Energy efficiency improvements in the german steel sector - more than window dressing?

Improving energy efficiency has been recognized as the key short- to medium-run strategy to reduce CO2 emissions and energy consumption in a cost-efficient way, in particular for energy-intensive industry sectors like steel production. To improve energy efficiency, voluntary agreements (VAs) between industry associations and governments have been implemented in Germany in 2001 as the main policy instrument. For the iron and steel sector the VA is specified as a 22 % reduction of the CO2 emissions per ton of crude steel between 1990 and 2012. To shed some light on the effectiveness of the VA this paper analyses the development of the specific energy consumption (primary energy use per unit of product) in the German steel sector between 1991 and 2007. We find that the total energy intensity declined by 0.4 %/year. Of this 75 %, or 0.3 %/year, is due to a structural change towards more electric arc furnaces (EAF). Energy efficiency improvement accounts for about 25 % of the observed change in energy intensity, or 0.1 %/year. Energy efficiency improvements are found, especially in rolling (1.4 %/year). The specific net energy consumption of blast furnaces decreased due to increased top gas recovery by 0.2 %/year per ton iron. Improvements in other processes were very limited or non-existent. In basic oxygen furnaces (BOF) net energy consumption increased due to a 60 % decrease in BOF gas recovery between 1993 and 2007. In electric arc furnaces and sinter plants the specific energy consumption remained constant or, respectively, even increased by 9 % between 1991 and 2007 per ton sinter. In sum, our findings do not support the view that the VA has led to noticeable improvements in the energy efficiency of the single processes in the German iron and steel industry. Improvements could only been observed for steel rolling. Instead, observed reductions in the SEC for crude steel originate mainly from the production shift towards EAF.