Steel industry can achieve Paris climate targets

A viable investment case for near-zero emissions primary steel projects is within reach in Europe and North America, according to the latest report from the global Energy Transitions Commission (ETC). This makes it possible to put the steel sector on a Paris Agreement-aligned emissions pathway by 2030.

The global pipeline of near-zero emissions primary (ore-based) steel projects must triple within the next three years to enable 190 million tonnes/year of “green” steel production by 2030 and keep industry emission reduction targets within sight, ETC says.

Green-lighting projects by 2026 is the critical challenge given the lead times involved. The ETC demonstrates that the financial gap for doing so is smaller than previously thought. All four countries studied – the UK, Spain, France and the US – can offer a viable investment case, particularly in light of recent policy developments, if action is taken urgently to close the “last-mile” gap, the commission adds.

“Investing in commercial-scale green primary steel is already possible this decade. Support for low-carbon hydrogen in the US and the CBAM in the EU offer solid foundations for getting breakthrough projects off the ground in those markets. Given the lead time of steel projects, urgent action is needed to further strengthen the investment case for breakthrough technologies and secure near-zero emissions primary steelmaking capacity before the decade is out,” ETC chair Adair Turner says in a note seen by Kallanish.

“Progress on breakthrough iron and steel projects in Sweden, Germany and Canada has shown that a compelling case for near-zero emissions primary steel can be made,” says Breakthrough Energy senior director Europe Julia Reinaud. “Ensuring stable and affordable electricity prices for industry and collaboration across the entire value chain are essential for making these projects happen in the short term, and critical for the action that is urgently needed this decade.”

The globalised nature of steel markets means that policy support at the national level can have implications on international trade. Concerted co-operation between governments and companies is essential for ensuring these efforts do not cause cross-border friction and instead create enabling conditions for investment at the international level, ETC observes.

Key areas for collaboration include coordinated aggregation of public and private sector demand across borders to strengthen purchasing signals for near-zero emissions iron and steel products. Harmonisation of product standards, definitions, and certification systems is also key to boosting buyers’ confidence to purchase breakthrough products. Also important is coordination of value chains to reflect new cost-optimal production locations, including the potential separation of iron and steelmaking.

Adam Smith Poland