How do we best decarbonise buildings construction? What effect, if any, do circular economy measures have? Is it more cost-effective to meet industrial energy demand with hydrogen or electrification?
By Ema Gusheva with contributions from Meta Thurid Lotz and Vassilis Daioglou, 30th of August 2024
An EU-wide model comparison exercise shows clear changes from implementing circular economy measures when decarbonising the iron and steel industry. The model projections agree that energy consumption will decrease and that energy from solids and gas will be replaced in favour of energy from electricity and hydrogen. However, the models project slightly different visions regarding how energy consumption patterns will change. Specifically, they diverge on the extent to which energy consumption will decrease and how much of it will come from hydrogen
What if we could sit down with Europe’s most advanced modellers and ask them to draw a picture of the most cost-efficient climate neutral energy system for the EU? Every one of them would draw a slightly a different picture. What’s more, some pictures would resemble one another, while others may look completely different. What are the biggest differences between these pictures and why? When do models show different results and why? This is the focus of this series of articles and the third one is dedicated to circular economy measures for reducing emissions from the iron and steel industry related to buildings construction.
The European Climate and Energy Modelling Forum is hosting a model comparison exercise with the aim of helping the EU reach climate neutrality by 2050. It is focused on exploring the impact of circular economy measures in the iron and steel industry for providing materials for building construction in the EU. Two distinct models have run a scenario adopting circular economy measures related to the following strategies: 1) building element reuse, 2) steel reuse, 3) steel recycling, 4) lifetime extensions, 5) reduced floor space, 6) material efficient design, 7) timber construction, 8) reduced clinker share and 9) low-carbon cement. Thus, in contrast to many circular economy scenario studies which focus on recycling, this model comparison exercise considers a broader range of measures addressing reuse, demand reduction, material efficiency and material substitution. Many of these measures assume fundamental changes in user behaviour and demand reduction, hence the results would best be read critically.
The two models participating in the model comparison exercise differ in model type, scope and solution method (Table 1). While IMAGE is an integrated assessment model with a good representation of full-system effects, FORECAST has a more detailed sectorial representation but lacks the extensiveness of a full-systems view. Similarly, FORECAST has external inputs regarding future material demand, while in IMAGE that is calculated internally in the model based on a material flow analysis. In the scenario run, the input assumptions regarding material demand and economic drivers (e.g. GDP development) are harmonised so that model results are comparable despite model differences.
| Model | Model type | Representation of material demand | Sectoral scope |
| IMAGE 3.3 | Integrated assessment model | Endogenous, based on material flow analysis | Industry, buildings and power sector |
| FORECAST-Industry | Bottom-up model | Exogenous, based on material flow analysis and demand data | Industry and buildings sector |
Reduction in energy consumption
Both models project a decline in final energy consumption in the iron and steel industry in EU27. IMAGE starts with lower energy consumption values in 2020 and projects a more ambitious decline than FORECAST (88% and 50% energy consumption reduction in 2050 compared to 2020 levels respectively). Importantly, the models based their scenario runs on other base decarbonization scenarios (which implement generous assumptions regarding carbon pricing, electrification and efficiency gains), so the decrease in energy consumption results from the base scenarios more generally. However, circular economy measures provide additional decreases in energy consumption. For example, in the case of steel, the reduction in energy consumption comes both from material demand reduction and lower secondary production energy intensity.
Major shifts in meeting energy demand
In the model runs, the iron and steel industry transforms from primarily relying on solids, electricity and gases in 2020 to relying mostly on electricity and, in the case of FORECAST results, on hydrogen. All in all, energy consumption from solids and gas decreases, while that of electricity and hydrogen increases. For example, model results align on the fall of energy consumption from solids since the range of results regarding the use of solids is wide for 2020-2025 but shrinks by 2050. Similarly, energy consumption from heat, liquids and solar remains low for both models.
The role of hydrogen for meeting energy demand
However, model results diverge on the consumption of hydrogen and electricity. Specifically, the range of results on hydrogen widens reaching 0.28 EJ/Yr in 2050 with FORECAST projecting a role for hydrogen (33% of energy consumed) while IMAGE sees no such role. Similarly, the model results range on electricity use widens to 0.43 EJ/Yr. Both models see much of the energy consumption to be from electricity, but the total amount of total energy consumed in the industry is much smaller for IMAGE leading to such a gap in results.
In FORECAST results, hydrogen is mainly for primary production from raw materials and electricity for secondary production for re-used materials. On the other hand, in IMAGE results, hydrogen consumption remains low until 2050 because, as a limited and expensive fuel with a low technology readiness level, the use of hydrogen is more strategic in other sectors like heavy transport. Instead, in IMAGE results, the iron and steel industry relies on electricity consumption through technologies like electrowinning in primary production or electric arc furnaces in secondary production. However, IMAGE increases the use of hydrogen after 2050, when it estimates that it will become more widely available, making it more competitive for this industry.
Be our guest, explore the results yourself and offer your thoughts
Can you see that IMAGE projects more rapid energy consumption decreases for many carriers, such as in the case of energy from solids? Did you notice that IMAGE has a lower value for energy consumption from solids in 2020 than that of FORECAST? Do both models project an increase in electricity consumption until 2050? Are there any differences between model results in the pattern of reduction of liquids consumption throughout 2050?
