System dynamics approach for the impacts of FINEX technology and carbon taxes on steel demand: Case study of the POSCO

The steel industry accounts for the largest share, approximately 27 percent, of global carbon dioxide emissions from the manufacturing sector. Changes in material and energy use, and emissions profiles of the iron and steel manufacturing are the result of complex interrelationships between technological and economic drivers. A better understanding of these changes require special attention paid to the time dependent consequences that technology and economic influences contribute to the choice of inputs and their associated outputs. We assess the impact that climate-change policies may have on energy use and carbon emissions in the Korean iron and steel industry. We then present models of the iron and steel industry’s energy and product flow of POSCO corporation, with respect to environmental regulations by using the system dynamics (SD). Time series data and engineering information are combined to specify changes in technologies, fuel mix, and production processes. Various scenarios are used to analyze the consequences of climate change on the iron and steel industry. The results of these studies show strategies to prevent environmental changes are devised from various perspectives to minimize the risks associated with future uncertainties, all in an effort to be conducive to the sustainable development of the energy-intensive industry.