The window for financing green transition projects is closing, posing the risk of construction delays and operational deadlines being missed, Kallanish learns from the recent Mission Possible Partnership (MPP) update of its global project tracker mapping.
These projects need to reach final investment decisions (FID) for commercial scale investments within the next two years, so that construction can start during 2025-2026 and be operational by 2030 to meet set emission targets.
“We have a two-year window of opportunity remaining to start construction of green production facilities for them to be up and running by 2030. There is no time to lose,” says Faustine Delasalle, chief executive of MPP.
For steel, the 2030 target is 70 near-zero emission primary steel plants. Currently only 9% of these have reached FID, according to the tracker, while 52 have been announced, leaving a pipeline gap of 12. During April to October, just five new projects were announced in the sector while one was cancelled.
This is well below the FIDs in the aluminium sector, which has the same target of 70 projects, with seven (57%) of the announced pipeline projects having passed FID, 33 plants in operation, and a pipeline gap of 17. However, it notes much of this progress is historic, with the majority of operating plants already running on hydropower for many years.
Only one-fifth of the 705 green industrial plants needed by 2030 across the heavy industry and transportation sectors are financed. Investment decisions for the planned projects are worth $1 trillion, with an estimated $155.6 billion investment needed to close the gap for steel.
The report notes policy interventions to embed green demand are key to increase momentum and convert these plans into financed plants. Stimulating transactions from buyers can unlock this supply and deliver dramatic emissions reductions.
“We have the projects to decarbonise our economies, but we’ve reached a stalemate between producers and buyers that cannot be broken, while buyers are not incentivised to purchase green products that still compete against cheaper, fossil fuel-derived products,” Delasalle adds.
The report also notes embodied carbon limits are set to trigger demand from industries such as construction, automotive and packaging, and are activating upstream investment.
On a regional basis, it sees Africa as a growing player in green steel with major decarbonisation projects emerging. Libya recently announced its first large-scale DRI steel project and Namibia has its first green iron kiln.
However, conventional fossil-based facilities are expanding in regions like Asia, where coal-based steel projects are on the rise. India leads this trend with high-emission steel production projects.
China leads in deployment of both high emissions and low-emissions steel production facilities globally, accounting for 10% of the total announced project pipeline across all industry sectors.
In September, China announced the aluminium, cement and steel industries will be added to its national carbon emissions trading market by year-end, with looming carbon tariffs on imported goods levied by Europe’s CBAM likely an influence on the acceleration of heavy industrial sectors in the country.
For steel, the first large-scale carbon capture project for blast furnace steelmaking is currently under development by Baotou Steel in China with a capacity of 0.5m t/y of CO2.
Carrie Bone UK
