Steel & COP27

Key facts

• The steel sector accounts for around 3 GtCO2e of emissions, or 5% of global emissions
• Emissions have risen by around 15% since 2010. If the sector is to keep in line with the Paris Agreement, these need to fall by around 25% by 2030
• Steel demand will steadily increase in the coming decades, from ~2bn tonnes a year today, especially in developing economies
• The sector remains reliant on coal (75% of its energy demand)
• Greater demand aggregation (including advance purchase commitments) across groups of countries and companies is needed to mobilize investment in the production of near-zero emission steel facilities
• Common definitions and standards for near-zero emission steel must be agreed, as important enablers of demand aggregation and trade
• Collaboration on commercial-scale pilot projects is needed in all major steel producing regions, to accelerate learning
• A strategic dialogue on trade should be launched at the earliest opportunity, including the leading producer and consumer countries, to agree ways to ensure near-zero emission steel can compete in international markets

What COP 27 means for the sector

COP27 marks one year since the promise of 45 countries to make ‘Near-zero emission steel the preferred choice in global markets, with efficient use and near-zero emissions steel production established and growing in every region by 2030’.

These countries will be showing they can make good this promise, by endorsing a clear, collective plan of action.

What’s at stake?

In parallel, the global pipeline of conventional, high emission plants, largely powered by coal, are currently underway or in the planning stage. Standing behind tighter coal-phase out standards for financial institutions and the successful demonstration of just transition platforms are essential if the sector is able to make a U-turn in parts of the world where coal-fired steel is just ramping up.

Asks for NSAs

• CEOs and Policymakers must accelerate the development of standards by participating in the work of CEM Industrial Deep Decarbonisation Initiative (IDDI) with IEA, Responsible Steel, and First Movers Coalition, recognising ISO standards (e.g. 14404) to create common definitions of low emission and near-zero emission steel, consulting throughout 2023, to announce by COP28 a common timeframe for the formal adoption of shared standards
• CEOs, mayors and financiers can grow demand commitments by developing packages of coordinated high-quality purchase agreements by COP28 (via FMC, Steel Zero and CEM IDDI)
• CEOs and investors must immediately launch more near-zero carbon steel demonstration projects, working via Mission Innovation’s Net Zero Industries Mission (NZIM) and Mission Possible Partnership
• Policymakers must launch a strategic dialogue on the trade of low and near-zero emission steel by COP28, including the leading producer and consumer countries
• Policymakers should review (via LeadIT) the current international assistance offer for deep decarbonisation of heavy industries