Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

Is Green Steel Socially Beneficial? A Cost-Benefit Analysis of SSAB’s Green Steel Investment

Kleja, Leo LU and Mao, Clarissa LU (2024) NEKP01 20241
Department of Economics
Abstract
This article aims to undertake a comprehensive cost-benefit analysis of SSAB's investment in green steel production under the HYBRIT initiative, focusing on the implications of operating within the EU Emission Trade System and an illustrative scenario employing a carbon tax. The study evaluates profitability and social benefits, utilizing time series models to forecast electricity prices in different regions of Sweden, accounting for energy inputs from wind, hydropower, and nuclear sources. The analysis finds that expanded wind power generation could significantly bolsters the project's viability due to its lowering of electricity costs. Under the current EU Emission Trade System framework, the project's success appears to result in a... (More)
This article aims to undertake a comprehensive cost-benefit analysis of SSAB's investment in green steel production under the HYBRIT initiative, focusing on the implications of operating within the EU Emission Trade System and an illustrative scenario employing a carbon tax. The study evaluates profitability and social benefits, utilizing time series models to forecast electricity prices in different regions of Sweden, accounting for energy inputs from wind, hydropower, and nuclear sources. The analysis finds that expanded wind power generation could significantly bolsters the project's viability due to its lowering of electricity costs. Under the current EU Emission Trade System framework, the project's success appears to result in a social loss if the permit cap is considered exogenous. In the illustrative carbon tax scenario, with escalating social costs of carbon factored in, the economic attractiveness of SSAB's green steel increases, promoting alignment with broader environmental objectives. The study highlights crucial regulatory shifts, such as the elimination of free carbon permit allowances and the introduction of the EU’s carbon border adjustment mechanism, which are pivotal in determining the future landscape of the steel industry. These changes encourage a transition toward sustainable production practices, positioning proactive companies for competitive advantage in a low-carbon economy. (Less)
Please use this url to cite or link to this publication:
author
Kleja, Leo LU and Mao, Clarissa LU
supervisor
organization
course
NEKP01 20241
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Cost-Benefit Analysis, EU Emission Trade System, Green Steel, Hydro-Based Steel, Sustainability
language
English
id
9172895
date added to LUP
2024-10-01 13:18:38
date last changed
2024-10-01 13:18:38
@misc{9172895,
  abstract     = {{This article aims to undertake a comprehensive cost-benefit analysis of SSAB's investment in green steel production under the HYBRIT initiative, focusing on the implications of operating within the EU Emission Trade System and an illustrative scenario employing a carbon tax. The study evaluates profitability and social benefits, utilizing time series models to forecast electricity prices in different regions of Sweden, accounting for energy inputs from wind, hydropower, and nuclear sources. The analysis finds that expanded wind power generation could significantly bolsters the project's viability due to its lowering of electricity costs. Under the current EU Emission Trade System framework, the project's success appears to result in a social loss if the permit cap is considered exogenous. In the illustrative carbon tax scenario, with escalating social costs of carbon factored in, the economic attractiveness of SSAB's green steel increases, promoting alignment with broader environmental objectives. The study highlights crucial regulatory shifts, such as the elimination of free carbon permit allowances and the introduction of the EU’s carbon border adjustment mechanism, which are pivotal in determining the future landscape of the steel industry. These changes encourage a transition toward sustainable production practices, positioning proactive companies for competitive advantage in a low-carbon economy.}},
  author       = {{Kleja, Leo and Mao, Clarissa}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Is Green Steel Socially Beneficial? A Cost-Benefit Analysis of SSAB’s Green Steel Investment}},
  year         = {{2024}},
}