The Group-wide trend in the extraordinary business year 2020/21 also affected environmental investments: They fell, from EUR 35.0 million in the previous business year to EUR 15.3 million. Yet voestalpine implemented many relevant environmental mitigation projects in the business year ended at its facilities worldwide nonetheless. Moreover, the Group also consistently pushed the investments in research and development projects described in the “Climate Action” chapter. ongoing operating expenses (OPEX) with an environmental component remained high. Following the record of EUR 314.5 million in the business year 2019/20, they were still EUR 300.1 million in the business year 2020/21 due, above all, to the significant increase in the price of EU allowances (EUA).
Approximately 60% of the Group’s environmental expenditures go to clean air activities. In the business year 2020/21, a total of EUR 76.7 million were spent on EU emissions trading (previous business year: EUR 90.0 million). The decrease stems primarily from the decline in the need for additional CO2 allowances owing to reduced production levels and the associated reduction in CO2 emissions. The latter fell in the Group’s Austrian production units—to which the largest portion by far of the CO2 emissions relevant to emission trading are allocable—from 12 million tons in calendar year 2019 to 11 million tons in calendar year 2020. Given the simultaneous and dramatic increase in the market price for CO2 allowances over the course of the reporting period, the decline in the need for additional CO2 allowances is not reflected directly proportional to the reduction in earnings.
Just as in previous business years on average, the need for additional CO2 allowances during the business year 2020/21 equated to just under one third of total CO2 emissions and follows from the total need less the allocation of free allowances.
Corporate environmental focus and measures
Consequently, the implemented projects focused on CO2 emissions, energy efficiency including exhaust heat usage, and expansion of the Group’s own renewable energy generation capacity.
The Steel Division focused chiefly on measures that continually improve resource efficiency, thus sustainably lowering the use of fossil fuels, the need for electrical energy as well as the need for water to cool facilities. Recurring emissions measurements that surpass statutory requirements and serve to improve emissions quantification in the coking plant were planned and implemented as well.
The work at the legacy pollution clean-up project on the areal of the former coking plant continued apace in the business year ended. Contaminated soil in the eastern region of the affected area was removed. The funnel & gate system has made it possible for more than six years to prevent almost all pollutants from leaching into the groundwater. For several years now, voestalpine has been operating both a soil vapor extraction system and a phased water remediation system to continue removing pollutants from within the built environment.
Additional remedies were utilized to ensure the upkeep and maintenance of existent environmental facilities and equipment. This includes excavators and similar tools used for the maintenance of the waste disposal site as well as new charging stations for expanding in-house e-mobility.
The High Performance Metals Division focuses on energy efficiency. Over and above the comprehensive implementation of certified energy management systems pursuant to ISO 50001 in all production companies, in the business year 2020/21 this division optimized its combustion technology; installed new, efficient lighting systems; and carried out various improvements of existent system controls as well as numerous process innovations in production. Cumulatively, these measures generate long-term savings of 85 GWh or about EUR 2.4 million.
The division also prioritizes issues associated with the circular economy. Strategic projects are in the process of being implemented to boost resource efficiency and secure supplies of key raw materials. This includes the recovery of alloying elements from production by-products, the creation of closed-loop material cycles (CLMC) with customers, the development of alternative (secondary) sources of raw materials, and the substitution of primary raw materials through secondary raw materials.
The investments of the Metal Engineering Division primarily funded ambitious measures to lower energy consumption and enhance the plants’ own generation of energy. For example, the conversion of power generation unit 01 in Donawitz, Austria, to modified sliding pressure operation was completed toward the end of the business year 2020/21; this reduces the need to procure third-party electricity by some 6,000 MWh per year. More than 9,000 MWh of additional energy sourced via the plants’ own generation capacities are obtained annually via cumulative individual measures in the power plant. The optimized converter gas facility, which was launched at the beginning of the business year 2021/22, now makes it possible to increase the division’s own production of electricity in its power plant by some 5,700 MWh a year.
Steps to achieve significant energy savings and/or CO2 reductions were also implemented in connection with the sintering plant and other facilities within the steel plant as well as in other business segments such as the manufacture of rails or wire. Yet other activities focused on optimizing cooling water and waste heat cycles.
The Metal Forming Division increasingly relies on induction instead of gas burners to heat and/or heat-treat strip steel and steel parts. Using electrical energy from the division’s own hydropower plants and photovoltaics (PV) units sustainably cuts CO2. In calendar year 2020, the division’s Böhlerwerk facility in Lower Austria achieved a new all-time high with respect to the volume of own electricity generated: Fully 87% of the electrical energy required at the facility were produced by the company’s three own hydropower plants on the Ybbs River. Energy efficiency measures also helped to cut various types of energy used by some 500 MWh during the previous business year. Of this amount, electricity accounted for fully 260 MWh and natural gas for 20,500 m3—a total of more than 40 tons of CO2.
The contribution of steel to renewable energies, wherever they are used, is growing. The development of products for PV units exemplified this fact at several of the division’s facilities. voestalpine has also prepared an Environmental Product Declaration (EPD) for its innovative phs® technology that is used to manufacture press-hardening autobody components for sophisticated lightweight automotive construction.
Energy and climate policy
The EU Commission’s “Green Deal,” which was initiated at the end of calendar year 2019, substantially raises the emissions reduction targets applicable through to the year 2030. In April 2021, the European Commission, Council, and Parliament agreed to increase the targets from previously 40% to 55% (in each case relative to the year 1990). Work is currently being done to establish (in EU directives and regulations regarding individual legal matters) what this actually means in terms of higher requirements to be imposed on sectors such as the steel industry that are subject to emissions trading. At this time, the target pursuant to EU-ETS is minus 43% relative to the year 2005.
The Austrian federal government, for its part, aims to achieve climate neutrality no later than by the year 2040 and thus a decade earlier than stipulated in the Paris Agreement and by the EU. The work to put in place the required statutory framework at the national level, too, is ongoing.
voestalpine’s decarbonization approach
voestalpine has a comprehensive plan to decarbonize its steel production. For the time being, this plan provides for electrification through renewable energy and, in the long term, the transition to hydrogen metallurgy.
The first milestone will make it possible to permanently lower process-related CO2 emissions by about 30% up to the year 2030. This corresponds to a reduction in annual emissions by approximately three to four million tons. voestalpine’s “greentec steel” project establishes the incremental shift from blast furnace technology based on coal to electric arc technology based on green electricity. Besides scrap, the most important input materials required for this purpose are liquid pig iron and CO2-reduced hot briquetted iron (HBI). This presents the following innovation challenge, specifically, how to arrive at the same top quality that is achieved through the existent blast furnace/LD steelmaking route using the new approach.
The companies cannot bear the investment costs and higher operating costs arising from higher prices for green electricity all by themselves. Adequate levels of budgeted funds for underwriting national and European co-funding mechanisms are required over and above the availability and competitiveness of green energy to meet the ambitious climate targets.
voestalpine’s hybrid greentec steel approach provides the basis for bringing about the hydrogen-based transformation by the year 2050. Subject to economic viability, the plan is to use electricity from renewable sources and green hydrogen to replace coal completely as the reducing agent for iron ore and thus produce CO2-neutral steel by the year 2050.
To enable hydrogen-based steel production technologically in the long term, voestalpine is working intensively with partners in industry and science on research and demonstration projects. In addition to the EU’s flagship “H2FUTURE” project for generating green hydrogen that is being implemented in Linz, Austria, through the end of calendar year 2021, two fundamental projects concerning hydrogen metallurgy are in progress at voestalpine’s Donawitz, Austria, plant: the “Sustainable Steel” (SuSteel) project and the “Hydrogen-Based Fine Ore Reduction” (Hyfor) project.
Circular economy and product sustainability
Transforming the economic system into a circular economy requires analyzing the entire value chain, i.e., all phases of a given life cycle. voestalpine has long implemented and refined the principles of a circular economy at the level of both processes and products in many areas. Over and above the material contribution of steel as a material in and of itself this includes:
- Developing closed-loop substance and materials cycles for boosting resource and materials efficiency in production processes;
- Expanding recycling chains for products and secondary raw materials in various supply chains;
- Creating so-called industrial symbioses such as the use of steel production by-products as secondary raw materials for manufacturing products in other industries; and
- Continually promoting developments aimed at the efficient use of alternative and/or secondary sources of raw materials.
Currently, life cycle assessments (LCAs) used to determine the environmental impact of products (i.e., product sustainability) are one focal point. Environmental Product Declarations (EPDs) play an important role in determining products’ environmental effects based on their life cycle assessments. The EDPs are based on two international standards (EN 15804 and ISO 14025) that are audited and verified by independent third parties. For example, the voestalpine Group has published EDPs for hot-dip galvanized strip steel, electrical steel strip, colofer®, heavy plate, and rails as part of the declarations program of the German “Institut Bauen und Umwelt” (IBU), an association of building product manufacturers. Additional EDPs are being developed.
Regular dialogues with customers on issues of decarbonization and product sustainability are integral to a variety of voestalpine’s supply and value chains. These customers represent a range of sectors such as the automotive industry, the electrical industry, and the oil & natural gas industry; some of them participate as additional scientific or civil society stakeholders.
voestalpine publishes information on its greenhouse gas emissions (GGE) and its water consumption under the Carbon Disclosure Project (CDP) and participates in cross-sectoral initiatives such as “Responsible Steel.”
Environmental management systems
By now, 70% of the roughly 130 Group companies worldwide that are covered by the internal environmental data management system—including all larger, environmentally sensitive operating sites—use an environmental management system (EMS) pursuant to ISO 14001 or the EU’s Eco-Management and Audit Scheme (EMAS). An additional 8% possess other certifications such as energy management pursuant to ISO 50001.