Modeling the Energy Transition of an Integrated Steel Site

Abstract

The steel industry is one of the most energy-intensive and carbon-emitting sectors, accounting for nearly 10% of global greenhouse gas (GHG) emissions. Tata Steel IJmuiden faces growing pressure to decarbonize due to rising CO₂ costs and increasing demand for green steel. This study develops an optimization model to evaluate Tata Steel’s current operations and identify feasible transition pathways towards carbon-neutral steel production. The model simulates energy flows, material usage, and economic impacts under different decarbonization scenarios, using real operational data and future energy price projections.

Three progressive transition phases from 2030 to 2050 are proposed: (1) a shift from the traditional blast furnace–basic oxygen furnace (BF-BOF) route to a hybrid model incorporating direct reduced iron (DRI) and electric arc furnace (EAF) technologies, (2) increased reliance on hydrogen-based steelmaking, and (3) full adoption of hydrogen-powered DRI plants. Results indicate that while green steel production is achievable, it will lead to higher costs due to electricity price volatility, hydrogen dependency, and network constraints. Key recommendations include optimizing capital investments, enhancing energy flexibility through EAFs, accelerating hydrogen infrastructure development, and advocating for policy reforms.

This study provides critical insights for Tata Steel and the broader industrial sector, demonstrating that strategic planning and investment in energy-efficient technologies are essential for a sustainable and competitive steel industry.