Decarbonizing Energy-Intensive Steel Production: Dynamic Analysis of CO2 Emission Persistence in Poland’s Basic Oxygen Furnace Sector

This paper analyses the factors that affect CO2 emissions in the BF-BOF steelmaking process using a dynamic econometric approach based on annual data from the Polish steel industry. The analysis commences with the estimation of a baseline dynamic model that describes the relationship between CO2 emissions in the industry and investment allocations, crude steel production, and lagged CO2 emissions. The baseline analysis illustrates the dominant feature of strong emission level persistence and poor tracking of selected conventional production-related factors. The analysis proceeds by extending the baseline results through additional consideration of technological factors, material composition factors, and resource use factors in the generation of CO2 emissions. The additional factors include the use of coke, electricity consumption, fixed asset value, and the scrap ratio. The analysis indicates that these additional factors are essential in improving the accuracy of the modeling process and in clarifying the significance of material composition in CO2 emissions in particular. The analysis further illustrates the critical result that increased use of electricity leads to high CO2 emissions in the BF-BOF process. Further analysis indicates that increasing the use of steel scrap leads to substantial CO2 reductions in the BF-BOF route and other steelmaking technologies. The results also show that CO2 emissions in the BF-BOF process depend not only on production volume, but also on material composition and the technological structure of the process. In the context of the WFESF project, these findings provide evidence-based guidance for metal industry research by identifying priority levers for mitigation, particularly through improvements in process technology and scrap-based material substitution.