Net Zero Industry Tracker 2024

CapitalSTEEL The steel industry will need substantial capital investment to advance low-emission production technologies. To support these technologies, a significant investment towards low-emission energy capacity will also be required. Overall, the estimated additional investment required is $3.6 trillion, out of which almost 70% must be invested by the ecosystem, while only around 30% must be invested by the sector companies. Ecosystem investments will include those needed to build capacity for hydrogen, clean power, CCUS and bioenergy, while investments by companies will be mainly focused on transitioning to net-zero compliant production technologies. Investments required by the sector and enabled by the ecosystem FIGURE 46 Enabled by the ecosystem (around 70% of total investments)Investments by the sector (around 30% of investments)$3.6 trillion required in investment by 2050 Clean power, hydrogen, CCUS, bioenergy Steelmaking technologies Secondary productionUpgrade production infrastructure to use clean power Switch to hydrogen use in production process Switch from BOF to EAF technology Collect post-production scrap Build more capacity for secondary productionProvide low-carbon power/renewable grid Build hydrogen capacity for use in production Build CCUS capacity for CO2 capture and use Build bioenergy capacity With the steel industry’s ROIC at 10%317 and its WACC at 9.4%,318 the industry’s profits are only slightly higher than its costs of financing. This narrow margin means that without additional support from external factors (such as technological advancements, policy incentives and industry collaboration), the industry may struggle to afford and implement the significant changes needed for effective decarbonization. The availability of scrap will influence investments in EAF infrastructure across different countries, with the EU and China having the highest potential to expand their EAF- based production. Approximately 77% of large publicly traded steel companies view climate change as a key consideration for their strategic assessment and integrate it into their operational decision-making. Meanwhile, 15% of companies are building basic emissions management systems and process capabilities. Finally, 8% of companies acknowledge climate change as a business issue.Source: Accenture analysis based on data from MPP . Net-Zero Industry Tracker: 2024 Edition 82