Alan Knight, general manager, head of corporate responsibility and sustainable development explains what the circular economy is, what it means for ArcelorMittal and why all of this matters.
More people, wanting more things, means more resources are required to meet those expectations – three planets worth of them, in fact, according to the World Wild Fund for Nature, if everyone on the planet lived the lifestyle we enjoy in Western Europe. The problem is, our resources are finite and cannot grow in-line with such demands.
So, what’s to be done?
Create a circular economy.
Before I explain what the circular economy is and what it means for ArcelorMittal, let me take you back in time to set the scene for the ‘hallelujah moment’ Ellen MacArthur experienced during her successful attempt to break the world record for the fastest solo circumnavigation of the globe in 2005:
“When you sail around the world, you take everything you need and when you’re at sea for three months… you realise what finite really means. What you have is all you have, there simply is no more. When I stepped off the boat at the finish line, I realised that our global economy is no different,” said MacArthur.
So, she started the Ellen MacArthur Foundation which works to accelerate the transition to a circular economy. The foundation defines the circular economy as:
“Looking beyond the current ‘take, make and dispose’ extractive industrial model, the circular economy is restorative and regenerative by design. Relying on system-wide innovation, it aims to redefine products and services to design waste out, while minimising negative impacts. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural and social capital.”
In other words, in a circular economy, resources go around and around and as a result, waste ceases to exist.
Enter the three ‘Rs’ we all recognise: reduce, reuse and recycle.
But what does the circular economy mean for ArcelorMittal?
We contribute to the three Rs in three different ways: our products, our processes and through new business models and collaborations.
Let’s start by exploring the recyclability of our products – in this regard, steel was born lucky, so to speak, because of its inherent properties as a permanent, versatile, infinitely recyclable material. Then there’s its magnetic properties which allow it to be easily separated from waste streams. All of this combines to make steel the material of choice for the circular economy.
In fact, the European Environment Agency (EAA) used steel as the example of resource efficiency in its 2015 report, “The European environment — state and outlook 2015.” It’s easy to see why they would single out steel here, when you compare its recycling rate of 87% to those of aluminium (67%), concrete (20%) and timber (13%).
But with recycling rates already at 90% in some countries, we’re nearing the limit of the potential to drive further progress here, so we’re also looking at how we can develop products which do more with less. Each new generation of steel we produce, for every application you can imagine, is stronger and more flexible. This means we need less and less steel to meet people’s needs.
This brings us nicely to the next R, reduce.
I’ve already mentioned how we’re developing new steels to reduce the amount of it we need to get things done. When it comes to reducing the amount of raw materials and energy we consume through our processes, I’m pleased to say we have made significant progress there too.
According to data from the Worldsteel Association’s 2016 report “Steel – the permanent material in the circular economy,” the efficient use and recovery of energy has enabled steelmakers to reduce the energy required to produce a tonne of steel by 60% since 1960. Much progress is being made on reducing our water use too. For example, our Brazilian facilities have collectively reduced the amount of water they use by 15% between 2015 and 2016.
By making our processes more efficient, we’re reducing our CO2 emissions too, and are on track to meet our target of an 8% reduction, from a 2007 baseline, by 2020. This is a more ambitious target than it sounds because our processes are already so close to benchmark performance, but we are on track to achieve it.
Even with today’s best technology, we do not have all the answers.
We still need carbon in our blast furnaces to produce the chemical reaction which transforms iron ore into pig iron. Although the ambition to develop a breakthrough carbonless technology is the ultimate objective for the industry, it is not yet achievable, and indeed is a long way off.
Because the world is consuming more new steel than the scrap it generates, the electric arc furnace (EAF) route, which replaces iron ore with scrap when making steel, cannot keep pace with today’s demand. According to a third-party report we commissioned on resource efficient steel production, there will only be enough obsolete scrap to enable flat products to be made from this route after 2050. The same report finds that steel made from scrap will only become predominant by 2070.
This means we will have to continue to use blast furnaces for the next half a century, unless a breakthrough technology for carbon-free steelmaking cuts that timeframe. It also means we have to find useful ways to use the carbon we generate in the meantime, through a process called carbon capture and utilisation (CCU). Our partnership with LanzaTech is helping us do this and brings me nicely onto the third prong of our circular economy approach – collaborating to reuse our by-products.
Our blast furnaces make steel, but they also make carbon, slag, dust, sludge, heat and gases for us to reuse.
We already share by-products like heat with local communities and use our process gases to make electricity for the national grid, but, as alluded to earlier, we are keen to do much, much more with our by-products through new partnerships.
I recently had the opportunity to talk to environmental specialists for Airbus about our collaboration with LanzaTech to recycle our carbon gases into ethanol, which then could be made into car or even jet fuel. They too are looking at this technology as a solution to their challenges. A combustible alternative to fossil fuel is very compelling for them because planes will not fly on solar energy, nor energy created from wind turbines.
We have also been repurposing other substances which had been considered waste, into usable commodities, either to use ourselves, or to sell on to others, with the objective of producing zero waste. For instance, slag can be made into cement, windscreens, insulation and fertiliser.
Ever the innovators, we’re taking the idea of reusing by-products to make useful new things a step further, thanks to the Low Carbon Technology Partnerships Initiative. We launched this in partnership with the cement and chemicals industries in November 2016. With our partners Evonik, LafargeHolcim and Solvay, we are looking for potential synergies between the manufacturing processes of these three energy intensive sectors. We’ll then collaborate to find a way to harness those synergies through cross-sector partnerships – like this one – to reduce CO2 emissions.
Another avenue we’re exploring on the theme of reuse, is new business models which promote reuse, such as leasing.
We already successfully lease sheet piles for temporary use. Leasing, rather than selling sheet piles, allows them to be reused again and again without additional processing, saving the environmental footprint of remanufacturing them into something else once they’ve served their initial purpose.
In the future, we may also lease steel for dismantlable buildings. Technically, designing such buildings for reuse is easy. The challenge is incentivising the market to lease steel for this purpose.
At the moment, a structure’s steel components only represent 2% of the cost of a building, so the market has little appetite for reusing steel in this way. For the idea to take hold, there would need to be legislation that rewards buildings with low embedded energy and carbon.
We’re working to ensure public policy helps us to transition to a circular economy. The EU Action Plan for the circular economy is playing a part in that, but that’s an article for another day.
Until then, I invite you to reflect on the products, processes and business models we as a steelmaker can adopt to drive further efficiencies, as we work our way toward becoming a zero-waste company in a zero-waste world.