China's steel efforts and challenges in moving towards a low carbon future - Shandong Jiugang Tisco Steel Co., Ltd.

About   Contact    |    

Trade Assurance Shandong Jiugang Tisco Steel Co., Ltd.

The world's best product manufacturing and trading service provider



China’s steel efforts and challenges in moving towards a low carbon future

China’s steel efforts and challenges in moving towards a low carbon future

2021 will go down in history as the first year of China’s low carbon era

Following Chinese President Xi Jinping’s official announcement in September 2020 that China would strive to achieve peak carbon by 2030 and carbon neutrality by 2060, decarbonisation has become a top priority for Chinese society. 2021 has seen an unprecedented series of decarbonisation initiatives launched by Chinese policy makers and industries.

Intensive decarbonisation measures

The Chinese government is at the centre of a series of decarbonisation initiatives, and on 24 October, the “Opinions on Complete and Accurate Implementation of the New Development Concept to Achieve Carbon Neutrality” was unveiled as the top-level overall plan at the central level. Subsequently, during the 26th UN Climate Change Conference in Glasgow, the Chinese government formally submitted to the UNFCCC secretariat the “China’s New Initiatives for Implementing the Effectiveness and New Targets of National Autonomous Contributions” and the “China’s Long-term Low Emission Greenhouse Gas Development Strategy for the Mid-Century”. on 26 October, the State Council issued the “Action Plan for Achieving Carbon Peaking by 2030”, which sets out specific targets for the energy and industry sectors, with the industry sector including steel, construction, transport and the circular economy.

On 16 July, China’s domestic carbon emissions trading system went into operation. This marked the official launch of the world’s largest national carbon emissions trading system. The power generation sector became the first sector to be included in the national carbon trading market in 2021, accounting for approximately 40% of China’s total carbon emissions. The Chinese government has repeatedly reiterated that the steel sector will be included in the national carbon emissions trading system by 2025.

Decarbonisation initiatives in the steel sector

Steel has been identified by the Chinese government as a key sector to focus on in its decarbonisation programme. In addition to basic macro-level policies, the Chinese government has developed initiatives specifically for the steel sector in 2021. It is reported that the Steel Industry Carbon Peaking and Carbon Reduction Action Plan is almost complete and is expected to be released to the public soon.

In 2021, the most direct carbon reduction measure taken by the Chinese government for the steel industry is to reduce steel production, i.e. to ensure a year-on-year reduction in crude steel production in 2021. According to the National Bureau of Statistics, the actual result was a year-on-year reduction of 31.9 million tonnes in China’s crude steel production to 1,032.8 million tonnes in 2021, the first year-on-year decline in steel production in six years.

To further control domestic steel production, the Ministry of Finance has decided to restrict the export of steel products by cancelling the export tax rebate on some steel products as of 1 May 2021. According to the circular, the 13% rebate will be removed for all major cold-rolled thin plates, colour-coated coils, high-alloy steel bars, seamless steel pipes, stainless steel thin plates and medium-thick plates. The export tariff on pig iron was increased from 10% to 15%, but the export tariff on steel scrap remained at 40%.

Full utilisation of steel scrap and circular economy

In January 2021, the Ministry of Industry and Information Technology (MIIT) set out guidelines for the high-quality development of the steel industry, setting a target of increasing the domestic scrap supply from 260 million tonnes in 2020 to 300 million tonnes in 2025.

In July, the National Development and Reform Commission announced the 14th Five-Year Plan for the Development of Circular Economy, which further raised the target for the development of domestic scrap supply to 320 million tonnes by 2025, raising the contribution of scrap to total crude steel production from just 10% in 2020 to 30% in 2025. China had introduced a ban on steel scrap imports in July 2019, which was partially lifted in January 2021. Despite this, for various reasons, actual scrap imports in 2021 will be only 560,000 tonnes, well below the peak of 13.69 million tonnes in 2009.

Action by industry associations and steel companies

As an industry association, the China Iron and Steel Industry Association (CISA) plays an active role in decarbonisation action planning. 2021 In April, CISA formed the Committee for the Promotion of Low Carbon Work in the Steel Industry, which was joined by 360 experts from Chinese steel producers, universities, colleges and research institutes. CISA is also actively organising training on carbon emissions and taking the lead in developing industry standards for the ‘double carbon’ initiative.

At the same time, Chinese steel producers are taking substantial steps to decarbonise, with the four largest steel companies in China – China Baowu Steel Group (the world’s largest steel company), TISCO Group, Angang Group and Baosteel Group – announcing their 2050 decarbonisation roadmaps in 2021, and TISCO Group setting an ambitious target to reach peak carbon by 2022. In November 2021, China Baowu Steel Group launched the Global Innovation Alliance for Low Carbon Metallurgy, with the first 25 low carbon research projects receiving financial support from the Alliance.

Steel coil inspection
A TISCO worker inspects a rolled steel coil
TISCO Group is building a 600,000 tonne per annum hydrogen direct reduction iron plant, which is planned to double its capacity within a few years. China’s second largest private steel company, Jianlong Group, has also launched a decarbonisation project, with a 300,000-tonne hydrogen-fired direct reduction iron plant being built in Inner Mongolia in April 2021.

Challenges ahead

Despite new policy measures and numerous actions taken in China, the steel industry still faces many challenges in its decarbonisation efforts. These include

·The high proportion of capacity in blast furnace-converter processes fed by iron ore, and the fact that the blast furnaces are all very new.
·the problems faced by scrap not only in terms of availability but also in terms of quality
·Inadequate preparation of carbon emissions data for external disclosure and emissions trading.
·the issue of decarbonisation financing for the steel industry, which could require more than US$3 trillion between 2022 and 2050
·The continued slowdown in China’s economic growth, which may reduce the incentive for the industry to decarbonise in the future.
·Nevertheless, there is no doubt that there is already a strong awareness in Chinese society of the need to reduce carbon emissions and pollution. For the steel industry, the combination of policy ·development, increased scrap usage, process efficiency and the development of breakthrough technologies will drive the industry towards a low carbon future.



Leave a message