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Investors set pathway for steel sector to reach net-zero

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A group of more than 500 investors representing $55TN in assets has published a sector strategy for steel producers and other value chain participants to reach net-zero emissions by 2050.

The plan is a part of Climate Action 100+, an investor-led engagement initiative that strives to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

Published on 4 August by the Institutional Investors Group on Climate Change (IIGCC), the Global Sector Strategies: Investor Interventions to Accelerate Net Zero Steel report claims it is technically feasible for the sector to reach net-zero, provided a combination of emerging technologies are used alongside widescale collaboration.

The report noted that as of June 2021, nine steel companies representing ~20% of the world’s steel production, including the world’s five largest, have committed to net-zero greenhouse gas emissions by 2050 or earlier. But it raised concerns that companies have yet to lay out in detail how they expect to deliver these pledges.

It called on steel businesses to:

  • Increase the proportion of steel produced by the scrap-EAF process from 23% to 60% by 2050
  • Enhancing material efficiency of steel products to limit steel demand growth
  • Further incremental improvements in energy efficiency of existing steel production capacity including by recovering excess heat and gases produced during operations and using them to generate electricity for on-site use or sell it back to the grid
  • Invest in low emission DRI-EAF capacity (including hydrogen-based) for primary steelmaking
  • Apply CCS/CCUS technology to fossil-based steel production plants where feasible

The report also urged steel manufacturers to set short, mid, and long-term targets in line with the IEA’s Net-Zero by 2050 scenario and consistent with the Climate Action 100+ Net-Zero Company Benchmark.  The organisation called for its members to work to demonstrate the feasibility of emerging technologies by producing reports by the end of 2022 that set the scope for deployment of carbon capture, storage, and hydrogen-based DRI-EAF to decarbonise steel production.

Acknowledging that investors also have a role to play in incentivising the low-carbon transition within the steel industry, the report encourages them to secure public commitments from the largest global purchases of steel to buy “green steel” and to provide capital explicitly to finance low-carbon steelmaking capacity.

Mark Davis, GridBeyond’s Managing Director UK & Ireland, said:

“Crucially this strategy mentions little about the steel sector’s potential to support the nation’s transition to net zero by providing balancing services to the grid that support higher integration of renewables. At GridBeyond we are supporting metals companies to do just that.

“From helping metal businesses with flexible procurement, installing on site batteries to secure production resilience and gain revenue from energy markets to supporting the UK’s transition to a net-zero economy. Using our AI-powered technology, we find the energy flexibility metal production sites and make it work for the businesses, reducing operating costs and carbon emissions and securing new revenues.”

 

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