In November, world leaders will meet in Glasgow for the 26th UN Climate Change Conference (COP26). Their mission is to reach a consensus on how to increase climate ambition and accelerate the global energy transition in the 2020s. This means setting in place changes in technologies and infrastructure to secure significant emissions reductions before 2030 and enable further emissions cuts in the following decades. The global steel sector will play a vital role in this transformation.
The 2020s will be a crucial decade for the transformation of the global steel sector. Two key facts underline this. More than 70% of existing coal-fired blast furnaces – comprising 2.4 million jobs and around 2.2 Gt of carbon emissions – will reach the end of their lifetimes by 2030. At the same time, emerging economies are currently building new coal-based steelmaking capacity to meet rapidly rising steel demand.
If all these (re)investment decisions continue to rely on coal-based steelmaking technologies, the outcome will be long-term carbon lock-in. And “bailing out” coal-based assets by retroactively equipping them with CCS after 2030 is a highly risky bet.
Instead, the global steel sector must use the 2020s to invest massively in low-carbon steelmaking technologies such as direct reduced iron and electric arc furnaces. This paper examines the challenges of and options for steelmaking asset transformation in a variety of countries. It is the first in a series of Agora Industry publications on the global steel transformation.