresses noth technical. Innovations like Craig pointed out, and sustained political support .
Americas Achilles heel is that our addiction to short term profits and lack of consistency in political support
America tends to go off in conflicting political positions.
So programs are gutted just the bear fruit
Investors are scared off by stop and start policy
!!
Thanks for your Insights
Curious what you think of the technology Craig presented
The world can ‘t resolve its emission GHS issues simply with solar,Wind, batteries.
To sustain economic and social we need innovations such as what Craig presented. Whether its steel production or cement making. We need industrialization Innovation to attain greater efficiency whole still having social and economic conditions needed for human sustainabiliy
Carry on what do you think.
I always look forward to reading your thoughtful comments, marcopolo.
I do take issue with your “Shrill demands from “progressive left” commentators, Unions and mainstream media outlets” bit, however. You imply that their collective demands for better wages and benefits are unreasonable and will cripple the effort to make the firm great again.
Let us focus for a moment on just ONE of the officers of US Steel. As President & Chief Executive Officer at UNITED STATES STEEL CORP, David B. Burritt made $11,590,073 in total compensation. Of this total $1,000,000 was received as a salary, $4,270,800 was received as a bonus, $0 was received in stock options, $6,099,985 was awarded as stock and $219,288 came from other types of compensation. This information is according to proxy statements filed for the 2018 fiscal year.
In the words of Abigail Disney, I would have to say that (especially given the situation with this company), Mr. Burritt’s pay is also pretty “insane”. And imagine if you will, how much more insane it would likely be if they were really profitable.
Rank and file salaries at United States Steel Corporation range from an average of $48,843 to $105,995 a year. This does beat Burger King wages for sure, but it’s a job that could kill or slowly poison you (like eating at Burger King).
I’m not suggesting that US Steel be converted into a Mondragon Cooperative, but that real, sustainable profitability might be better assured with fair, progressive compensation plans.
Hi Marc,
Thank you for you reply.
David B. Burritt presides over a company with $12.8 billion revenue and 30,000 employees. His salary is relatively modest in comparison to many tech billionaires who don’t share his responsibilities.
Corporate pay is ultimately set by the corporate shareholders, who as investors are always at liberty to remove or replace poorly performing executives or remove their investment to other more rewarding investment opportunities.
Corporations are in competition (sometimes globally) to recruit the best and most competent executives. It’s important to remember Corporate chiefs are very like politicians, Their jobs depend on the continuing support of investor/share holders.
The US is one of the few countries in the world where corporations are responsible for the healthcare and pensions of workers.
Most nations shifted long ago to healthcare and superannuation systems where the burden was assumed by the State or large independent Superannuation funds.
I agree with your observation that employee wages and healthcare costs are only a factor in the overall dynamic, but they still affect the companies ability to attract investors and compete with corporations who don’t have these costs.
As an employer, I must carefully weigh the productive value of employees against any remuneration paid. Regrettably;y, no matter how deserving an employee as a person, or how “fair” the situation, I must understand customers only care about getting the best “deal”.
Some of my employees earn over $1 million annually, while being just out of college while other’s work extremely hard with great dedication and loyalty for less than 5% of those “stars”.
The difference seems unfair. My farm worker is no less worthy an individual than a futures trader, but the remuneration difference is justified by the profitability of the individual as a “production” unit.
When put like that, I agree it sounds heartless and even cruel, but it’s reality. I like the idea of a ‘Mondragon Cooperative’, but such organizations seldom prosper in the long term.
Unfortunately, Western World consumers want to be be paid first world salaries, working conditions and benefits, but want to purchase at only third world prices!
Investment capital goes where the best returns can be obtained. Western consumers expect their pension/retirement/superannuation funds to pay high returns, but those funds must invest where the greatest yields can be obtained.
To be fair, Disney CEO Bob Iger’s salary should be compared with the $81 million remuneration paid to Robert Downey Jr. or $124 million for Dwayne ‘The Rock” Johnson.
Bob Iger is in charge of managing Disney’s $52.4B acquisition of 21st Century Fox’s film and TV assets. Now, with all due respect to the acting talents of film stars, I think Bob Iger’s responsibilities are considerably more onerous.
Abigail Disney is undoubtedly a sincere, talented and principled individual. But, that’s not hard when you acquire more than $500 million from just being born!
My main objection to the “progressive left” , unions etc, is they only represent of advocate for a small part of the entire dynamic.
Starting with a false or incomplete scenario will never produce an accurate conclusion.
Employee health benefits liabilities would effectively wipe out US Steel’s profitability, leaving investors with no return and driving down the stock price.
The question you might consider is, would you rather invest in US Steel and lose, or POSCO steel of South Korea and make a lot of money? (Imagine you are investing your parent’s retirement funds or Children’s college tuition fund).
US steel workers must face the reality of foreign competition.
President Trump has helped, but any President can only do so much. The US needs huge reforms in healthcare and retirement benefits.
So should the health care burden be assumed by our gov’t ??
Any revival of the US steel and car industry needs to be making Electric Vehicles. Gasoline is OUT OUT. for ever.
One by product of this discussion from my view is this.
In a Global economy and in an attempt to be profitable a change I would suggest.
The US needs to smell the Rose’s a d implement some firm of Universal healthcare. Marco you stated a big number like $ 20,000 health care cost f Steel employees.
This a big burden to our industry.
Removing this cost for all business in US would be a major cost reduction
To business.
From all the various studies I have been. A government system could deliver good care.
The over head Admin cost f Medicare is around 3 % contrary to insnsurance profit protection lobbyists lies and distortions of reality. Our current overhead f private sector health care is around 18 %.
So the numbers would work. This would be a start. Most of US public has reprogrammed themselves from the negative programming and propaganda bombarded at us over the years.
They know that dog can t hunt.
It’s only a $$$ corrupted political system that keeps us trapped in status quo.
Marco you have a point that American consumers want cheap priced but high wages, etc.
That is part of the cultural contradiction of our culture. Shame on us. But shame also on the ad industry for their constant ad campaigns based on price or a great deal. Prople are very numbed to reality. We are bombarded all day with the concept if low priced etc.
Makes real value quite distorted.
On insanely high Executive salaries I will argue that they are excessive and zi dont buy the fable that they warranted such excessive pay.
Sane f sports and entertainment sector.
Those excessive wages are leading to a Feudalitic culture and its Global nit just in US.
They are part of the diagnosis equation as to what ails us.
Trump has little to do with our economic resurgence as he walked into a stable slower growth economy that had much pentup demand.
He caught a good wave, goosed it some .
But he seems incapable of implementing the structural weaknesses baked into our current political/ economic system.
As Marco said investors want to see stability before making serious investments in new technology that needs time to generate the needed returns.
We are slaves IMHO to a short cycle system. Our Achilles Heel.
Pension reform is another area.
But we need process innovation and maybe its time f National Ibdustrial Policy from Feds.
Most of the people we compete with have made it done this also.
We remain trapped in the illusion that the post WW 2 economic boom. Those conditions are long long gone. But our leaders and the overpaid plutocrats of industry are playing w outdated tactics and rules.
It makes it very hard for good technical advancenents like Craig presented.
Cheers to all