Governments play key steel transition funding role: forum

Governments must play a critical role in providing financing for the technological transformation of the steel industry, said speakers at the Open Forum-Climate Action conference hosted by worldsteel in Antwerp last week.

“We shied away from heavy industries in the last two decades, but are now coming back to segments like cement or fertilisers because of climate change,” said Alfredo Bano Leal of Asia Development Bank.

“Hopefully, we will find enough banks, or else we would need to rely on governments,” said Gabriel de Laval, head of hydrogen at Credit Agricole. He underlined how green steel is pushing the boundaries, as “there is no bigger object of investment than a greenfield green steel mill”.

In line with other speakers, the moderator of the panel, Soo Jung Kim, worldsteel head of sustainability communications, also cautioned that governments are an essential enabler of major tech investments.

Elizabeth Dykstra-McCarthy of the Climate Investment Funds noted that her organisation’s funds are normally supporting governments. She made the point that “we believe developing countries will be key to the energy transition” given their potential for solar and wind power parks.

That view was challenged by Kwasi Ampofo, head of metals and mining at Bloomberg New Energy Finance (NEF). “Emerging countries do not have the economies of scale as producers and consumers to attract investors,” Kallanish heard him say at the event. They “will be in line later in the next wave of investment,” he added.

He noted the steel industry was an early mover in decarbonisation, but other materials have caught up, like aluminium, cement, or plastics. However, “steel is still expected to decarbonise faster that its peers,” he observed.

In his presentation, Ampofo compared the costs of low-emission steelmaking now with 2050, by which point many mills pledge to be net-zero. According to figures by BloombergNEF, the costs per tonne of hydrogen-based steelmaking are between $658 in China and $889 in Germany and approximately in the USA. By 2050, these could sink to between $432 and $525 respectively.

Christian Koehl Germany