Carbon reduction potential and costs through circular bioeconomy in the Brazilian steel industry

Although steel recycling is a credited circular economy strategy, domestic scrap stock may be a limitation to curb steelmaking carbon emissions. In Brazil, charcoal production can be a complementary climate change mitigation alternative to recycling. This study has assessed CO2 abatement potentials and costs in a low-carbon (LC) scenario for the Brazilian steel industry based on two circular bioeconomy-based options. For this purpose, Brazilian steel production was forecasted up to 2050 through an econometric model. The technical amount of scrap and the economic feasibility of charcoal have been estimated to determine the penetration of LC strategies. In addition, an uncertainty analysis was conducted using the Monte Carlo method. For the median value in the simulation, we found that crude steel production will emit 64 MtCO(2) in 2050. A recycling share of 36% of the total steel production could reduce these emissions by 20%, and 86% of the remaining blast furnace production could be based on charcoal, improving the total abatement by 65%. The weighted average cost of the LC scenario is -\$1/tCO(2) for the median value in the simulation, but positive values have been found in 45% of the simulations. Charcoal presents higher abatement costs but less uncertainty than recycling. Such strategies can significantly reduce Brazilian steelmaking emissions, postponing other emerging or more expensive alternatives. Nevertheless, economic policies are needed due to additional costs of charcoal, in conjunction with law enforcement to ensure sustainable charcoal production, and regulations are needed to improve logistics and scrap market disparities. (AU)