China didn’t permit any new coal-based steel projects in the first half of 2024 — a potential “turning point” in the shift to cleaner production methods, according to the Centre for Research on Energy and Clean Air (CREA), citing data from provincial governments.
Why it matters: China is comfortably the world’s largest manufacturer of steel, and the sector is the country’s second-biggest source of carbon emissions, after electricity generation.
Steel is in most cases made by reducing iron ore in ultra-hot blast furnaces that use coal as a fuel and reductant. Moving away from this technology is critical in the fight against climate change.
The latest: In the first six months of the year, only plants powered by electric arc furnaces — which process recycled scrap steel — were granted permits, CREA says in a new analysis. The omission of coal-based plant approvals is a first for the country, and comes after new policies were introduced to support the industry’s decarbonisation.
Thanks to its decarbonisation efforts, China’s emissions from steelmaking could fall by 200 million tonnes by 2025 — equivalent to the annual emissions from the EU’s steel sector, CREA says.
“As China’s steel demand peaks and more scrap becomes available, there is great potential to shift away from coal-based production, representing a significant opportunity for emissions reduction in the next 10 years,” the research group notes.
Policy drivers: A new action plan for the steel sector aims to reduce emissions and restrict exports of steel products with high energy intensity but low added value, potentially curbing exports stemming from excess production.
Moreover, provincial governments have been compelled to draw up plans to cut steel production in 2024 in response to overcapacity, and plants with the highest emissions will be in the firing line first.
The state government has also introduced tax and financial assistance measures to boost producers that use domestic scrap steel.
CREA notes that the EU’s decision to impose taxes on imports of carbon-intensive goods prompted China to include the steel sector in its national emissions trading scheme.
