Feature Article - Reducing Carbon Emissions - Huge Challenge for Port Talbot Steelworks
Chris McDonald discusses the implications and requirements for the steel industry to meet the challenges of reducing carbon emissions with Wales Online
The huge challenge the Port Talbot steelworks faces as Wales brings in tough new legally-binding carbon emissions targets
BY SIAN BURKITT, Wales Online, 1 MAR 2021
Major changes must take place across heavy industry in Wales in order for the Welsh Government to meet its climate change targets, experts have said.
The Welsh Government has put into law the target of reducing net carbon emissions to zero by 2050 - which means the nation faces demanding targets in the coming decades with the first being the need to cut C02 emissions by 63% by 2030.
Hitting the target will mean major changes to cars, gas-fired home central heating systems and industry with one of the biggest challenges facing the steel industry.
Tata’s primary steel making plant in Port Talbot, which employs around 4,000 people, has been identified by the government as a key area it must address with the site previously reported to produce 15% of Wales' carbon emissions. It contributes to the Neath Port Talbot council area producing around four times as much C02 as any other Welsh local authority.
Tata currently uses coking coal to power its blast furnaces and experts say reducing the emissions produced would either involve converting the plant to use hydrogen, bringing in carbon capture storage or stopping primary steelmaking altogether and converting the site to recycling scrap steel using electricity.
Any of those changes - or a combination of all three - would require investment of up to £2bn just in the site itself and huge sums spent on infrastructure elsewhere.
In a statement, Tata told WalesOnline it would "look to government to support industry with breakthrough policies".
Chris McDonald, chief executive of the Materials Processing Institute, a research organisation based in Teesside in England described the sums needed as "capital investment like the UK hasn’t seen in generations".
“There has to be collaboration between governments and the industry to do it,” he said.
He said both the UK and Welsh governments would need to be willing to support the sector in order to make the necessary changes.
“I think it’s quite big for Wales to take on on its own, and it’s definitely too big for any one company in the industry as well.”
What has the Welsh Government announced?
Earlier this month, Welsh Government has set out its legal commitment to achieve net zero emissions by 2050, but says it is pushing to “get there sooner.”
The legal commitment from Welsh Government, based on a report made by the Climate Change Committee (CCC), is for a 63% reduction in CO2 emissions by 2030, and an 89% reduction by 2040 - reaching a 100% reduction (net zero) by 2050.
The reductions involve cuts to emissions in industry, agriculture, waste, transport, aviation and shipping.
The statement made by Welsh Government announcing the targets and explaining CCC’s findings said: “The report also draws attention to the inter-dependency of UK and Welsh actions and targets. The UK cannot reach net zero without action in Wales, but equally Wales needs the UK Government to step up to the challenge and ensure a swift, fair and equitable transition to a low carbon future.”
Why is the steel industry such a major concern?
The challenge for the Welsh Government is that steelworks like those in Port Talbot and Newport are big carbon emitters.
"The use of carbon is a fundamental part of the process," said Chris McDonald.
"To make steel we dig iron ore out of the ground, and it has iron ore and oxygen in it. You can’t make it into steel until you pull the oxygen out of it somehow, and that’s the job that the coal does."
The byproduct of this process is carbon-dioxide.
"That’s why steel is a much more difficult decarbonisation challenge than, say, manufacturing, where you can electrify lines and so on, and switch to green electricity," said Chris.
"You can’t electrify the process in the same way. So what we need to do is find different ways and completely redesign the process.
"If you imagine, you’re trying to make a car, and you’ve got an assembly line, you can make it a green-powered assembly line.
"The challenge for steel is that you need to throw the assembly line in the bin and invent a brand new way of making cars that doesn’t use an assembly line, that’s the sort of analogy really.
What are the key targets?
Looking at the legal targets set by Welsh Government, the steepest reduction in carbon emissions must take place within the next decade or so, meaning that the 2020s will be a key decade in terms of hitting the targets set out by the CCC.
By 2030, just nine years away, if Wales is to meet the 63% reduction rate, it must drastically reduce the amount of carbon produced.
In 2018, the most recent figures available, Wales produced 26,525 kilotons of CO2. In addition to these targets, the CCC has also set “carbon budgets” for Wales, which measure the average CO2 emissions over a five-year period. The next two budget periods for Wales are between 2021-2025 and 2026-2030.
The 2021-25 budget recommends an average reduction of 37% in carbon emissions in Wales, while the 2026-2030 budget recommends an average reduction of 58%.
If both of these budgets and the targets for 2030, 2040 and 2050 are to be met, emissions from heavy industry in Wales must be reduced.
“The new evidence from the CCC says greater reductions within the industrial sector will help achieve this goal, as a large proportion of Welsh emissions come from a small number of big emitters, such as Port Talbot steelworks,” a Welsh Government statement said.
Currently, Neath Port Talbot is the area of Wales with the highest rate of CO2 emissions by a significant margin. In 2018, 6,506 kilotons of CO2 were emitted in Neath Port Talbot, approximately 45.5 kilotons per capita.
“Port Talbot is vitally important for the whole of the UK,” said Chris, discussing the steelworks in the town.
He said that whilst the decarbonisation of the steelworks here may look like a major issue that the Welsh Government needs to tackle, it’s actually a major issue for the whole of the UK.
“There needs to be sufficient support from the UK as a whole to enable Port Talbot and the Welsh Government to achieve decarbonisation,” he said.
“Without Port Talbot the UK wouldn’t have the essential strip steel product that we need to power our economy.”
In comparison to Port Talbot’s emissions, the next highest local authority, Flintshire, saw 1,753 kilotons of carbon emitted in 2018, equivalent to approximately 11 kilotons per capita.
The next highest authorities were Cardiff, which saw 1,647 kilotons (4.5 kilotons per capita), Carmarthen, which saw 1,133.5 kilotons (6 kilotons per capita), and the Vale of Glamorgan, which saw 1,123.5 kilotons (8.5 kilotons per capita).
Is there a solution?
In a broad sense, there are two potential paths for the future of the steel industry in Wales moving forward. The first is that Wales and the UK decide to innovate and switch to a greener steel industry. If the UK steel industry is to do this, there are three main ways in which producers can go about it, explained Chris.
These solutions are: carbon capture storage, the melting of scrap steel, and the use of hydrogen instead of coal.
The first of these, carbon capture storage, poses serious logistical issues.
“You still emit carbon but you grab it and bury it somewhere,” said Chris.
“It’s a reasonably mature technology and it has been installed in some places but you have to think about where you put the carbon,” he said.
“In Port Talbot, you’d have to put the carbon on a ship and take it somewhere else to bury it, so it ‘s quite a complicated one for south Wales. It’s not impossible, but it’s complicated.”
The second option, melting scrap steel, would help cut UK emissions. However, other nations who currently rely on British scrap steel may have to produce more of their own steel. This means that, on a global scale, emissions may not be cut back as drastically as hoped.
Finally, there is the option of using hydrogen as an alternative source of energy in the production of steel.
Hydrogen is a much-discussed topic at the moment in terms of solving the impact of carbon emissions in the steel-making process.
These three technologies - carbon capture storage, melting scrap steel, and the use of hydrogen instead of coal - are the potential solutions to decarbonise the steel industry.
“My view on this is that it’s unlikely any one of these technologies is going to be the answer,” said Chris.
“We’re probably going to need a bit of a mix.”
Responding to Welsh Government’s ambitious new targets, Tata Steel, which owns the Port Talbot steelworks site, has confirmed it aims to produce steel in a “CO2-neutral way” by 2050, and that it aims to reduce 30% of its emissions by 2030.
“We work with governments, academia and the South Wales Industrial Cluster to identify ways in which this can be achieved,” a spokesperson for Tata said.
“To do this we continue to work on developing breakthrough technologies, but look to government to support industry with breakthrough policies which allow these ambitions to be realised.”
Elsewhere in Wales, Liberty Steel, which has sites in Newport and in Tredegar, has said it aims to become a carbon-neutral steel producer by 2030.
“We welcome the Welsh Government target but urge it to move even faster,” a spokesperson for Liberty Steel said.
It said that the whole steel industry must “accelerate” towards carbon neutrality if the sector is to be sustainable in the longterm.
“Electric arc furnaces, which reduce carbon emissions by recycling steel, are undoubtedly the best way to achieve this in the short term and should be adopted rapidly across the UK steel industry.”
What needs to happen?
The issue of switching to hydrogen is the perfect example of how these different parties must come together if the targets are to be met.
“If you look at the hydrogen issue, the steel company can do all of the invention and innovation it needs to do to be ready to use it,” said Chris.
“But then it needs the hydrogen to use. And that means that someone, somewhere, needs to provide loads of renewable energy.”
It might require, for instance, the Swansea Bay tidal lagoon in order to give sufficient renewable energy in south Wales to produce the hydrogen needed for steel production in Port Talbot.
“That’s too big a problem for a steel company to solve on its own,” said Chris.
He explained that, in order for steel companies in Wales such as Tata and Liberty Steel to invest in the new technology they want to, they need the infrastructure there in place to do so.
“We need a national renewal of that kind of infrastructure that actually allows the industry to invest. And we can see that starting to happen in some other countries around the world as well.
“This week, there have been two really fascinating announcements. One was that Liberty Steel has announced a new hydrogen production facility in France. And another new player in the steel industry has announced that they’re going to build a hydrogen-based steel making plant in Sweden.”
He added: “The Swedish Government has piled a lot of money into research in this area. So if we want that to happen in Port Talbot and in other places around the UK then we’re going to need a lot of investment from government in providing the essential infrastructure to make that work.”
According to Chris, steel is one of the most difficult decarbonisation challenges the world faces, and there are three ways to overcome this.
1. Innovation in terms of the way in which steel is made is the first one.
2. Infrastructure
3. Capital expenditure
Capital expenditure is a problem due to the fact that, while steel manufacturers such as Tata in Port Talbot may have the money to make changes, they can only spend this money once.
“We’re asking companies to invest in new technology, and there is the risk that they might do everything right and then that’s not the favourable technology, ultimately.”
“There needs to be some thinking as to how government can help the industry to manage the risk around the capital expenditure.”
One possible solution to the problem could be co-investment from the Welsh and UK Governments in new technologies.
But whatever happens, it looks likely there will be wholesale change across the industry if Wales is to meet its carbon emissions targets - the likes of which haven’t been seen in over a generation.
“The last time this [change] was required in the UK was the 1960s and 1970s,” said Chris.
“The steel industry was uncompetitive and brand new technology came along, and the whole of the world’s steel industry upgraded to the latest technology.
“We resolved that in the UK by nationalising the industry and investing in it. Now, I’m not calling for the nationalisation of the industry, I’m just saying that that was how we tackled it last time and the investment that is required now is much bigger than it was then.”
But what about the cost of transitioning a single site such as Port Talbot, for instance?
“Possibly, to transition somewhere like Port Talbot, you might be looking at a figure somewhere between £1.6 billion and £2 billion,” said Chris.
“That’s the steelworks, but the infrastructure needs to go in around it as well.”
He added: “Transitioning the economy to a zero-carbon economy is going to require capital investment like the UK hasn’t seen in generations, frankly.”
The future of communities and the workforce
Decarbonisation of the steel industry is happening at the same time that technology is becoming increasingly digitised, with the use of AI and robotics in the production of steel.
Despite any potential fears of a human workforce being replaced by robots, the digitisation of heavy industry could actually pose an opportunity, explained Chris.
“This decarbonisation is happening at the same time as the digitisation of technology - AI, robotics and all of this sort of stuff,” he said.
“So, as these companies invest, they will decarbonise but they will also increase productivity, which is a good thing because they become more sustainable.
“If you look at the most productive steel plants in the world, they employ a fraction of the people who are employed at the steel plants in the UK.
“So what we also need to think about is how we have this transition for the workforce and the communities. And we can’t really shy away from that, that investing in these new technologies does mean a smaller workforce, so how is that managed?”
Of course, across Wales, the steel industry still employs thousands of people. The challenge here is to make these changes whilst ensuring that local communities are not simply dismissed.
“For me, speaking from where I’m sat in the North East [of England], this is very personal,” said Chris.
“I grew up in a coal mining community in County Durham in the 1980s, where my entire village was put out of work immediately as were many others.
“And the impact on those communities, you can see it today, and you can also see it in the Welsh Valleys as well.
“Now, it doesn’t have to be like that. And again, that’s a problem that is too big for a steel company to solve.”
A potential solution is to invest in the infrastructure for the new green hydrogen energy alongside investments in the steel industry.
“So, we’re creating a more productive steel industry that requires fewer workers, but also we’re investing in new industries and new technologies that require new workers,” said Chris.
“I think if we can make those investments side by side with retraining, then we can manage that transition.”
Link to Wales Online article
2 March 2021
