The global steel industry is making strides towards a greener future through decarbonization and adopting environmentally friendly practices. Christopher Lilholm, head of global key account at DNV, emphasized the importance of Asia, particularly China, in achieving emissions reduction targets for the industry. With Asia accounting for 70% of global crude steel production, China alone produced over 1 billion tonnes in 2023, highlighting its significant role in the decarbonization process.
Lilholm pointed out that transitioning to green steel will require substantial capital investment in green technologies, which may take several years to achieve significant capacity. While government support, private capital, and innovative financing mechanisms like green bonds and loans linked to sustainability will provide initial funding, steel producers must eventually generate profits for investors to sustain green practices in the long term.
One key challenge in the transition to green steel is the lack of uniform standards and regulations. Lilholm highlighted the importance of price reporting agencies (PRAs) like Fastmarkets in establishing standards for assessing emissions reductions, measuring low-emissions steel, and providing transparent price data and methodologies to ensure credibility in the transition to green steel.
The adoption of green metallics such as hydrogen-based direct-reduced iron (DRI), steel scrap, and low-carbon iron ore will be crucial in achieving net-zero emissions in the steel industry. However, challenges remain, especially in China where steelmakers are facing low margins and are hesitant to invest in higher-priced greener raw materials.
Iron ore miners and steelmakers must implement robust assurance mechanisms such as carbon accounting, third-party verification, and transparent reporting to assure customers that the premiums paid for carbon-accounted steel are funding genuine emissions reductions. In a demand-driven global steel market influenced by environmental, social, and governance considerations, China’s role will be pivotal in driving the industry towards sustainability.
As the industry continues its journey towards green steel production, the role of Asia, particularly China, will be crucial in achieving global emissions reduction targets. By adopting green technologies, establishing uniform standards, and embracing sustainable practices, the steel industry can work towards a more environmentally friendly future.