Net Zero Industry Tracker 2024

PolicySTEEL The production of steel is highly concentrated globally, with China and India contributing to over 60% of the total output, and future demand from these countries is expected to be significant. However, key policies aimed at emissions reduction are currently being developed primarily in the US and Europe. Hence, it is critical to develop and enforce supportive policies in regions where most of the demand and production comes from. To support the journey towards net-zero emissions, the key focus areas of policy in the steel sector should be: –Investment in the development of new steelmaking technologies that are less emission and energy intensive compared to existing processes (e.g. EAF technologies with the use of low-emission fuels) –Direct funding/incentives for increasing capacity for renewable energy, hydrogen, CCUS and biofuels required to power the new steelmaking processes –Demand-side interventions for green public procurement (as an example) to stimulate the demand for green steel Furthermore, international collaboration must align emissions-accounting methodologies for steel to effectively track and monitor progress towards net- zero targets, especially in major producing countries like China and India. Steel industry policy summary TABLE 11 Policy type Policy instruments Key examples Impact Market-basedCarbon price –EU-ETS319 –California ETS320 –South Korea ETS321 –China ETS322Incentivizes steel producers to reduce emissions, but impact is limited by free emission allowances and lower carbon prices. Border adjustment tariffEU CBAM323Emission-intensive steel exporters to the EU face increased costs of compliance. Currently, 30% of steel consumed is imported from non-EU countries. The policy needs to be complemented by transparent and fair carbon accounting standards. Carbon price India’s Carbon Credits Trading Scheme (pending launch in 2026)India’s domestic voluntary carbon market will include the iron and steel sector, and is expected to launch in 2026. Mandate-basedProduct standards China’s Action Plan for Industrial Carbon Peaking324By 2025, steel suppliers are expected to achieve an annual recycling capacity of 180 million tonnes. Incentive-basedDirect funding UK Green Steel Fund325£2.1-3.5 billion clean steel fund, with the aim of establishing up to 3.78 Mt of additional secondary steel capacity, 4.44 Mt of low-emissions primary steel capacity and 5 Mt of domestic hydrogen-DRI capacity. Tax credits and subsidiesIRA tax-credits to clean power, green hydrogen and CCUS326These can potentially reduce the cost of near-zero- emission steel by up to 35%. With limited funding available in developing economies, international funding collaboration mechanisms are an option to raise the required capital. Direct funding EU Clean Steel Partnership327Funding to support research and innovation for carbon neutral steel production. Net-Zero Industry Tracker: 2024 Edition 83