Decarbonization should be done immediately to avoid stranding of assets and employment
It is of “paramountimportance” the steel industry invests now in low-carbon steelmakingtechnologies that are compatible with climate neutrality, to avoid exposingassets and jobs to high risks in the 2030s and beyond. So says German think tankAgora Energiewende.
Around 71% of the world’s coal-basedsteel blast furnace capacity – 1.09 billion tonnes/year – will reach the end ofits operating lifetime before 2030 and require major reinvestments. At the sametime, emerging economies with rising steel demand will require at least 170million t/y of new capacity. “Meeting these needs with coal-based capacity willcreate long-term carbon lock-in and lead to stranded assets, endangering jobsand putting any pathway compatible with 1.5°C out of reach,” the think tankobserves.
Kickstarting the steel sector’stransformation will require a massive increase in global iron ore pelletcapacity to feed direct reduced iron plants, new infrastructure, government supportand a regulatory policy framework for low-carbon steelmaking, AgoraEnergiewende says. This could include policy instruments such as carboncontracts for difference, green steel labelling and reporting standards,embedded carbon requirements, green public procurement, hydrogen supportinstruments and the construction of a hydrogen infrastructure.
“If the global steel industry movesahead at the same speed, the resulting single-speed transformation will bringenhanced international cooperation and a level playing field,” the organisationopines in a report seen by Kallanish.
The project pipeline of greensteelmaking capacity that will come online before 2030 is growing rapidly, with40m t/y of DRI capacity already planned. “Retroactive post-combustion CCS forcoal-fired blast furnaces may be a dead-end road,” Agora Energiewende comments.“The best strategy from now on is to avoid reinvestments into blast furnaces byprolonging lifetimes of old assets by 2-5 years and after 2025, invest into DRIdirectly.”
Edit: Yuan Hui