As the government tightens carbon credit regulations, domestic steelmakers have moved to expand electric arc furnace operations. Hyundai Steel has launched a combined electric arc furnace–blast furnace (blast furnace) process, and POSCO is set to run its first electric arc furnace next year. It comes a little over two years after they said in 2023 that they would restart electric arc furnaces in response to stricter carbon credit rules. Carbon emissions from electric arc furnaces are more than about 70% lower than those from conventional blast furnaces.
According to the steel industry on the 9th, Hyundai Steel has completed all preparations, including installing one electric arc furnace for the electric arc furnace–combined process at the Dangjin Steelworks, to operate phase one of the combined electric arc furnace–blast furnace process. It is currently running one rebar electric arc furnace and one special steel electric arc furnace. When commercial production begins in Jan. next year, carbon emissions are expected to fall by about 20% from the existing process. In phase two, using a new electric arc furnace to be completed in 2030, it will be possible to produce products with 40% lower emissions.
POSCO will begin operating electric arc furnaces next year. It will be the first time running an electric arc furnace since selling the existing electric arc furnace high mill at the Gwangyang Steelworks in 2020. POSCO last year broke ground on an electric arc furnace plant in Gwangyang, South Jeolla Province, investing about 600 billion won to produce 2.5 million tons per year of hot metal. POSCO expects an annual reduction effect of up to about 3.5 million tons of carbon dioxide compared with the blast furnace method.
Major domestic steelmakers have a low share of electric arc furnaces. Hyundai Steel halted its thin-plate (steel plate less than 3 mm thick) electric arc furnace operations in Jun. 2020 due to difficulties producing high-grade steel and low profitability. Because steel scrap (scrap metal) is used as the main raw material, impurities are often mixed in, so electric arc furnaces have a high share of low-priced product output and limits on what products can be made, the industry said. In Korea, electric arc furnaces account for about 30% of the total, but in the United States they reach about 60% to 70%.
The introduction of electric arc furnaces and combined electric arc furnace–blast furnace processes by steelmakers is also related to cutting greenhouse gases. The government aims to reduce greenhouse gas emissions by at least 50% from 2018 levels by 2035. The steel industry is among the sectors with high carbon emissions, emitting about 2 tons of carbon dioxide to produce 1 ton of steel. Carbon emission regulations are tightening worldwide, including the European Union's Carbon Border Adjustment Mechanism (CBAM).
Running electric arc furnaces lowers carbon emissions, but the rising expense is a burden. The main raw materials used in electric arc furnaces—steel scrap and the low-carbon steelmaking feedstock HBI (Hot Briquetted Iron)—are more expensive than iron ore, and electricity bills are also high. As industrial power rates have surged recently, Dongkuk Steel Mill, which has the highest share of electric arc furnaces (76.05%) in Korea, paid 299.8 billion won in electricity charges last year, up by more than 110 billion won from the previous year.
An industry official said, "With the expected commercialization of hydrogen reduced ironmaking in 2037, expanding electric arc furnaces was the option to cut carbon emissions," adding, "There is a risk that products made with electric arc furnaces will be too expensive to sell. Government support is needed for this part."