China has taken a significant step towards reducing its carbon emissions by imposing restrictions on coal-based steelmaking projects in the first half of this year. According to a report by the Centre for Research on Energy and Clean Air, provincial governments in China approved 7.1 million tonnes per annum of steelmaking capacity, all of which were projects using electric arc furnaces (EAFs).
This marks a major policy shift for the country’s iron and steel sector, moving away from blast furnaces and basic oxygen furnaces (BOFs) that heavily rely on coal. EAF steelmaking, running on recycled scrap and electricity, emits about one-third as much carbon dioxide per tonne of steel compared to coal-based methods.
China aims to peak carbon emissions before 2030 and achieve carbon neutrality by 2060. By 2025, the country plans to reduce the steel sector’s annual carbon dioxide discharge by 200 million tonnes by increasing the share of scrap-based secondary steel from EAFs.
However, China faces challenges in its transition to low carbon steel production. The country dominates global steel production but the majority of its plants are coal-based, limiting its recycling rate and posing a dilemma with its young fleet of blast furnaces. To achieve carbon neutrality, accelerated investments in near-zero steel-smelting capacity, such as hydrogen-based production or carbon capture facilities, are needed.
The steel industry is a significant contributor to global carbon dioxide emissions, highlighting the urgency for China to transition to cleaner steelmaking methods. With the world’s carbon emissions budget dwindling, the pressure is on for the steel sector to innovate and reduce its environmental impact.
