China’s Green Steel Drive to Push Steel Making Costs
China is rolling out proposals related to its goal of hitting peak carbon emissions by 2030, including setting an emission peak target for the steel
China is rolling out proposals related to its goal of hitting peak carbon emissions by 2030, including setting an emission peak target for the steel sector at 2025. Experts said that achieving the target means that steel costs are likely to rise which might in turn drive up housing and automobile prices. But it would also prompt steelmakers to optimize operations by using more cutting-edge new technologies. According to a report of the Economic Information Daily, China has generally been clear about its peak carbon emissions goals for the steel industry. The country initially plans to achieve peak carbon emissions in 2025 for the steel sector, five years ahead of the general carbon emissions peak target. By 2030, the volume of carbon emissions in the steel industry is expected to decrease by 30% compared with the sector's emission peak. Chinese state-run think tank Metallurgical Industry Planning & Research Institute Secretary Mr Li Xinchuan said at a forum in Beijing earlier this month that China's steel industry will reach peak carbon emissions and output by 2025 and will cut emissions by 30% by 2030,.
Beijing Lange Steel Information Research Centre Director Ms Wang Guoqing told the Global Times that controlling total steel output will affect the steel industry in the short term. She said "However, this will in turn encourage steelmakers to optimize their production processes by adopting short production flows and boosting the application of new technologies, such as deoxidization with hydrogen to reduce carbon emissions.”
Investment Association of China’s Green Innovation Centre of the Investment Consulting Special Committee Deputy Director Mr Guo Haifei however said that it will be hard for Chinese steelmakers to achieve the current peak carbon emissions target by 2025, but not impossible. He told "To achieve the objective, Chinese steel companies have to shift their production methods and replace hard coke with electricity. This would push the cost of steelmaking higher and reduce profit margin, and some steelmakers might reduce production as a result. Steel sector's upstream and downstream enterprises will be affected. For example, the coke industry is expected to shrink, while the electricity industry will increase investment in clean sources such as wind turbines. Higher steelmaking costs would also increase the costs of raw materials for downstream industries like real estate and infrastructure, which will eventually lead to higher prices for housing. Vehicles will also likely be affected.”
The steel industry is a sector that produces the most carbon emissions in China, accounting for about 15% of the national total. Thus, it's crucial for steelmakers to pursue green and low-carbon development during the 14th Five-Year Plan period of 2021-25. China's steel industry carbon emissions are expected to fall by 30% from the peak to 420 million tonne by 2030 and will fall substantially by 2035 and meet China's goal for carbon neutrality by 2060. Incidentally, China's largest steel producers state-controlled Baowu and Hebei Iron & Steel have committed to reaching peak carbon emissions in 2022-23.