Citation:

Gigih Respati Yudistianto, Yudo Anggoro. "Techno-Economic Analysis of Electric Arc Furnace Technology as a Pathway towards Indonesia Low-Emission Steel Production" International Research Journal of Economics and Management Studies, Vol. 5, No. 6, pp. 223-234, 2026. Crossref. http://doi.org/10.56472/25835238/IRJEMS-V5I6P125

Abstract:

The European Union (EU) launched the European Green Deal, which led to the implementation of the Carbon Border Adjustment Mechanism (CBAM). Steel is subject to an additional carbon tax based on EU-CBAM. Indonesia also planned to impose a carbon tax on steel, but the tariff is low. There are 3 (three) major steelmaking production routes: Blast Furnace-Basic Oxygen Furnace (BF-BOF), gas-based Direct Reduced Iron-Electric Arc Furnace (DRI-EAF), and scrap-based Electric Arc Furnace (EAF). This research provides a technological review for PT Giga Steel facilities regarding their specific consumption of input materials, fuel, Energy, CO2 emissions, and the cost competitiveness for steel production routes. Furthermore, it will examine the impact of Indonesia's carbon tax and the EU-CBAM on the transition to low-carbon steel production. According to the analysis, the BF-BOF route has the lowest production cost but the highest CO2 emissions. The EAF route has the lowest CO2 emissions, but its production cost is 20.91% higher than that of the BF-BOF route. Given the current Indonesian carbon tax, the BF-BOF route remains the most competitive production route. When the carbon tax tariff exceeds 67 USD/-CO2, EAF will be more competitive. For export markets to the EU with a carbon price >80 USD/t-CO2, the scrap-based EAF route will become the preferred option.

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Keywords:

BF-BOF, CBAM, CO2 Emissions, EAF, and Cost Competitiveness.