Environment

Environmental expenditures

Environmental investments (+62.7%) as well as current environmental operating expenses (+16.1%) in the business year 2018/19 substantially surpassed those in previous years.

The new environmental investments rose in the past business year from EUR 40.7 million to EUR 66.2 million. This increase stems mainly from two large projects in the Steel Division and the High Performance Metals Division, respectively. By contrast, the increase in current environmental expenditures from EUR 257.7 million to EUR 299.1 million reflects the significant increase in costs associated with EU emissions trading. Because the price of the CO₂ certificates has risen over time, the resulting expenses of the voestalpine Group in the business year 2018/19 were EUR 69 million, and thus EUR 36 million higher year over year. The Steel Division alone had to spend EUR 44 million to buy CO₂ certificates and thus EUR 26 million more than a year earlier—even though its CO₂ emissions in the business year just ended were much lower than in previous years due to the complete overhaul (relining) of its largest blast furnace.

On average, the shortfall (overall need for certificates less allocation of free certificates) in the past business year was about one third, just as in previous years.

After skyrocketing in the business year 2017/18 by almost 173% on average, the price of a certificate jumped yet again in the business year 2018/19 by another 61.7%, from EUR 13.26 per ton of CO₂ to EUR 21.44 per ton. Note in this connection the extremely high price volatility of the price trend, with a doubling of prices in the first five months of the business year 2018/19 and yet another massive increase in April 2019 to more than EUR 27 per ton of CO₂.

Environmental expenditures

In millions of euros

* In the business year 2015/16, in addition to the emission-intensive Austrian Group sites, a number of other, primarily international, production companies were included.

Corporate environmental focus and measures

The Group’s environmental programs in the past business year again focused on further reductions in process-related emissions and continual improvements in resource efficiency (especially in connection with the consumption of energy and raw materials), although existent steel production processes offer only limited options for doing so.

In the Steel Division, more efficient filter systems were introduced as part of the complete overhaul of the Group’s largest individual blast furnace (blast furnace A), and extensive supplementary steps were taken to ensure blast furnace gas cleaning and dedusting. The rehabilitation work on the area of the division’s coking plant in Linz, Austria, which has been contaminated since World War II, has been ongoing since 2011; highly contaminated sites in the eastern portion were removed by way of so-called hot spot excavation in the business year 2018/19. More than 25 tons of aromatic hydrocarbons have been removed from the subsoil using soil vapor extraction since 2015.

The High Performance Metals Division has lowered its consumption of energy to a considerable extent by acquiring a new forging press with automated system controls as well as by putting in place new, energy-efficient furnaces.

In the Metal Engineering Division, additional steps have been taken to suppress dust, for example, by misting the production lines near the blast furnaces in Donawitz, Austria, as well as by installing dust-suction equipment at the annealing furnace in Kindberg, Austria.

The Metal Forming Division focused on expanding its in-house generation of hydropower and thus the production of renewable energy, which the voestalpine Group has already pursued in the past at several sites. As far as the current project is concerned, a more powerful turbine was installed in one of the existent hydroelectric plants and the power plant as such—all the way to its control systems—was brought up to specifications. Steps aimed at using electromobility as the intracompany mode of transportation were accelerated in a number of this division’s units.

Environmental management systems

Of the roughly 130 Group companies worldwide that are included in the environmental data management system (including all larger, environmentally sensitive operating sites), about 60% use an environmental management system (EMS) pursuant to ISO 14001, about 15% have also been validated under the EU’s Eco-Management and Audit Scheme (EMAS), and more than 20% utilize a certified energy management standard pursuant to ISO 50001. The implementation of ISO 14001 at the Group’s facility in Corpus Christi, Texas, USA, will be completed by the end of the business year 2019/20.

In September 2018, the voestalpine Group’s environmental team was awarded the EMAS prize for the best environmental team by the Austrian Ministry of the Environment.

Product sustainability

“Product sustainability”—i.e. the analysis of a product based on ecological, economic, and social criteria across its entire useful life—is increasingly gaining significance, and not just from the customers’ standpoint; increasingly, it is also being addressed at both the political and the legislative level in connection with climate protection. voestalpine has been pushing the complex issue for many years, taking into account all affected areas of both the Group and its divisions, including the latter’s operating units.

In particular, current customer-specific activities concern the following:

• Life cycle assessment, material compliance, environmental product declarations (EPDs), circular economy models;
• Social aspects (e.g. conflict minerals); and
• Economic analyses (particularly regarding life cycle costs).

Furthermore, increasingly detailed information and data on product assessment are being made available, for instance, as the basis for certification systems related to sustainable buildings or international product-related standards (e.g. the Framework Standard for Responsible Sourcing – BES6001). voestalpine also participates in initiatives such as the Carbon Disclosure Project (CDP) in connection with the comprehensive assessment of delivery chains.

Energy and climate policy

Energy-intensive and thus emissions-intensive sectors such as the steel industry are currently pushing their research and development activities to reduce the CO₂ emissions that are generated in the production of steel. Aside from the actual innovation activity in metallurgy, cross-sector projects are becoming significant, especially those related to energy. At the same time, the framework for energy, climate, and research policies that are key to the feasibility in the long term of new technologies is being fleshed out incrementally at the global as well as at the European and national level.

The United Nations World Climate Agreement, which was adopted in Paris in 2015 and took effect at the end of 2016, was given a rule book in November 2018 that is binding on all 196 parties to the accord. Starting in 2020, therefore, global climate protection will be subject to uniform standards, requirements, and mechanisms—at least formally so.

At the European level, the actual, legal implementation of the “Clean Energy for all Europeans” package intended for the implementation of the EU’s “2030 Goals”—which addresses discrete topics such as energy efficiency, expansion of renewables, electricity market design, and governance—currently is in its final phase. The emissions trading system (ETS) for the 2021 to 2030 trading period now is subject to tertiary legislation (final determination of key parameters such as benchmarks for the free allocation of certificates).

Also at this time, the EU’s innovation and trading policy up to 2030 is under discussion and/or in the process of being prepared at the legislative level. The monies available during the multi-year funding period from 2021 through 2027 for research, development, and upscaling to large-scale standards are the element of this legislation that is material to the industry. Thinking beyond 2030, currently the EU is also developing its long-term “A Clean Planet for All” decarbonization strategy up to 2050.

Austria held the presidency of the European Council in the second half of the calendar year 2018. Hence voestalpine participated in a multitude of related events and activities that served as platforms for presenting and discussing the company’s challenges, approaches to solutions, and ongoing projects aimed at decarbonizing the production of steel in the long term. The high-level conference, “Charge for Change: Innovative Technologies for Energy-Intensive Industries,” was held in September 2018 at voestalpine Stahlwelt, Linz, Austria, as part of an informal meeting of the EU Council of Energy Ministers. The European Hydrogen Initiative adopted by the Energy Ministers was signed by voestalpine too.

Nationally, Austria’s hydrogen strategy, which is based thereon and is supposed to be ready by the end of 2019, is one focus of the implementation of the “Integrated Climate and Energy Strategy” (#mission2030) that the Austrian government presented in June 2018.

voestalpine is chairing one of four working groups, specifically, the one headlined “Hydrogen in Industrial Processes” at the invitation of the Austrian Federal Ministry for Sustainability and Tourism, which is tasked with managing the hydrogen strategy.

Additional Austrian administrative laws pertaining to the #mission2030 were being discussed or implemented at the time the present Annual Report was being prepared. In particular, this includes the Austrian Expansion of Renewables Act (Erneuerbaren-Ausbaugesetz – EAG); the Austrian Energy Efficiency Act (Energieeffizienzgesetz – EEffG); the Austrian sustainable heating supply strategy as well as the finalizing of the National Energy and Climate Plan (Nationaler Energie- und Klimaplan – NEKP). The latter must encompass specific actions for achieving the 2030 Goals, and Austria must submit it to the EU Commission in binding fashion by the end of 2019.

Decarbonization: EU H2FUTURE showcase project and SuSteel

The adequate and stably secured, large-scale availability of “green” hydrogen is one of the basic requirements for the development in the long term of hydrogen-based breakthrough technologies for CO₂ minimized steel production.

The “H2FUTURE – green hydrogen” showcase project, which is supported by the Fuel Cells and Hydrogen Joint Undertaking (FCH JU) as part of the EU’s “Horizon 2020” research program at voestalpine’s Linz site, is researching proton exchange membrane (PEM) electrolyte technology on an industrial scale for the purpose of generating hydrogen in the future using electricity from renewable energy, its potential for use in steelmaking, and its simultaneous contribution to grid stabilization. This joint venture of six industrial and scientific partners from Austria, Germany, and the Netherlands—specifically, VERBUND (Austria’s largest electricity provider); voestalpine; Siemens; Austrian Power Grid (APG); K1-MET (a metallurgical competence center); and ECN part of TNO (a Dutch research organization)—is currently engaged in preparing the demonstration operation that will run until mid-2021.

A massive push is being made with respect to the “Sustainable Steelmaking” (SuSteel) project at the Group’s Donawitz facility in Austria, another long-term research project in the field of hydrogen metallurgy. It is aimed at producing pig iron directly from the base material by way of a hydrogen plasma smelting reduction without any intermediate steps. Tests in connection with this multi-year research and development project are currently being conducted at a pilot plant, though for now solely at the bench scale. The project is being undertaken jointly with the University of Mining and Metallurgy in Leoben, Austria, and with the support of the Austrian Research Promotion Agency (FFG), among others. voestalpine is also exploring the possibilities of carbon capture and usage (CCU). In particular, current projects or those that are beginning to take shape in connection with “Carbon-2-X” concern the conversion of CO₂ from process gases and its subsequent utilization as a raw material in the chemical industry.

Research projects on the development of metallurgy and raw materials that are aimed at optimizing existent production processes with respect to CO₂ are being pursued concurrently.