Net-Zero Roadmap for China’s Steel Industry
Authors: Ali Hasanbeigi, Ph.D. - Global Efficiency Intelligence
Hongyou Lu, Nan Zhou - Lawrence Berkeley National Lab
Iron and steel manufacturing is one of the most energy-intensive industries worldwide, accounting for over 7% of global greenhouse gas (GHG) emissions and 11% of global carbon dioxide (CO2) emissions. In 2021, China accounted for 53% of global steel production. The Chinese steel industry produced 1,033 million tonnes (Mt) of crude steel in 2021, of which 89.4% was produced by primary steelmaking plants using blast furnace-basic oxygen furnace (BF-BOF) and 10.6% was produced by the electric arc furnace (EAF) production route.
China has pledged to peak its CO2 emissions before 2030 and achieve carbon neutrality before 2060. China’s steel industry is expected to peak its CO2 emissions before 2030. This peak in steel industry CO2 emissions is mainly driven by the peaking of domestic steel demand. Steel production in China has one of the highest carbon intensities in the world because the majority of steel is produced by the energy-and carbon-intensive BF-BOF steelmaking process.
The goal of this study is to develop a roadmap for deep decarbonization of the Chinese steel industry. We analyzed the current status of the Chinese steel industry and developed scenarios for 2050 to assess different decarbonization pathways that can substantially reduce the CO2 emissions of the steel industry in China.
We included five major decarbonization pillars in our analysis: 1) demand reduction, 2) energy efficiency, 3) fuel switching, electrification, and grid decarbonization, 4) technology shift to low-carbon steelmaking, 5) carbon capture, utilization, and storage (CCUS).
Our analysis to 2050 shows that under a business-as-usual (BAU) scenario, due to steel demand reduction, moderate energy efficiency improvement, technology shift (primarily to the EAF production route), and decarbonization of the grid, annual CO2 emissions will decrease by 54% between 2020 and 2050. Chinese steel production drops 23% in the same period under the BAU scenario (Figure ES1).
The Net-Zero scenario has the largest reduction in annual CO2 emissions in the steel industry, as it includes a more ambitious contribution of demand reduction, energy efficiency measures, fuel switching, technology shift to low-carbon steel production, and CCUS. Under the Net-Zero scenario, total CO2 emissions from the Chinese steel industry will decrease to about 78 MtCO2 per year in 2050, a 96% reduction compared to the 2020 level.
Figure 1. Total annual CO2 emission in the steel industry in China under various decarbonization scenarios, 2020-2050 (Source: this study)
The contribution of each decarbonization pillar to the CO2 emissions reductions in the Net-Zero scenario for the steel industry in China in 2050 is also quantified. In this scenario, the technology shift (primarily to scrap-based EAF steel production) makes the largest contribution to CO2 emissions reduction, followed by demand reduction and fuel switching, electrification of heating, and electricity grid decarbonization.
The Near Zero Emissions scenario is technologically achievable with the most commercially available technologies, such as scrap-EAF and direct reduced iron (DRI)-EAF, and near commercial technologies, such as hydrogen-DRI steelmaking.
Achieving the results shown in the Net-Zero Emissions scenario requires unprecedented uptake of low-carbon technologies, ranging from aggressive energy efficiency improvements to large-scale adoption of commercialized EAF steelmaking technology and low-carbon ironmaking technologies, significantly increasing the use of lower-carbon fuel in China’s iron and steel industry, and decarbonizing the electricity supply to the steel industry. The primary goal, however, should be phasing out carbon-intensive BF-BOF steelmaking.
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The Executive Summary is also available in Chinese. The full report will be available in the Chinese language soon.
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