The world is going to use more steel in the next 25 years, but it’s going to take less energy to produce it, according to a new outlook from the Energy Information Administration.
The manufacture of steel and related products is an energy-intensive process. In 2015, the steel industry accounted for 1.5 per cent of all industrial shipments but 6.1 per cent of industrial delivered energy consumption. In EIA's Annual Energy Outlook 2016 (AEO2016) reference case, energy use in the steel industry increases by 11 per cent over 2015–40. Over the same period, the steel industry's energy intensity falls by 27 per cent, compared with an 18 per cent reduction in total industrial energy intensity.
Much of the change in energy intensity is attributed to the shift in steel production from primary to secondary (recycled) production. Primary production of steel typically uses a blast furnace to produce molten iron from iron ore, coking coal, and limestone. The molten iron is then converted into steel by a basic oxygen furnace. Secondary production of steel typically uses an electric arc furnace, with scrap providing the main input. In an electric arc furnace, scrap is melted using electricity. Natural gas can also supplement the melting process.
Overall energy intensity of an electric arc furnace is significantly lower than the energy intensity of a basic oxygen furnace. The shift from using the basic oxygen furnace to the electric arc furnace since the early 1990s has contributed to the substantial reduction in energy intensity in the steel industry. According to calculations based on the Manufacturing Energy Consumption Survey and the World Steel Yearbook, from 1991 to 2010, the share of U.S. steel production using electric arc furnaces increased from 38 per cent to 61 per cent, while the energy intensity of crude steel production decreased by 37 per cent. In the EIA reference case, the electric arc furnace share of crude steel production increases to 69 per cent by 2040, further decreasing energy intensity.
Steelmaking processes and technologies will continue to evolve in response to commodity prices for iron ore and scrap steel, investment in energy efficiency, product specification demand, environmental regulations, and fuel prices.