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City and County Level Modeling of Technology Transition in Korea’s Steel Industry Under Carbon Neutrality Using GCAM-EML

  • 김문태 (Kim Muntae, 아주대학교 일반대학원)

초록/요약

The steel industry is one of the most energy-intensive and greenhouse gas (GHG)-emitting sectors, accounting for approximately 30% of global industrial energy consumption and about 19% of direct GHG emissions in 2021. Korea, as the sixth-largest steel producer, produced 70.4 million tons of crude steel in 2021. The Korean steel industry consumed approximately 25% of national manufacturing energy (128.2 MTOE) and emitted 38% of industrial GHG emissions (233.1 MtCO₂eq) in 2021. To achieve carbon neutrality by 2050, industry and government stakeholders aim to replace all existing blast furnaces (BFs) with hydrogen-based direct reduced iron (H₂-DRI) facilities by 2050. About 70% of Korea’s steel is produced using the BF process and is concentrated in three regions: Dangjin, Gwangyang, and Pohang. The policy's effects can be more effectively analyzed when regional characteristics, such as energy and technology, are considered. This study utilizes GCAM-EML (Global Change Analysis Model – Energy Modeling Laboratory), developed by the Energy Modeling Laboratory at Ajou University based on the Global Change Analysis Model (GCAM), to simulate the transition of regional steel technologies at the city and county levels. GCAM-EML assumes that Korea is a small, open economy, using global resource prices as external inputs, modeled as infinitely elastic supply curves. GCAM-EML features a high-resolution model for analyzing Korea's 229 cities and counties. The developed scenario is designed to align with the steel production and GHG emissions targets set by the 2030 Nationally Determined Contributions (NDC) and the 2050 net-zero scenario. Simulation results indicate that energy consumption in Korea's manufacturing sector is expected to decrease by 1% by 2050 compared to 2020. Meanwhile, GHG emissions are projected to decrease by 65% in 2050 compared to 2020 due to the expected changes in the energy and technology mix during the period. It is driven by electrification in the industry sector, from 17% in 2020 to 25% in 2050, and the rise of renewables in electricity generation from 4% to 68%. In the steel sector, BF is expected to be replaced by a blast furnace with carbon capture and storage (BF-CCS, 49%) and a hydrogen-based blast furnace with carbon capture and storage (H₂-BF-CCS, 28%) by 2050. CCS technologies are expected to contribute to a 90% reduction in the steel sector's GHG emissions by 2050 compared to 2023. However, H₂-DRI accounted for 2% of production in 2050, below the national target of 55%. Regionally, the main production hubs in 2050 are expected to remain the same as those in 2020, with production accounting for approximately 69% of the total in 2050. However, Dangjin is expected to surpass Pohang as the largest producer by 2050. Gwangyang, which lacked an electric arc furnace (EAF) in 2020, is not expected to adopt an EAF by 2050, while EAF use is projected to increase in Dangjin and Pohang. Given the central role of CCS technologies, sensitivity analysis is conducted by increasing CCS costs by 30% and 50%. Increasing CCS costs by 30 % and 50 % reduced the share of CCS-based steel production from 72.2 % to 72.0 % and 71.8 %, respectively. In the major steel-producing regions of Dangjin, Pohang, and Gwangyang, the CCS production share fell by no more than 4.1 %, confirming that the impact of higher CCS costs on overall technology is limited. When CCS technology costs, including baseline steelmaking processes, increase by 30% and 50%, the CCS share declines to 62.2% and 55.1%, respectively, while the H₂-DRI share remains minimal at 2.1% and 2.3%. This paper makes two contributions. First, by segmenting the analysis into 229 cities and counties, this paper applies and implements regional features of industrial structures and energy systems that the national-level model commonly overlooks in modeling. Second, it demonstrates that CCS technology, particularly BF-CCS and H₂-BF-CCS, represents the economic path for decarbonizing the Korean steel industry. Another minor contribution is adjusting the GCAM’s default income elasticity of steel demand from a negative value to a positive value by reflecting its nature as a normal good. These findings underscore the need for regionally tailored infrastructure investment and technology policies to facilitate an efficient transition to carbon neutrality.

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목차

I. Introduction 1
II. Overview of Domestic Steel Industry: Past, Present, and Future 5
A. Past and Present of the Steel Industry 5
1. History of the Steel Industry 5
2. Economic Contribution of the Steel Industry 12
B. Future of the Steel Industry 18
1. Carbon Neutrality of the Steel Industry 18
2. Future Demand of the Steel Industry 22
III. Review of Previous Studies 26
IV. Model and Data 37
A. GCAM 37
B. GCAM-EML 45
1. Structure of GCAM-EML 45
2. Data of GCAM-EML 49
V. Scenario and Results 68
A. Scenario Design 68
B. Results 70
VI. Conclusions 88
References 93
Appendix A 114
Appendix B 115

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