Ferro-chrome and decarbonization: the European energy question
Energy has been at the top of the agenda for the ferro-chrome market over the last couple of years, as prices fluctuate and access to steady supplies becomes more uncertain
The ferro-chrome market was particularly affected by the onset of the energy crisis in Europe. As an energy-intensive industry, it experienced a particularly severe impact. Costs were pushed up throughout value chains, and ferro-chrome prices were eventually pushed down, following major upward spikes during the first half of 2022, as buying interest from end users was dampened by their own cost issues.
Indeed, in the immediate aftermath of Russia’s invasion of Ukraine, Fastmarkets’ weekly assessment of the price ferro-chrome high carbon 6-8.5% C, basis 65-70% Cr, max 1.5% Si, delivered Europe increased significantly.
The price began 2022 at $1.72-1.92 per lb Cr, before peaking for the year at $3.19-3.58 per lb Cr in May, and dipping to $2.08-2.35 per lb Cr in November.
To resolve the issues surrounding energy cost and supply in Europe in the longer term, it is vital for the ferro-chrome industry and the continent as a whole to move away from a reliance on fossil fuels, whether for heat or electricity.
The question then becomes, where does the industry, and the continent, go from here?
According to Maxence Cordiez, an engineer and head of European public affairs at the French Alternative Energies and Atomic Energy Commission (CEA) and a member of the expert committee of the website Connaissance des Énergies, there is no single solution.
“Today, our whole economy is reliant on fossil fuels, whether that’s oil, coal or gas, and that’s true on a world scale as well as for Europe,” he said.
Today, our whole economy is reliant on fossil fuels, whether that’s oil, coal or gas, and that’s true on a world scale as well as for Europe
“Today in the EU for instance, we’re approximately 70% dependent on fossil fuels. What’s very difficult when we say we want to get rid of fossil fuels is that they provide a high level of service for a relatively low cost. They are also easily transportable.”
Cordiez, who is also the author of Energy, Fake or Not: Building our future and decarbonizing our energy without fake news, added that oil may be the most difficult to replace because of its applications beyond energy, especially in chemicals and plastics.
For industries such as ferro-chrome, where fossil coke is used as a reductant, reliance on fossil fuels also extends beyond their use in energy generation, although alternatives are emerging, such as bio-based reductants.
Oil also remains the only viable source of fuel for air transport, as battery-powered alternatives would make aircraft too heavy, Cordiez said.
On the ground, there are of course alternatives to fossil fuels, but there are still limitations.
“We’re used to using energy and electricity whenever we want, and we produce it as we need it,” Cordiez said.
“If we want to close fossil fuel power plants and replace them with wind or solar for example, we will need to make our systems more flexible.”
It also requires public willingness to invest in energy storage, which remains very expensive at a household level. In the UK, for example, the total installation cost of a solar battery storage system, excluding any subsidies, could be £12,000 ($14,500).
“It requires infrastructure, and we also have to make demand for electricity more flexible, for example, charging electric cars at certain times and not others. It requires effort,” Cordiez said.
And in terms of alternatives to fossil fuels beyond renewables or nuclear, such as hydrogen, the production process itself still often relies on fossil fuels, with some methods requiring the use of oil or coal. Although similar to ferro-chrome, bio-based options may be available.
“If we want to produce a fuel that is really sustainable, we have to be careful about the origin of the carbon,” Cordiez said.
“We’re shifting from fuel that is made cheaply to fuel that we have to synthesize from carbon that we have to transform using a large amount of energy, with expensive infrastructure,” Cordiez added.
This is true, to some extent at least, of all “green” alternatives, he said – whether it is wind energy requiring the construction of turbines or solar energy requiring mined materials to manufacture photovoltaic cells.
It will also require public and political will, which may be at odds with the decarbonization agenda. There may be public aversion, for example, to constructing wind farms near populated areas or an unwillingness to moderate consumption.
In terms of nuclear energy, debate remains over its viability in the long term, including questions over what to do with spent reactors, as well as the time frames involved in building new reactors.
“We don’t have the capacity today to build 40 EPRs in France between now and 2050. It’s not realistic. You also need time to hire people and to train them,” Cordiez said.
But this is not to say that decarbonization should stop, nor that there are no solutions; rather, a combination of solutions will be needed, alongside collective effort.
This means, at a basic level, there must be a mix of nuclear, wind, solar and other energy sources, each acting as a contingency for the other, along with better insulation and low carbon sources of heat, Cordiez said.
“We shouldn’t bet everything on nuclear without developing other energy sources. You need about 10 years to build a nuclear power plant, but with renewables, it’s quicker,” he said.
“To get rid of fossil fuels, we will need all low-carbon energy sources, i.e., nuclear and renewables, plus significant energy savings.”