Italy is in a strong position to become a world leader in green steel but needs to deal with the country’s higher electricity prices that put its steel companies at a disadvantage, Federacciai President Antonio Gozzi said at the Italian steel association’s conference in Vicenza Sept. 26.
“The world of steel is changing rapidly,” Gozzi said. “As usual in situations of radical change, there are threats but also opportunities. The two great issues, scrap and energy, both impacted by decarbonization policies, are central to the survival of our companies.”
Italy is the second-largest steel producer in Europe after Germany, and 85% of its steel output is from electric furnaces.
Italian companies continue to pay higher electricity prices than their European competitors, Gozzi said. In 2023, energy-intensive German companies paid an average of Eur65/MWh, while in Italy the costs exceeded Eur110/MWh, he said. The reasons include the national energy mix, state incentives and the lack of an interconnected European electricity market.
Unified approach to power urged
Federacciai has suggested a unified approach to the use of emissions trading system auction proceeds, noting that countries such as Germany and France have allocated much more than Italy to support industrial decarbonization. A single European price for energy-intensive sectors could reduce these differences.
“The Italian EAF based steel industry, as far as Scope 1 is concerned, is in fact close to carbon neutrality” Gozzi said. “We are committed to solving the residual problems related to small emissions still present in electric furnaces and those, albeit limited, deriving from the use of natural gas in the reheating furnaces of rolling mills. To this end, we are working on solutions such as biomethane and hydrogen.”
“To reach the goal of net zero or even be carbon negative, we need a further third of electricity with zero carbon emissions,” Gozzi said. “Many of our companies have already invested, and continue to invest, in plants for the production of renewable energy.
“We are evaluating, as individual companies or in consortiums, participating in tenders for the renewal of hydroelectric concessions, which we hope will be announced as soon as possible in accordance with European directives.”
For this reason, Federacciai recently signed a memorandum of understanding with Edison-Edf and Ansaldo Nucleare to support future installations of small modular reactors and micro modular reactors in Italy and to lead to a long term nuclear power purchase agreement that will act as a bridge to new generation nuclear energy.
“We already have a connection cable with France, built by Interconnector, which could support the feasibility of the project,” Gozzi said. “If we could stipulate this contract under economically balanced conditions, starting from 2025-26, we could realize our dream of world leadership in the production of green steel.
“Being the first in the world in the production of totally green steel would radically change the history of our companies and their prospects, strengthening their relationships with customers, with institutions, including financial ones, increasing their sustainability and therefore their value.”
Renewable energy link to Tunisia
The second project Gozzi cited is the 600 MW cable with Tunisia and the investment in renewable energy in that country.
“After years of work, we are close to signing an intergovernmental agreement between Italy and Tunisia that could allow Italian energy-intensive companies, within the framework of the Interconnector obligations, to participate in the financing of the cable and the construction, in Tunisia, of photovoltaic and wind power plants whose energy could, at least partially, be reimported into Italy through the new cable.”
Gozzi said the cable could be ready in 2028.
Gozzi cited also another project that Federacciai launched: the CEIP Consortium, which practically all the Italian steel companies that use electric arc furnaces have joined and which is looking at the feasibility of one or more direct-reduced iron plants in Italy or abroad to serve Italian companies.
Gozzi told reporters that the scouting for the DRI is focusing on North Africa, but also Brazil or even with Vale in Brazil, with a long-term offtake agreement to deal with the shortage of scrap that is expected as many European blast furnace steelmakers go the EAF route.
In 2023, the Italian steel industry produced 21.1 MMt of steel, a reduction of 2.5% compared with 2022. Gozzi said Federacciai expects that 2024 production will be slightly less than in 2023 as Acciaierie d’Italia weighs on national output.
Platts, part of S&P Global Commodity Insights, assessed HRC Italy Sept. 26 at Eur540/mt base ex-works, down Eur5/mt on the day.
