Environmental investments and expenditures
At an increase of just under 10%, the environmental expenditures of the voestalpine Group in the business year 2022/23 reached yet another all-time high; investments were high throughout.
Current operating expenses relevant to the environment increased by 9.7%, going from EUR 437.5 million to EUR 479.9 million. This means that the voestalpine Group’s environmental expenditures over the past ten business years have already reached EUR 3 billion.
Investments in environmentally relevant facilities rose to EUR 28.9 million (2021/22: EUR 26.7 million).
Environmental expenditures
In millions of euros
EU emissions trading/CO2 allowances
Among other things, the increase in environmental expenditures reflects yet another rise in the costs associated with the EU Emissions Trading System (EU ETS).
In the business year 2022/23, the price of the allowances climbed 17.01% to EUR 89.24 (2021/22: EUR 76.27). Volatile price developments that have shown no signs of abating even caused the price to breach the EUR 100 threshold in February 2023, albeit briefly.
The voestalpine Group’s need for additional allowances results from the total number of allowances required (scope of the emissions) less the no-cost allowances allocated to it. In keeping with the average of previous business years, the need for additional allowances in the reporting period equated to roughly one third of total CO2 emissions.
In the business year 2022/23, a total of EUR 242.1 million was therefore spent on EU emissions trading (2021/22: EUR 235.0 million).
The greentec steel climate action program
In March 2022, the Supervisory Board of voestalpine AG gave the green light to carry out the preliminary work for climate-friendly steel production at the Group’s plants in Linz and Donawitz (both in Austria). Implementation of this work since then has been consistent.
In March 2023, the Supervisory Board gave its approval in principle to an investment volume of some EUR 1.5 billion for the construction of two facilities. This project involves installing two electric arc furnaces (EAFs) driven by green power, each replacing a coal-based blast furnace. Depending on the quality requirements, the EAF route requires a mixture of scrap, liquid pig iron, and hot briquetted iron (HBI). voestalpine sources the required HBI primarily from the direct reduction plant in Texas, USA. This plant has been majority-owned by a global steel manufacturer since 2022, with voestalpine holding a 20% stake as well as long-term procurement contracts.
Decisions as to the units and suppliers will be made before calendar year 2023 is out, with construction scheduled to start in 2024 and operations to begin in early 2027. Subsequently, voestalpine will be able to produce 2.5 million tons of CO2-reduced steel annually. The emissions at both of the aforementioned facilities will drop by 30%, which equates to about 5% of Austria’s total current CO2 emissions, meaning that greentec steel offers Austria the most effective leverage by far in terms of climate action. The modalities of the first implementation step are still contingent on the clarification of open funding issues with the Austrian federal government and the upgrade of the power grid slated for the end of calendar year 2026 at the latest; in particular, this concerns a 220 kV transmission line in the country’s core Upper Austria region.
The EU ETS target envisions net climate-neutral production by 2050 at the latest. voestalpine is pursuing a long-term approach to this end based on several modular technological steps and options. These are focused equally on generating the greatest possible CO2 mitigation effect and on the project’s feasibility against the backdrop of then applicable political and legal parameters and relevant supply availability, mainly concerning raw and other input materials, green energy, and the required infrastructure.
Below is an overview of the key elements and milestones of voestalpine’s greentec steel program in Austria:
Reduction in CO2 emissions by 30% from 2027
- Replacement of two coal-based blast furnaces in Linz and Donawitz with electric arc furnaces powered by renewable energy
Reduction in CO2 emissions by 50% from 2030
- Replacement of other conventional pig iron production facilities at both plants
Net zero CO2 emissions by no later than 2050
- Possible options include the use of fossil-free sources of energy—for example, green hydrogen and bioenergy—and the sequestration (i.e., carbon capture, utilization, and storage – CCUS) of CO2. The aim is to achieve the greatest possible flexibility, taking the economic feasibility of the net zero strategy into account.
- The final decisions will therefore be made at a later date to coincide with investment cycles and in accordance with foreseeable requirements at the time.
Corporate environmental measures
Back in the previous business year, voestalpine launched a Group-wide campaign to expand its own production of renewable energy. This includes the installation of PV units on technically suitable building roofs and open areas along with investments in both wind and hydropower facilities. In addition, the company continues to push the installation of electric charging stations.
Furthermore, there are various environmental projects underway in the Group’s divisions that focus on energy savings. In the High Performance Metals Division, for example, all current projects are being implemented with the consistent aim of boosting energy efficiency. Concurrently, this division—like other Group divisions—is taking steps to lower the proportion of fossil sources of energy used. This is how the plant in Sweden substituted biogas for 30% of its natural gas usage, and equipment such as furnaces was converted from natural gas to electricity. By following this approach, voestalpine is consistently pursuing its ambitious goal to bring about an 80% reduction in CO2 emissions at its Swedish plant by 2027/28.
At the Donawitz steel plant in the Metal Engineering Division, various steps have been taken to significantly boost the plant’s capacity to generate renewable electricity from its own sources. For example, improved heat recovery will enable an increase by about 1,700 MWh annually. Optimized use of waste heat in the facility’s captive power plant and the resulting improvement in efficiency will add another 2,000 MWh per annum.
A PV system with an output of 1.36 MWp has been installed in an external landfill and has been feeding green electricity into the plant’s grid through a direct transmission line since October 2022. In the future, these 2,520 modules are expected to supply some 1.5 million kWh of solar electricity per year with the help of ten inverters for the production and processing companies at the Donawitz plant. In addition, a PV system with an installed total output of 8 MWp has been set up on the factory floor roof of the Metal Engineering Division’s seamless tube rolling mill in Kindberg, Austria. There are plans for yet more units to be installed on the rooftops of other factory buildings too. As in other divisions, operational and/or process-related steps have been taken to replace natural gas with electricity.
In the Metal Forming Division, photovoltaic projects were installed at various production sites, in particular in Austria, Germany, and the Netherlands. In many cases, mountings from own production (“iFIX”) were used.
The Steel Division is focusing on a number of additional goals over and above its preparations for the greentec steel program: energy efficiency aimed at reducing specific consumption; captive generation of renewable energy using expanded photovoltaics units; and, finally, continually increasing the share of e-mobility in both intra-plant vehicular traffic and in the charging infrastructure for voestalpine’s employees.
The continued expansion of the division’s CO2-reduced product portfolio has been a particular focal point. As early as in calendar year 2021, voestalpine began offering all flat steel and heavy plate products manufactured at the Linz plant in a greentec steel edition too. The carbon footprint of these products has been reduced by some 10% through the optimization of operating modes (for example, when scrap and reducing agents are utilized) and the use of renewable energy. In addition to the automotive industry, greentec steel is also already being deployed by customers in fields such as facade construction, building technology, crane construction, or the heating and heat pump industry.
Austria’s largest legacy pollution clean-up project—“Altlast O76, Linz Coking Plant”—which was started in calendar year 2012 was finally completed in the business year 2022/23.
Product sustainability
In addition to reducing direct greenhouse gas (GHG) emissions from production (Scope 1), voestalpine is also setting ambitious reduction targets with regard to its Scope 2 (energy purchases) and Scope 3 (e.g., raw materials, transportation) emissions. To this end, the Group has been involved in the independent Science Based Targets initiative (SBTi) since July 2022. This comprises the science-based evaluation, verification, and validation of corporate plans in terms of their alignment with the Paris Agreement.
voestalpine’s determination of the sustainability of its products across the entire value and process chain is currently focusing on environmental factors. Analyses of products’ carbon footprint and the decarbonization roadmap are front and center in this respect, as are life cycle assessments (LCAs) that also serve as a methodological tool. This requires developing uniform, workable, and globally comparable methods to contribute to a level playing field at the international level and hence to the promotion of sustainable economic growth.
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 in the declarations program of the German Institut Bauen und Umwelt e.V. (IBU), an association of building product manufacturers. This includes, for example, hot strip steel; hot-dip galvanized strip steel; hot-formed, pressed steel sections; prestressed concrete turnout sleepers; rails; and seamless tubes. EPDs for a number of other products are in preparation.
