I. China's Steel Industry: A Unique Path to Green Development
In recent years, China's steel industry has taken a distinctive route toward green and low-carbon development through a series of initiatives, including capacity reduction, the development of electric arc furnace (EAF) steelmaking, exploration of hydrogen metallurgy, establishment of Environmental Product Declaration (EPD) platforms, and formulation of low-carbon steel standards.
However, Jiang Wei, Vice President of the China Iron and Steel Association (CISA), pointed out, "Amid rising anti-globalization sentiment, uncertain directions for green transformation, and accelerating industrial restructuring, the steel industry is facing unprecedented pressure. Achieving consistent technological progress under economic downward trends requires long-term and determined efforts from governments, enterprises, and society."
II. Key Approaches to Overcome Challenges
1. Strengthen Upstream and Downstream Collaboration to Build a Green Value Chain
Carbon reduction in the steel industry is not solely the responsibility of steel enterprises. Liu Andong, Vice President of CISA, emphasized the need to establish a system-wide green collaboration network, encompassing iron ore mining, energy suppliers, equipment manufacturers, steel producers, and downstream users, aiming to minimize carbon emissions across the entire life cycle.
2. Advance Technological Innovation to Support Green Metallurgy
Fortescue Metals Group proposed a vision of producing 100 million tons of green ferrous materials annually to replace traditional high-carbon iron ore processing.
Vale is developing Tecnored technology, using biomass charcoal to replace coke in the production of green pig iron.
BHP is exploring blast furnace retrofit technologies, combining renewable energy and green hydrogen to reduce emissions.
According to IEA reports, hydrogen-based direct reduction is currently 50–85% more costly than traditional blast furnace-basic oxygen furnace (BF-BOF) routes. However, China's robust renewable energy infrastructure lays a solid foundation for significant cost reduction in green hydrogen. Wang Li from Broad Reach Consulting predicts that by 2030, hydrogen-based direct reduction in China will become globally competitive and a major tool for decarbonizing steelmaking.
3. Elevate the Strategic Importance of Scrap Steel
Scrap steel is a key lever for low-carbon steelmaking. CISA recommends:
Including scrap steel in the national Five-Year Plan;
Clarifying the corporate tax treatment for scrap recycling companies;
Increasing tax rebates for recycled-content steel products to encourage usage;
Building a closed-loop system covering scrap collection, processing, and distribution, supporting the industry's green transformation.
4. Cultivate the "Green Steel" Market
"Green steel" is emerging as a new growth point for the industry. Currently in its nascent stage, demand is driven by automakers and government procurement projects. To promote its development, the following measures are suggested:
Promote green procurement to build lead markets;
Encourage downstream industries such as automotive and construction to gradually increase green steel usage;
Introduce carbon footprint labeling and low-carbon certification to justify price premiums.
According to Shougang Jingtang, some automakers are already willing to pay a premium for stable-performance low-carbon steel, reflecting a convergence between market demand and decarbonization goals.
5. Deeply Integrate with Carbon Market Mechanisms
The future profitability of carbon allowances will depend on each steelmaker's energy efficiency and emissions intensity. Shi Weiwei, a technical expert at China Datang Group, noted that steelmakers should proactively engage in carbon markets, incorporate carbon pricing into technical and economic analysis, and identify optimal decarbonization pathways.
A dual-track approach is needed: one focusing on technological improvement and energy efficiency, the other leveraging carbon trading for economic incentives and efficient resource allocation.
III. Looking Ahead: A Chinese Model for Low-Carbon Development
Institutional, technological, and smart innovation strategies include:
Developing and promoting a national standard for "Low-Carbon Steel Evaluation Methods," extending to specialty steels;
Fostering collaboration between the steel industry and upstream renewable sectors such as wind, solar, hydrogen, and biomass to build an integrated energy system;
Leveraging AI and IoT technologies to optimize processes, reduce emissions, and support green upgrades in steel production.
Green steel under the Dual Circulation Strategy:
China's steel industry should rely on its robust domestic industrial chain to build a green and low-carbon development model that strengthens internal resilience while advancing global cooperation. By focusing on key technologies like hydrogen metallurgy and carbon capture, and by forming international partnerships, China can lead in shaping global green steel supply chains.
