Environmental investments and expenditures
In the business year 2021/22, the voestalpine Group significantly boosted both investments and current expenditures relating to environmentally-relevant projects and activities. Investments in environmental action soared by 75% year over year, from EUR 15.3 million to EUR 26.7 million. Compared with the business year 2020/21, which was marked by the COVID-19 pandemic, this change includes investments serving to catch up particularly on environmental action projects aimed at cutting carbon dioxide emissions and on energy projects. Current operating expenses relevant to the environment jumped by 46%, from EUR 300.1 million to EUR 437.5 million.
Environmental expenditures
In millions of euros
EU emissions trading/CO2 Allowances
The increase in expenditures mainly stems from the significant increase in the price of emissions trading allowances. In the reporting period, the expense arising from trading CO2 allowances was EUR 235.0 million, up from EUR 76.7 million in the previous business year, with the Steel Division accounting for fully EUR 164.4 million of the cost.
voestalpine’s need to purchase emissions trading allowances results from its overall need for allowances commensurate with its verified emissions less the no-cost allowances allocated to the company. Roughly one-third of emissions had to be covered by allowance purchases in the business year 2021/22, just as on average in recent years.
greentec steel: The voestalpine climate neutrality plan
voestalpine’s greentec steel program entails an ambitious, step-by-step plan for achieving climate neutrality. Preparations for the plan and initial implementation steps currently are the main focus of the Group’s environmental engagement.
In a first step, this approach provides for the incremental switch from the coal-based blast furnace route to electric arc furnace technology driven by green power. Subject to considerations of economic feasibility, one electric arc furnace each will be commissioned at the Group’s steel facilities in Linz and Donawitz (both Austria) as early as at the start of 2027. The planned production capacity will be about 2.5 million tons per year, of which Linz will account for 1.6 million tons and Donawitz for 900,000 tons.
In March 2022, the Supervisory Board of voestalpine AG approved an amount in the three-digit millions to fund the initial implementation steps. The work to clear the necessary construction sites along with infrastructural preparations can now begin. A decision as to final approval of the investments required for the two electric arc furnaces will be taken in the Northern spring of 2023, in turn making it possible to begin construction in 2024. In part, this is predicated on the commissioning of a 220 kV power line in Linz by the end of calendar year 2026.
By itself, this initial step toward implementation of an electric furnace route leads voestalpine to expect that it will be able to achieve a roughly 30% reduction in its CO2 emissions in Austria by 2030. This equates to a reduction of about three to four million tons of carbon dioxide annually—or close to 5% of Austria’s total current CO2 emissions. The greentec steel concept has been submitted to the EU ETS Innovation Fund for financing; it will serve as the basis for hydrogen metallurgy in the long term.
By continuing to refine its green hydrogen approach, voestalpine aims to bring about carbon neutral steel production by 2050. A number of extensive research and development projects that are being undertaken together with partners in industry and science focus on this technology. Among others, these projects include the Linz-based H2FUTURE hydrogen pilot plant in regards to which the planning for a follow-on project to be carried out under the auspices of the “Hydrogen and Carbon Management Austria” (HCMA) project is available; the SuSteel pilot plant in Donawitz that aims to enable sustainable steel production in a single process step based on iron ore using hydrogen plasma; as well as the Hyfor research project at the same site concerning the use of hydrogen to reduce ultrafine ores.
The overall feasibility of such comprehensive approaches to the technological transformation is contingent on a number of critical prerequisites: secure and stable supplies of both renewable energy and green hydrogen at competitive prices as well as adequate investment options for the participating entities, including support from vehicles of change and transformation. The concrete, political decisions both at the level of the EU and nationally were still pending at the time the present Report was prepared.
Corporate environmental measures
Concurrently with the preparation of the fundamental technological shift, in the business year 2021/22 voestalpine took other, immediately effective steps in connection with climate action and resource efficiency.
The Group-wide installation of photovoltaics (PV) units on a total surface of some 310,000 m2 with an output of just under 61 megawatt peak (MWp) sets new standards for both power output and dedicated surface area in connection with sustainable captive power generation. Additional PV units are being prepared.
In terms of products, at this time the need to respond as best as possible using existing technology to customers’ demand for green steel poses the greatest challenge. Work to optimize modes of operation and the energy used serves these needs. For example, the Steel Division started shipping CO2-reduced steel from its Linz plant for the first time at the end of calendar year 2021. Over and above the use of green electricity, this steel is also based on an innovative raw materials mix that is achieved by adjusting both the reducing agents and the raw materials mix as well as by maximizing the amount of scrap used. A CO2 footprint that has been reduced by some 10% is the outcome so far of this greentec steel edition. This approach is being incrementally expanded to other Steel Division product groups.
At the Hagfors (Sweden) plant of the High Performance Metals Division, the first climate-neutrally produced tool steel rolled off the assembly line in late 2021. Extensive, proprietary technology developed solely for this purpose enabled this innovation. Liquefied natural gas (LNG) is replaced by fossil fuel-free liquefied biogas (LBG), and all transportation within the plant is powered by green electricity or fossil fuel-free diesel (HVO100). This production concept cuts carbon emissions by up to 90%. voestalpine also utilized the gold standard carbon offset as per the UN’s sustainability targets because, for now, a type of carbon that cannot be eliminated stays in the metal scrap and graphite. The Hagfors facility plans to achieve complete climate neutrality by 2030 and to apply the same approach to its entire value chain by 2035.
The Metal Engineering Division has taken a number of steps to continue cutting its energy consumption. For example, this entailed work to optimize the blast furnace gas (BFG) network at the Donawitz plant, the Group’s most energy-intensive facility. This expanded the degree to which the facility’s captive power plant can utilize the resulting BFG to generate captive energy by some 7,000 MWh.
Improvements in the waste heat network enabled further increases in the captive power plant’s efficiency. Optimizing the fuel preheating process made it possible to expand captive power generation by an additional 4,000 MWh annually.
At the Group’s facility in Kindberg, Austria, construction of a new rotary hearth furnace stack is in the preparatory stage; it will serve heat extraction purposes. This will make it possible to feed up to 15 GWh to the planned district heating plant that supplies the city of Kindberg.
Furthermore, a multitude of measures aimed at further optimizing the use of materials, hydrological circuits, and clean air activities at the division’s Austrian and international facilities have been taken. Yet more projects are being implemented—for example, in Linz—with respect to the electromobility charging infrastructure, the shift to electric vehicles and forklifts for inter-facility transportation, the thermal refurbishment of production floors, and the retrofitting of facilities with energy-saving LED lighting.
The Metal Forming Division, which manufactures innovative products for PV units, among other things, aims to achieve climate-neutral production by 2035. Its facilities in Kematen and Böhlerwerk in Lower Austria cover their need for electrical energy through both their own hydropower plants on the Ybbs River and certified renewable energy. New PV units have further raised the share of captive power generated. The division is also carrying out a comprehensive energy reduction project in collaboration with an industrial partner. This involves lowering the use of both electricity and natural gas, for example, by replacing existing drives and engines with higher-efficiency types, installing heat pumps to recover energy, and using district heating to heat both production and administrative facilities.
Product sustainability
As far as product sustainability assessments are concerned, voestalpine’s current focus is on environmental aspects and thus on analyses of the products’ environmental footprint and potential improvements.
Environmental product declarations (EPDs) are a critical tool that voestalpine uses to determine and communicate products’ environmental impact based on their life cycle assessments. The EPDs are based on two international standards (EN 15804 and ISO 14025) that are audited and verified by independent third parties. voestalpine has listed and published environmental product declarations for various products (e.g., hot-dip galvanized strip steel and electrical steel strip) in the declarations program of the German “Institut Bauen und Umwelt” (IBU), an association of building product manufacturers. EPDs for a number of other products are in preparation.
voestalpine is working intensely on developing measurable targets derived from the current approach to the technological transformation in accordance with state-of-the-art climate science. A number of different options for verifying such science-based targets are being explored.
Furthermore, the production entities of the Steel Division completed their certification as sustainable steelmaking facilities in the business year ended. This is based on a sustainability approach that rests on three pillars—environment, social, and governance (ESG). Fulfilment of ResponsibleSteel’s strict standards is the prerequisite for obtaining the certification.
