Decarbonization Pathways for the Italian Steel Sector: Environmental, Economic and Social Implications

The Italian steel industry requires revamping through strong actions both in the short and medium term. It is essential that Italy meets its steel demand through domestic production, not only to reduce its dependence on imports but also for social and economic reasons. In this context, three decarbonization scenarios for the steel sector in Italy have been developed, including a Conservative pathway, a Potential scenario, and a Desirable one. The Conservative scenario envisions a short-term perspective in which corrective actions mainly involve the addition of CO2 capture to the existing technologies. Potential scenario envisions a medium-term perspective that introduces substantial modifications to production processes (blue hydrogen-based DRI) to achieve complete decarbonization of the sector in the long term. Lastly, Desirable scenario envisions a long-term perspective in which primary steel will be produced using DRI technology based on the use of green hydrogen. Each scenario has been analysed from different viewpoint, considering the CO2 overall emissions, the Levelized Cost of Production (LCOP) of steel and the employment repercussions. The outcomes highlight a good reduction of CO2 for every scenario, with a substantial improvement for Potential and Desirable ones, with 68% less CO2 emissions. From the economic viewpoint, the best results have been achieved by blue hydrogenbased DRI, followed by Conservative scenario and Desirable one. The employment rates are best for green hydrogen-based DRI, due to the relocation of workers into the renewable energy sector.