**4. Results**

This section first presents the three pathways in terms of the development of energy consumption over time and comparison of the total steel production cost. This is followed by the of CO2 emissions along the pathways. Finally, the results of the sensitivity analysis are discussed.

#### *4.1. Future Productivity—Outline of Pathways*

Figure 2 gives the three production pathways for the Swedish steel industry showing the timing of replacement of current technology.

Pathway 1 (Figure 2a) represents a shift to the top gas recycling blast furnace with carbon capture and biomass for the conventional primary steel production and to the EAF with biomass for secondary steel production. From 2025, the total production level of BF/BOF equals 2.1 Mt/year (42% of the total steel production in Sweden) due to the blast furnace shutdown in Oxelösund and replacing it by the EAF (SSAB, 2018). By the year 2030 the current primary steel production technology is replaced by a

combination of TGRBF and CCS technologies and the replacement of the coal for PCI with biomass. As regards CO2 capture technology, post-combustion technology is assumed.

(**c**) 

**Figure 2.** Production processes mix for the Swedish steel industry in Pathway 1 (**a**), Pathway 2 (**b**) and Pathway 3 (**c**) from 2020 to 2045. Note the different scale of the y-axis of Figure 2c.

In Pathways 2 and 3 (Figure 2b,c), Sweden's two blast furnaces are replaced by the hydrogen direct reduction (H-DR/EAF) steelmaking process, which is assumed to be implemented by 2040 (HYBRIT, 2016). Between 2025 and 2040, steel production is assumed to be done by the EAF with biomass at a level corresponding to about 58% of the current total production, which is due to the retirement of one blast furnace in 2025.

For Pathway 3 (Figure 2c), the export of iron ore pellets is assumed to be replaced by the export of hot briquetted iron (HBI) pellets from 2040. The increased production of HBI in Sweden can replace current iron making in other regions and consequently lead to a reduction of CO2 emissions from ironmaking.

#### *4.2. Energy and Fuel Demand*

Figure 3 shows energy consumption for both primary and secondary steelmaking technologies. In Pathways 1, 2 and 3 (Figure 3a–c), the replacement of the iron ore-based steel plant with an EAF results in a coal consumption reduction in 2025. In Pathway 1 (Figure 3a), further coal demand decline is observed in 2030 since the injected pulverized coal into the blast furnace is replaced by biomass. Due to the reinjection of the top gas components CO and H2 to the blast furnace as a reducing agen<sup>t</sup> of iron ore, total coke consumption for primary steel production in Pathway 1 is lowered by 27% compared to the conventional BF. In 2030, an increase in natural gas consumption by 44% is observed compared to current steel industry configuration, despite the reduction in natural gas consumption using biomass in EAFs. In the TGRBF/CCS, natural gas is utilized for the preheating of the steam, as well as for the supplemental thermal energy demand of the CCS technology [29].

For Pathway 2 (Figure 3b), the demand for fossil fuel-based energy carriers, such as coke, coal, oil and natural gas, decreases by almost 100% in 2040 compared to the demand with current steel process configuration, due to the transition to the hydrogen direct reduction technology. However, from 2025 to 2040 the demand for fossil fuel-based energy carries is higher compared to Pathway 1. The electricity use increases significantly, implying an electricity need of around 12 TWh per year in 2045. For Pathway 3 (Figure 3c), the energy consumption level is similar to Pathway 2 until 2040 when the electricity consumption increases dramatically to reach a level of 33 TWh per year in the year 2045.

**Figure 3.** Energy use for the Swedish steel industry in Pathway 1 (**a**), Pathway 2 (**b**) and Pathway 3 (**c**) from 2020 to 2045. Note the di fferent scale of the y-axis of Figure 3c.

## *4.3. Steel Production Costs*

Figure 4 shows the production costs (Equation (4)) of 1 tonne of steel from primary and secondary steelmaking technologies applied in the investigated pathways, where capital expenditure (CAPEX) for the steel production technologies calculated as annuity payments (cf. Equation (5)). Nearly 60% of current steel production costs consist of raw materials (i.e., iron ore, ferroalloys, scrap and fluxes), fuels and reductant, while CAPEX only contributes to around 20% of the total cost. Thus, since steel production costs are strongly influenced by different market drivers, mainly raw material cost and energy prices, which vary from location to location, the production cost figures obtained are indicative. Figure 4a shows steel production cost for primary steelmaking via the conventional process (BF/BOF), TGRBF/CCS with biomass (Pathway 1) and H-DR/EAF (Pathways 2,3), since the same primary steelmaking technology is used in Pathways 2 and 3, the production costs for these pathways are the same. As for secondary steelmaking, conventional EAF is compared to EAF with biomass implemented in Pathways 1–3 (Figure 4b).

**Figure 4.** Steel production cost for primary steelmaking technologies (**a**) and secondary steelmaking technologies (**b**) applied in the pathways investigated in this work.

Primary steelmaking with CO2 emissions reduction, such as applied in Pathways 1–3, implies steel production cost increase by 12–13% compared to conventional primary steelmaking. Capital expenditures for Pathway 1 and Pathways 2, 3 increase by 55% and 97%, respectively, compared to capital expenditures for the conventional process. The cost of electricity is the dominant cost for Pathways 2 and 3 and makes up 30% of total production cost. In this work, an average electricity price for Sweden between 2012 and 2019 of 35 EUR per MWh is used and it is assumed this electricity price level remains constant up to 2045. This, since little is known about the future costs of electricity, but cost can be reduced due to increased share of renewables. Yet, in order to achieve this electricity price level, there is flexible operation of the electrolyser so that periods of high electricity prices are avoided, is likely required. However, such operation strongly depends on electricity system composition and might lead to additional capital expenses of hydrogen storage and electrolyser capacities. Based on our assumptions, secondary steelmaking using EAF, where coke and natural gas are replaced with biomass, offers production cost similar to conventional EAF (Figure 4b).

Figure 5 shows the development of the average steel production cost over time for investigated pathways. Pathways 2 and 3 have identical production cost development, since the same steelmaking technologies are invested in along these pathways. All three pathways show a slight increase in production cost due to investments and increased fuel prices. The production cost in Pathway 1 increases by 5% in 2030 and by 8% in 2040 compared to the current production cost due to the investments in new production technology. The average steel production cost in Pathway 2 is relatively stable up to 2040. From 2040, the steel production cost of Pathway 2 is 16% higher compared to the 2020 cost.

**Figure 5.** Development of the average steel production cost for the three pathways investigated.

#### *4.4. The Pathways in Relation to the CO2 Emission Targets*

Figure 6 shows the development of the CO2 emission intensity of steel production for the three pathways. Steel production via processes with substantial electricity demand, such as H-DR/EAF (Pathways 2, 3) and EAF (Pathways 1–3), results in low CO2 intensity of steel production due to the low CO2 emission grid factor of the Swedish electricity system. For primary steelmaking in Pathway 1, the decrease in the CO2 emission grid factor between 2030 and 2045 results in the reduction of steel CO2 intensity only by 2%.

**Figure 6.** Development of CO2 emission intensity of the steel production (primary and secondary steelmaking) for the three pathways.

Figure 7 shows the development of CO2 emissions over time for the Swedish steel industry for the three pathways. As shown in Figure 7, Pathway 1 yields up of 83% emissions reduction in 2045, i.e., applying CCS in combination with biomass substitution in the blast furnace as well as a replacement iron ore-based steel plant with an EAF. Furthermore, already in 2030, an 80% reduction in CO2 emissions is obtained. Pathways 2 and 3, including electrification, enable further emission reductions compared to implementing CCS and utilization of biomass. As can be seen in Figure 7, none of the pathways can achieve zero CO2 emissions due to emissions emerging in lime production and the addition of carbon to make steel, which is an essential component in steelmaking.

From 2040, there is a slight increase in CO2 emissions for Pathway 3 resulting from the large growth in HBI pellet production for export, which could support international emissions reduction efforts not accounted for here.

**Figure 7.** Development of CO2 emissions for the Swedish steel industry pathways from 2020 to 2045.
