Engineering:Green steel in Ukraine

Green steel is the only financial incentive in Ukraine for metallurgical enterprises to reduce CO2 emissions to the European target values within the framework of the Green Deal. Accordingly, it is the only mechanism available today for modernizing steel production to meet environmental goals. Metallurgical plants in Ukraine, which have reduced CO2 emissions to the European target level, are exempted from paying part of the “NEC Ukrenergo” tariff for electricity transmission, which was set up to offset the costs of using electricity from renewable energy sources.

A similar financial incentive is in place in Germany, which exempts green industry from payments for green electricity.

Nationally Determined Contribution and Green Deal

Nationally Determined Contributions (NDCs) are Ukraine's obligations under the Paris Agreement to reduce CO2 emissions. Ukraine submitted its intended obligations in 2015 and will submit new commitments in 2021.

The European Green Deal is a plan to achieve zero greenhouse gas emissions and zero pollution in the member states of the European Union by switching from fossil fuels to renewable energy and raw materials by 2050. To achieve this goal, the EU plans to spend 1 trillion euros over the next ten years. Adopted by the European Commission on 11 December 2019, the aim of the plan is to combat global warming and environmental pollution.

From 2021-2027, the Green Deal will provide 100 billion euros for the regions most affected by decarbonization. As one example, Poland is guaranteed to receive two billion euros from a total 7.5 billion euros allocated to the Fair Transition Fund program component of the overall plan, directly funded by the European Commission.

Germany is already introducing a green steel financing program. In 2019, the German steel industry accounted for about a third of direct industrial emissions, with CO2 emissions of more than 36 million tonnes. The German Ministry of the Environment plans to allocate about two billion euros for this purpose through the Energy and Climate Fund in the coming years.

Now in the European Union, when producing one ton of steel by the oxygen-converter method, CO2 emissions are on average 1300 kg, in Ukraine - 2000 kg. According to the Green Deal, this level should be reduced by 80% by 2050, or to 250 kg per ton of steel.  Electric arc steel production is the only technology available today that can meet this target.

History of adoption

On July 21, 2020, the Verkhovna Rada of Ukraine adopted the Law of Ukraine 810-IX "On Amendments to Certain Laws of Ukraine Concerning Improving the Conditions for Supporting the Production of Electricity from Alternative Energy Sources."

This law contains a number of norms that introduce such a concept as "green steel" into the legal field of Ukraine. The author is the People's Deputy of Ukraine, Deputy Head of the Verkhovna Rada Committee for Economic Development, Dmitry Kisilevsky. He submitted amendments to bills No. 881 and No. 939, for which 277 and 289 people's deputies voted, respectively.

In order to be compliant with the law,  a green steel enterprise must meet the standards for direct CO2 emissions in steel production: no more than 250 kg per ton, exclusively using the electric arc production method.

Green steel enterprises also must pay a "green" tariff by ensuring their electricity is produced from alternative sources.  The transmission system operator “NEC Ukrenergo" has been designated to provide  services for the transmission of electricity purchased for steel production, excluding the costs of performing special duties, to ensure an increase in the share of electricity from alternative energy sources.

The establishment of the tariff for green steel enterprises program has been sanctioned by the Ministry of Economic Development, Trade and Agriculture of Ukraine and the Ministry of Environmental Protection and Natural Resources of Ukraine.

Green steel enterprises in Ukraine

Theoretically, only five metallurgical plants in Ukraine could receive the status of "green steel":

1. Interpipe Steel (Dnipro)
2. Elektrostal (Kurakhove)
3. Azovelektrostal (Mariupol)
4. Energomashspetsstal (Kramatorsk)
5. "Dneprospetsstal" (Zaporizhzhia)

It is these enterprises that already have CO2 emissions below 250 kg / t of steel, that is, within the limits that the EU intends to achieve under the Green Deal by 2050.

At the end of 2020, these five steel plants account for 5.5% of the steel smelted in Ukraine and less than 1% of the total electricity consumption in Ukraine.

Not a single metal plant has yet received the status of "green steel," since the Cabinet of Ministers is still developing the procedure for obtaining this status.