Dialogue and co-operation in the G20 will be critical to ensuring access to the resources required to decarbonise the steel industry on a global scale, says a new report from the International Renewable Energy Agency (IRENA) in collaboration with India’s Ministry of Environment, Forest and Climate Change.
The role of steel recycling will continue to grow over time as more scrap becomes available in emerging economies, resulting in larger shares of recycled steel, in turn progressively reducing the need for primary production. By 2050, about half of the world’s steel production could come from recycled scrap, according to the report seen by Kallanish.
“National governments can make a difference by adopting and enforcing regulations that ensure environmentally sound and thorough steel scrap collection and sorting processes,” the report states. “Adopting such good practices in the recovery of end-of-life steel products is also crucial to minimise scrap’s contamination by other materials, for example, copper, thereby enabling the use of scrap as input for higher-quality steel specifications.”
“Dialogue and co-operation in the G20 can contribute towards removing the barriers to international scrap trade, allowing scrap to be transported and used where it creates the most economic and environmental value,” it adds.
G20 members can also facilitate the exchange of best practices among national policymakers and regulators. This could focus on preventing market distortions that disincentivise investments in energy efficiency projects. Implementing best practices can make the industry more competitive and provide sufficient incentives to invest in improving efficiency in domestic steel industries.
When it comes to hydrogen use, regions with low-cost, abundant and high-quality renewable energy and iron ore resources are in the best position to make hydrogen-based iron ore reduction competitive, the report continues.
This creates an opportunity for international co-operation. Iron ore exporters with competitive captive renewables supply could capture more value by exporting processed iron. Importing countries could reduce the overall costs of decarbonising their domestic industries while retaining steel production within their borders, the report observes.
A transition towards renewables-based steel will require decisive policy support in the early stages of technology adoption. Policy action at the national level can help create the conditions for investment but since steel is an internationally traded commodity, multilateral co-ordination will be vital.
The report recommends G20 members co-operate in several areas to accelerate a transition towards renewables-based steel. These include dialogue towards internationally agreed definitions, standards and certifications for low-carbon steel; initial demand creation through multilateral public procurement commitments; and knowledge exchange on technology research and development. Further areas are professional skills needed for the transition; and technical and financial assistance to developing countries, among others.
Adam Smith Poland