Steel: The Perfect Material for a Circular Economy, but with a Huge Decarbonization Challenge

There are issues with the circular economy framework related to the concept's feasibility. The framework's central idea is the elimination of waste. The most significant ones are a lack of financial resources, knowledge gaps, and a lack of urgency. All industry players must work together to get beyond these obstacles and advance with decarbonization. The circular economy is essential for protecting the environment and developing a system of incentives to promote electronic recycling goods.

There would be yearly advantages for India implementing a circular economy.

What is meant by Circular Economy?

A production and consumption paradigm known as the "circular economy" emphasizes sharing, renting, reusing, repairing, and recycling old goods for as long as feasible. This extends the lifespan of things. In actuality, it refers to minimizing waste. A circular economy encourages producers to produce reusable goods. For instance, electrical equipment is made in a way that makes repairs simpler. Products and raw materials are reused wherever feasible. It is a fresh approach to production and consumption that guarantees long-term sustainability.

The circular economy enables resource optimization, lower raw material consumption, and waste recovery by recycling or giving it a new life as a product.

There is another important aspect of this material: Recyclability

One of the most recycled materials worldwide is steel. Through the recycling process, steel scrap may be combined to create various types of steel to satisfy shifting consumer demands. For instance, discarded steel from industrial applications may be recycled to make consumer goods like household appliances, cars, and more. Steel will therefore serve as the foundation of the future circular economy. Steel is a significant facilitator of a circular economy and may extend the life cycle of products.

Still, the steel production industry lags in sustainable operations and practices. Steel is a material that requires a lot of energy to produce. The energy needed is generally produced by burning fossil fuels, whose carbon emissions worsen the global climate issue.

Digital transformation will be necessary to achieve the aim of "net-zero" emissions

The balance between the quantity of greenhouse gas generated and the amount removed from the atmosphere is known as net zero. When the quantity we add is equal to the amount subtracted, we have reached net zero. Even though many steel manufacturers have already begun the transformation process, switching to green steel won't happen soon because it would require large expenditures. It's also unclear how long this change will last, such as adopting steel made of green hydrogen.

The development of new technology further increases the difficulties faced by those involved in the steel industry. For instance, green hydrogen-based steel necessitates a significant increase in the capacity of power produced from renewable sources. Steel producers should start today and adjust their business practices for higher efficiency rather than wait for such significant changes. The business process issues that any steel production can (and should) begin to address right away are the remaining technology-related hurdles.

The term "net zero" describes a situation where the atmospheric removal of greenhouse gases equals the number of greenhouse gases entering the atmosphere. The concept of net zero is necessary because, at least for CO2, this is the point at which global warming halts. It is possible to attain this goal if all greenhouse gas emissions from human activity are stopped and removed from the atmosphere. Like, extracting carbon from the atmosphere might result in emissions that are net zero.

Challenges

• Technological Challenges

One of two processes—the electric arc furnace or the blast furnace—is primarily used to create steel. The blast furnace is the first step in converting iron oxides into steel. The first blast furnaces produced one tonne per day when they debuted in the 14th century. Technological efficiency distinguished the Indian steel industry during the 1960s and the oil crisis in the middle of the 1970s. The majority of this technology was imported.

However, during the two decades that followed the oil crisis, a sharp increase in energy prices and an increase in the price of other inputs limited the steel factories' profit margin. Less money was invested in technical advancements as a result. As a result, the sector lost its technological advantage and is now much behind the developed nations in this area. In India, the output of material value is still relatively low.

With 1.2 tonnes on average, crude steel production in India is still high. In the upcoming years, increasing yield at every step of manufacturing, especially for items with added value, will become increasingly essential.

• Supply Chain Challenges

The steel sector desperately needs supply chain innovation. Improved visibility and collaborative planning of the whole value chain are required: scrap producers, steel makers, and downstream consumers must all better match their plans to achieve more efficient, sustainable manufacturing. Given the industry's unpredictability, reliable demand and supply planning is required to construct lean plans, allowing the formulation of multiple scenarios and data-driven choices based on organizational objectives.

• Daily Business Challenges

Daily disturbances such as production timetable demands, equipment downtime, and more abound on the steel factory floor, making controlling operational expenses and optimizing profitability an even more excellent task to manage. Furthermore, metal price fluctuations due to shifting demand patterns influence steel makers' already tight profit margins. In this case, production optimization is critical in assisting steel companies in coping with such changes. Steel companies will benefit from an integrated platform approach to optimizing production, scheduling, and execution.

Technology trends driving steel production modernization

The following digital competencies are required to keep up with the trends:

• Automation, robotics, and operational hardware are being used for digitizing and automating operations to make them quicker and more efficient.
• The digital connection enables a digitally enabled workforce (connected mobility, VR and AR).
• Integrated enterprise, platforms, and ecosystems for identifying and analysing supply chain concerns.
• Advanced analytics and decision assistance for increased operational flexibility and efficiency.