Ways to Decarbonise the Metals Industries in Central Asia

Kazakhstan is one of the world's largest producers of metals such as iron, steel, copper, zinc and aluminium. This makes the metals industry, in particular the steel industry, one of the largest emitters of greenhouse gases (GHG) in the industrial sector. The country’s strategy for achieving a climate-neutral economy by 2060 includes the transformation of the steel and aluminium industries to almost GHG neutral production. Against this background, the objective of the DeKaMe project was to provide a knowledge base on which policymakers and stakeholders can draw to define technological pathways towards a deep decarbonisation of the metals industry and for the design of supporting policy instruments.

Researchers from the Wuppertal Institute, on behalf of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) identified and described technological options for decarbonising the steel industry as well as the aluminium industry and summarised their advantages and disadvantages in the Kazakh context. In order to provide the Kazakh authorities with a broad portfolio of policy options, the researchers also identified and described policy instruments for decarbonising the steel and aluminium industries, including best-practice examples and international activities on green lead markets. To collect data and validate the findings, stakeholder interviews were conducted and the results were later presented in a webinar.

For the steel industry, the DeKaMe project team found various advantages and disadvantages of different options that require further analysis and discussion during the further elaboration of the countries decarbonisation strategy.

• Direct iron reduction (DRI) using natural gas is the technically most advanced and most cost-effective option for significant near-term CO₂ reduction. However, for achieving near-zero steel production later on it is required to replace natural gas by hydrogen or to add Carbon Capture and Storage (CCS).
• Equipping the blast furnace-converter route with CCS is a comparably low-cost option that allows significant CO₂ reduction. But remaining emissions are comparably high and the feasibility hinges on the implementation of a large-scale CCS-infrastructure in Kazakhstan
• DRI using green hydrogen allows near-zero emissions steel production but is the most expensive near-zero emissions option. Local water scarcity might be a barrier in a dry country such as Kazakhstan.
• Electrolysis allows near-zero emissions steel production but has a comparably low Technology Readiness Level (TRL) and is associated with uncertainties regarding its capabilities and technological characteristics
• For the aluminium industry: Supply with renewable electricity is most important. Due to the high electricity demand of the aluminium smelting process currently the emissions related to electricity provision are about four times higher than direct, process-related emissions.
• For avoiding process emissions of aluminium production the use of inert anodes instead of carbon anodes seems to be the most promising option, although inert anodes will not be available for application at industrial scale in the short term. 

The identification and discussion of policy instruments revealed that international markets for green metals and other sustainable materials are likely to emerge, creating new opportunities for Kazakh companies investing in climate-friendly production. Support and de-risking instruments used in the EU and Germany aim to address coordination, economic, and risk-related challenges. They are typically designed to bridge the cost gap between conventional and climate-friendly technologies, which is not yet fully covered by a CO2 price. Given the currently low CO2 price in Kazakhstan, a significant increase would be necessary to enable the cost-efficient use of such support and de-risking instruments.

The project involved the following members from the Sectors and Technologies Research Unit at the Wuppertal Institute: Dr. Georg Holtz, Alexander Jülich, José Acosta Fernandez, Süheyb Bilici, PD Dr. Peter Viebahn. Additionally, Katharina Knoop from the Structural Change and Innovation Research Unit, and Dr. Anna Leipprand from the Transformative Industrial Policy Research Unit contributed to the study.

The report "Providing a knowledge base for decarbonizing the Kazakh metals industries (DeKaMe)" was produced as part of the DeKaMe project and can be downloaded free of charge via the following link.