Modeling Technological Change and Its Impact on Energy Savings in the U.S. Iron and Steel Sector

Market penetration of energy-efficient technologies can be estimated using energy optimization models that minimize cost; however, such models typically estimate the minimum cost of optimal pathways under a certain set of non-dynamic assumptions, so technology penetrations determined for the long-term do not fully respond to changing circumstances or costs. In this study, investment costs of energy-efficient technologies are modeled dynamically in the Industrial Sector Energy-Efficiency Model (ISEEM) using a technological learning formula. Results from 24 energy-efficient technologies – 14 existing, 10 emerging – selected from the United States (U.S.) iron and steel sector show that when technological learning is incorporated into the model, total energy consumption of this sector is expected to decrease by 13% (180 PJ) in 2050 compared to energy consumption in a non-learning scenario. Average energy intensity of the steel production improves from 12.3 GJ/t in the non-learning scenario to 10.7 GJ/t in the learning scenario in 2050. This decrease represents a cost savings of US$1.6 billion and a carbon dioxide emissions reduction potential of 14.9 billion tonnes. Results discussed in this paper focus on the U.S. iron and steel sector, but the proposed framework can be applied to study new technology development in any other industrial processes and regions.