Posted on 11 Jul 2024
China has put limits on coal-based steelmaking projects in the first half of this year, a significant turning point as the world’s biggest polluter rushes to meet its dual-carbon targets, according to Helsinki-based Centre for Research on Energy and Clean Air.
In the first six months of 2024, provincial governments permitted 7.1 million tonnes per annum of steelmaking capacity, all of which were projects using electric arc furnaces, according to the CREA report published on Thursday.
This is in contrast with the approvals given in the past seven years, when 99 per cent of the newly installed ironmaking capacity used blast furnaces and 70 per cent of the new steelmaking capacity used basic oxygen furnaces (BOFs), according to CREA.
It also marks a major policy shift for the country’s iron and steel sector, as EAFs running on recycled scrap and electricity could help slash emissions, according to Shen Xinyi, researcher at CREA and the report’s lead author.
“Producing steel in EAFs has a much smaller environmental impact than BF – BOF, with fewer carbon emissions and air pollutants, and saving the local ecology from mining new iron ore,” she said. “As China’s steel demand peaks and more scrap becomes available, it brings us a major opportunity to reduce emissions over the next 10 years.”
EAF steelmaking is about one-third as carbon-intensive as coal-based BF – BOF routes of steelmaking. EAF steelmaking, with electricity as its main energy source, emits about 0.6 tonnes of carbon dioxide per tonne of steel, while the BF – BOF route, which uses coal as the main energy source and reducing agent, discharges about 2 tonnes of carbon dioxide per tonne of steel, according to CREA.
China has set a goal to peak carbon emissions before 2030 and achieve carbon neutrality by 2060. By 2025, the country aims to cut the steel sector’s annual carbon dioxide discharge by 200 million tonnes, equivalent to to the EU’s steel sector’s annual emissions, by increasing the share of scrap-based secondary steel from EAFs, according to the CREA report.
China faces several challenges in its low carbon transition, said Li Shuyi, principal, industry decarbonisation at non-profit energy transition researcher RMI China.
The country dominates global steel production, accounting for 54 per cent of the world output in 2022, far ahead of second-placed India’s 7 per cent, Li noted. However, 76 per cent of its plants are coal-based, compared with 24 per cent in the US and 44 per cent in the European Union.
Limited supply of scrap steel restricts China’s recycling rate to 9 per cent compared with 42 per cent in the EU and 71 per cent in the US, she added.
Another dilemma facing the Chinese industry is its young fleet of blast furnaces, whose average age at 12 years is far lower than the global average of 40 years. In the event of early shutdowns, the industry would be threatened with major asset write-offs and higher bad debts, Li said.
While China has achieved “comprehensive” progress in the past year, with seven major steel companies committing to achieving carbon neutrality, accelerated investments in near-zero steel-smelting capacity – either hydrogen-based or fitted with carbon capture facilities – is needed, she noted.
In traditional steelmaking, the carbon in coal or natural gas is used as a chemical agent to turn iron ore to iron, a process that produces carbon dioxide. Hydrogen-based steel production emits only water vapour.
The steel industry is responsible for over a tenth of global carbon dioxide emissions, according to consultancy Global Efficiency Intelligence.
“We have no time to lose,” Li told an Alliance for Green Commercial Banks webinar late last month. “To limit global warming to 1.5 degrees [by 2050], from the start of 2020, out of the remaining global carbon emissions budget of about 400 billion tonnes, 19 billion to 70 billion tonnes will go to the steel sector.
“This will be used up in the next five to 12 years if the sector continues to grow at the current pace.”
Source:South China Morning Post
