The global steel industry may find itself saddled with up to $70 billion (€58.9 billion) in assets over the coming years and decades because it is still constructing new coal-powered blast furnaces which will become redundant as the world continues to cut carbon emissions, according to a new report.
Steelmaking. Photo: Yermolov / Shutterstock
Photo: Yermolov / Shutterstock
Around 50 million tonnes of steelmaking capacity is currently under development using blast furnaces, mostly in China, the world's largest producer, said the report by San Francisco-based think-tank Global Energy Monitor (GEM).
"Building new coal blast furnaces is a bad bet for steel producers and a bad bet for the planet," said Christine Shearer, GEM's coal programme director.
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Coal-powered blast furnaces are likely to become unnecessary or inoperable over time, leaving the sector with "stranded assets" worth between $47 billion (€39.5 billion) and $70 billion (€58.85 billion), the report claimed.
"Based on projections from the IEA and other groups, (they could become stranded) quite likely by 2030-2040. It could be sooner if more aggressive carbon taxes or restrictions are applied," said Caitlin Swalec, the report's lead author.
Total direct global emissions from the iron and steel sector need to drop by over 50% by 2050 relative to 2019 in order to meet the goals of the Paris Climate Agreement, according to data from the International Energy Agency.
Despite there being large swathes of excess steelmaking capacity worldwide, new plants are being built. GEM said that the current capacity was 25% above 2019 production levels.
Most players in the global steel industry - which accounts for around 8% of greenhouse gas emissions worldwide - acknowledge that carbon emissions must be slashed, the group said.
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Steelmaking companies and countries have made commitments to move to net-zero and low carbon emissions that cover more than three-quarters of current global steel capacity, it added.
Steelmakers are looking to expand the use of electric arc furnaces while also developing hydrogen and carbon capture technologies to cut emissions.
GEM used data from its Global Steel Plant Tracker, which surveys every plant operating at a capacity of one million tonnes a year or more.
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