TELF AG Key Takeaways from the ICDA 2023 Conference

The ICDA Conference 2023 brought together industry experts and stakeholders to discuss critical issues related to the energy crisis and the stainless steel sector. The conference shed light on the urgent need to address the reliance on fossil fuels, the challenges facing the iron and steel industry in achieving net-zero emissions, the implications of the EU Carbon Border Adjustment Mechanism (CBAM) on ferroalloys trade, and other important topics. Let’s explore some of the key takeaways from this conference.

Understanding the Energy Crisis:
Energy experts emphasized that the world still heavily relies on its primary energy source, fossil fuels. The main transition causes are global warming and fossil fuel depletion. To overcome this crisis, the European Union (EU) needs to reduce reliance on fossil fuels by investing in renewables, enhancing energy efficiency and sufficiency, and developing flexible energy systems. Industries must evaluate their risk and exposure, both internally and within their supply chains, to anticipate constraints to position on tomorrow’s markets. What energy-intensive industries can do is invest in decarbonization strategies such as adapting specifications to specific uses, research, and development in low-carbon processes, adopting lifecycle approaches, reducing demand, and relocating industries that aim to not significantly affect the population but preserve the services provided by fossil fuels, while getting rid of them.

Net Zero Scenario for the Iron and Steel Sector:
Three scenarios were presented during the conference -: Stated Policies Scenario (STEPS), Announced Pledges Scenario (APS), and Net Zero Emissions by 2050 Scenario (NZE) – to simulate the future of the iron and steel production mix required to meet these scenarios. The use of innovative production routes can significantly reduce coal consumption and emissions. However, unlocking low-carbon technologies requires increased clean energy research and development and $90 billion in demonstrations by 2030. Global CO2 emissions will not fall to net zero by 2050 without international cooperation and collaboration.

EU Carbon Border Adjustment Mechanism (CBAM) and Ferroalloys Trade:
The introduction of the CBAM aims to prevent carbon leakage by ensuring equivalent carbon pricing for imports and domestic products subject to carbon costs under the EU Emissions Trading System (ETS). The mechanism will impact the trade of certain ferroalloys. Importers will be required to pay a border tax that reflects the carbon costs associated with EU production. The CBAM will be implemented gradually, with full-phase implementation expected by January 2026. During the transitional phase, importers will report total imports, embedded emissions, and carbon price information.

Chromium ESG Factors:
Project Blue presented research results for the ICDA on the materiality assessment conducted, considering all members’ inputs and perspectives on what is most relevant in each context. The results showed the most material issues per stage of the value chain and per country. The categories, issues, and sub-issues considered in the study from the CIASS list by the BGR. Company governance was deemed the most relevant ESG factor for the chromium value chain. Energy use is a high priority for downstream players, and social issues are deemed important for the mining and refining stages. The study provides an overview of the most relevant ESG issues and priorities to manage, depending on where companies are in the supply chain and where they operate.
The 1.5°C Pathway and its Impact on the Chromium Market:
Based on the Wood Mackenzie Accelerated Energy Transition 1.5 Degree Scenario (WM AET-1.5), the demand for chromium is expected to increase, driven by the stainless steel use increase in the renewable power generation sector. As renewable power generation, mainly solar and wind, dominates the market, renewables will offset the decline in stainless steel used in fossil fuel generation. There are plenty of applications for stainless steel in each key power form. Chromium in power generation is projected to rise by 16% under AET 1.5 scenario. The additional supply requirements can be met comfortably by available reserves.

Saving Water with Stainless Steel Flexible Service Lines:
A case study showcased the success of using Type 316 stainless steel service lines in Tokyo and Taipei to reduce water leakage. It is estimated that 30% of drinking water is lost globally. Stainless steel service lines offer advantages such as fewer joints, less leakage, ease of installation, resilience to external forces, and improved connections. Implementing stainless steel service lines can lead to significant cost savings and improved water management. This case study illustrates the potential of how new stainless-steel applications can prove to be more sustainable solutions by increasing social, environmental, and economic performance. The main roadblock to overcome by governments and cities is to adapt new concepts for sustainable procurement that embrace ESG factors and long-term planning in decision-making in tenders beyond solely cost-driven decisions.

Black and White Swans in the Stainless Steel Industry:
Consumer goods represent more than 50% of all stainless products. , Most reduction opportunities lie in the raw materials side of the supply chain, as raw material production has the highest attributed emissions overallIt also explored future applications, such as heat pumps, that can contribute to reducing CO2 emissions.

Stainless Steel Stocks and Flows 2019:
World Stainless presented the development of a dynamic global stainless steel flow model to analyze historical production and consumption data and resulting material inflows from 1950-2020. In-use stocks were estimated at 550 million metric tons, and the overall accumulated primary material inflow to stainless steel production was estimated at around 700 million metric tons. The vast majority of stainless steel that has entered the market since 1950 is currently still in use after having passed one or even several product cycles. • Recycling Input Rate (RIR) is 37% in stainless, potentially meaning that around 63% comes from primary sources. This number is deemed to change as more scrap material becomes available. The current End of Life Recycling Rate (EOL RR) for stainless steel is 70%, but including the carbon steel cycle, it increases to 95%. This means there is still an opportunity to collect stainless steel effectively to avoid mixing it with carbon production.

In conclusion, the ICDA Conference 2023 provided valuable insights into addressing the energy crisis, achieving net-zero emissions in the iron and steel sector, and understanding the implications of the EU Carbon Border Adjustment Mechanism on the ferroalloys trade. Additionally, discussions on the industry’s most material ESG issues, the 1.5°C pathway and potential impact on the chromium market, new stainless-steel applications for more sustainable solutions, and other climate-related challenges and opportunities in the stainless steel industry. These takeaways will be important considerations for policymakers, industry leaders, and stakeholders working towards a more sustainable and resilient stainless steel supply chain.