Under the European Commission’s Horizon 2020 Programme, from within one of the Innovative Training Networks (ITN), and with the support of the funds from the Marie Skłodowska-Curie Actions on Excellent Research, Julian Torres has become the first member of the AdaptEconII project to deliver his results and be granted the titles of Doctor of Economic Sciences (Université Clermont Auvergne, France) and of Doctor of Environmental and Natural Resources Management (University of Iceland).
By working alongside the Institute of Economic Structures Research (GWS, Germany), the International Society of Industrial Ecology (ISIE), and the industrial stakeholders WorldSteel Association, Umicore and ArcelorMittal, Julian developed a new approach to the integration of Life Cycle Assessment (LCA) and System Dynamics (SD), contributing to the decision- and policy-making efforts oriented towards sustainability and circularity in the European Steel Industry.
Below you can read both the executive summary and the abstract of his work. The AdaptEconII team celebrates this remarkable achievement, delivered within the 3 years deadline, and wishes Julian the best for his next career steps. We will keep you updated as the remaining 11 team members join him in bringing to light new perspectives and insights on how society can adapt to an ever-evolving economic and environmental reality.
EXECUTIVE SUMMARY: RECLAIMING THE HELM
Steelmakers should consider diverting capital to the end-of-life services that promote circularity as a new strategy towards resource ownership retention and raw material self-sufficiency. These hold the key to curbing steel supply concerns in the long-term while creating new sources of revenue in the secondary metals market, alongside servitization.
Doing so will require the combined efforts of industry and political institutions so environmental commitments continue to be met, calling for circular measures involving either steelmakers or their customers to prioritize investments in supply chain integration, and the recovery of specialty alloys and of scarce alloying elements during recycling.
Furthermore, focus on operational efficiency, by-product recycling, technology and cost reduction now trumps production scale, as per the Chinese lessons of the last decade. Therefore, steelmakers should pay close attention to logistic costs and capital costs as the balance between prices and capacity utilization becomes more delicate and the use of hedging more intensive.
Since high-grade iron ores will go through either technical or economic scarcity between 2051 and 2054, BFBOF steelmakers will continue struggle to manage competition and capacity utilization. Moreover, the continuing transition towards EAF steelmaking will be hindered by increasing electricity and alloying element prices and, although steel scrap continues to leave European borders, its prices will go down more moderately than expected.
However, what stimulates some sectors of the economy might discourage others, since those that contribute the most to steel scrap generation tend to be those in which products containing steel have the shortest life cycles. But despite the fact that increasing circularity by extending steel’s life cycle will likely result in lower demand for new steel, there is a balance to be found and it relies on the European Steel Industry reclaiming the helm.
The thesis delved into the current and future interactions within the European Steel Industry and of it with the environment it is a part of, with the main objective of supporting decision- and policy-making efforts oriented towards sustainability and circularity, helping to shape the future of steel in the European Community. The thesis used the European Steel Industry as a case study to explore the potential benefits of integrating Life Cycle Assessment (LCA) into System Dynamics (SD) under the scopes of Circular Economy and Industrial Ecology. A model representative of the European Steel Industry was built modularly in Stella Architect, following ILCD and ISO guidelines and standards for LCA. Throughout 4 of the 5 articles developed for the present thesis, 21 simulation runs were performed on the aforementioned model: 12 on identifying potential constraints and benefits of End-of-Life policies; 5 assessing the advantages and disadvantages of different Supply Chain Integration (SCI) strategies along European steel supply chains; and 4 addressing the interactions between biophysical and economic dynamics in the steel market. An additional article was developed using the methodologies of Circles of Sustainability and Sustainable Urban Metabolism to appraise the challenges and contributions of steel as part of servitization initiatives in urban environments. Overall results indicated that integrating LCA into SD was not only feasible and capable of reproducing results, trends and behaviors from previous scientific studies, but also of contributing to both methodologies in different levels. This approach has potential to interest policy-makers who seek more granularity within the European Steel Industry as well as decision-makers searching for a broader understanding of their operation’s dynamics beyond the gates, notably regarding raw material scarcity, resource self-sufficiency, and resource ownership retention. From the results of each article it was observed that, (a) pushing for recycling and reuse could generate interesting medium to long-term results for circularity, transitioning away from fossil fuels and developing a whole new market around end-of-life services; (b) different SCI approaches can be environmentally and strategically promising; (c) six key biophysical variables can distinctively affect spot prices, future prices, EBITDA margins, capacity utilization, dividend payouts, and costs of steelmaking; and (d) servitization can provide significant benefits to sustainable cities, while also being able to substantially alter the supply-side dynamics of steelmaking, highlighting how important it is for steelmakers to pay close attention to the service-providing initiatives that may concern their clients and products.