Assessing Opportunities to Reduce Carbon Dioxide Emissions from Electric Arc Furnace Steelmaking in the United States

Abstract

Steel is energy- and CO₂ emissions-intensive to produce, but it is also a crucial material for infrastructure, defense, and the energy transition. This thesis focuses on Electric Arc Furnace (EAF) steelmaking, which accounts for roughly 70% of steel production in the United States. Decarbonization levers for EAF producers are diverse—encompassing energy efficiency (EE) measures, fuel switching, material input substitution, development of onsite carbon-free electricity (CFE) generation, CFE procurement through power purchase agreements (PPAs) or unbundled renewable energy credits (RECs), and negative-emissions credit purchases, among others. We first construct a techno-economic model that analyzes costs and emissions of individual EAF facilities in the United States under a business-as-usual (BAU) scenario for the years 2025 through 2035. We then calculate the Levelized Cost of Carbon Abatement (LCCA) of various decarbonization levers against the BAU counterfactual. We build aggregate LCCA curves to draw insights on least-cost emissions abatement strategies for facilities and opportunities for policy to accelerate decarbonization decisions.

We find that the modeled levers collectively deliver a 46% reduction in EAF CO₂ emissions versus the BAU case—equivalent to a reduction of roughly 1.7% of national industrial CO₂ emissions. Voluntary CFE procurement has the greatest potential to abate EAF emissions, but comes with large uncertainties. Onsite CFE and PPAs have negative LCCAs in most cases, whereas unbundled RECs have positive LCCAs. EE measures provide modest emissions reductions and costs are negative on a levelized basis under a wide range of assumptions. EE opportunities, onsite CFE, and PPAs may be bound by non-financial constraints. Direct reduced iron (DRI) with carbon capture has lower variable costs and produces fewer emissions versus hydrogen-based DRI in most cases. While the challenges to decarbonize EAF steelmaking are immense, we find EAF facilities can take actionable steps in the near term—supported by federal and state policies—to abate carbon emissions while reducing levelized costs.