Carbon peaking goal for steel sector toned down

A “guiding opinion” document on “high quality development” in the steel industry has suggested the sector should target peak carbon emissions “by 2030”, rather than “before 2025” as floated last March. 

The document was released on 7 February by three central government ministries. The revised date reflects signals from the top for China to decarbonise in a gradual and steady manner. These were issued most strongly in December 2021 when President Xi called for “the correct understanding of carbon peaking and carbon neutrality… Decarbonisation should be carried out steadfastly – but not achieved with one stroke.”

China produces over half of the world’s steel. The sector is the second largest carbon emitter in the country, after the power sector. Until 2021, the industry had seen unwieldy and seemingly unstoppable growth, propelled by domestic demand from the construction industry, as well as surplus production capacity. Previous attempts to limit capacity and control production have had limited success. However, last year saw the first decline in annual steel output in six years.

Decarbonisation in the steel industry is complex. Smelting requires intense heat and large amounts of electricity, both of which have traditionally been supplied by burning coal. 

The new guiding opinion calls for increasing efficiency and reducing emissions, as well as ensuring at least 15% of crude steel is produced by electric arc furnaces (using scraps) by 2025. A recent report by Global Energy Monitor shows that, to date, there has been little progress in increasing the share of electric arc furnaces. The guiding opinion also “strictly forbids” adding new steelmaking capacity.