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A recent report from Global Energy Monitor (GEM) reveals that India has surpassed China as the top developer of coal-based steel capacity for the first time. Despite the need to decarbonize coal-based steelmaking in line with the Paris Climate goals, steelmakers increased their investments in polluting coal-based plants by 8% in the past year. Most coal-based capacity under development is in Asia, with India and China leading the way, raising concerns about stranded assets and slow decarbonization efforts.
India and China Lead in Coal-Based Steel Expansion:
The GEM report highlights that Asia dominates the expansion of coal-based steelmaking, with India accounting for 40% and China 39% of the capacity under development. The steel industry's heavy reliance on coal-based production poses significant challenges in achieving carbon neutrality commitments.
Risks of Stranded Assets and Slow Transition:
The global steel industry faces a staggering $554 billion in stranded asset risk as countries continue to increase coal-based steel capacity while striving for carbon neutrality. While some progress has been made in transitioning to cleaner production methods, the pace is deemed insufficient. Developers who invest in coal-based capacity now risk substantial write-downs in the future, according to Caitlin Swalec, the program director for heavy industry at GEM.
Net-Zero Scenario and Decarbonization Ambitions:
In line with the International Energy Agency's net-zero scenario, the GEM report underscores the necessity of shifting towards 'electric arc furnace' capacity, targeting a 53% share by 2050. This would require retiring or canceling 347 million tonnes of coal-based capacity and adding 610 million tonnes of electric arc furnace capacity.
SteelWatch, a new global watchdog monitoring carbon emissions from steelmakers, emphasizes the urgency for investment decisions to shift rapidly in Asia. With Asia accounting for 83% of blast furnaces in operation, the region's steel producers face a crucial choice - either invest in the future of the steel sector with green technology or continue relying on coal-based steel, risking climate calamity.