The steel industry is an energy-intensive, high-emission sector. In 2020, carbon emissions from the global steel industry reached 2.6 billion tons, accounting for approximately 7% of total global carbon emissions; emissions from China’s steel industry totaled 1.81 billion tons, representing about 16% of the country’s total carbon emissions. At the same time, as a key raw materials sector, the steel industry is also one of the pillars supporting steady economic and social development.
The low-carbon and carbon-neutral transition of the steel industry is crucial for achieving climate goals and will also create opportunities for high-quality development within the industry itself and related sectors. The technical roadmap for carbon reduction in China’s steel industry has been largely established, with key technologies and measures including the large-scale utilization of scrap steel and low-carbon production of primary steel through clean hydrogen metallurgy. Furthermore, key policy support and initiatives by leading enterprises are being comprehensively advanced. By 2050, as scrap steel recovery rates increase, the share of recycled steel in total production is expected to grow from the current 10% to 60%. Furthermore, with the continuous decline in the costs of emission-reduction technologies such as clean hydrogen and carbon capture and storage (CCS), the production of near-zero-carbon primary steel is projected to reach nearly 240 million tons.
In the steel industry’s low-carbon transition, green procurement on the demand side plays a crucial role in helping to stabilize sales channels and cash flow projections for low-carbon and near-zero-carbon steel. Major downstream sectors of the steel industry, such as construction, automotive, and machinery, can offer long-term procurement contracts for steel products with lower carbon emissions—provided they meet performance standards—or pay an additional green premium to recognize their low-carbon attributes. Green procurement not only contributes to carbon reduction within the purchaser’s own supply chain but also accelerates the development of the low-carbon steel industry, promoting sustainable development across the steel sector and its upstream and downstream sectors.
Carbon Accounting and Low-carbon standards
Product-level carbon emissions accounting is a key tool for translating the steel industry’s carbon reduction practices to the level of products. It precisely allocates emissions contributions from factors such as feedstock composition, production processes, energy and electricity sources, auxiliary materials, and transportation to specific products, thereby providing quantifiable and comparable decision-making criteria for measures such as process upgrades, energy substitution, and scrap steel recycling.
Product-level carbon accounting supports emissions reduction and procurement requirements within the supply chains of downstream industries such as automotive, home appliances, and construction. It helps steel companies enter green procurement systems with transparent, verifiable data, thereby reducing market access risks.
Cost and Economic Analysis
The cost-effectiveness of low-carbon metallurgical technologies is a critical issue for the transformation of the steel industry. Compared to traditional long-process routes, low-carbon technologies such as scrap-based short-process electric arc furnaces, hydrogen-based direct reduction, and related infrastructure upgrades typically entail higher capital and operating costs at this stage. On the demand side, while green procurement can pass on some of the incremental costs through premium mechanisms, the scope for such premiums is often constrained by downstream industry profit margins, price sensitivity, and market competition. The resulting cost pressures have become a key constraint on the adoption of low-carbon technologies and the expansion of the market for low-carbon products, underscoring the importance of stabilizing expectations through large-scale cost reduction, the coordination of policy and financial instruments, and more robust standards and procurement mechanisms.
Value Chain Collaboration and Ecosystem Development
Building an industrial chain ecosystem is a critical component of the steel industry’s low-carbon transition. By leveraging collaborative platforms, communication channels, and joint statements, and utilizing systematic solutions, this initiative fosters deep cooperation between the supply and demand sides and promotes synergies among stakeholders across the industrial chain. Carbon emissions and costs associated with steel products are influenced by a range of factors, including upstream feedstock and energy supplies, steelmakers’ investments in processes and equipment, downstream application scenarios and procurement strategies, as well as the financial and policy environment. Consequently, the success of this transition hinges heavily on collaboration and coordinated action across different entities and stages of the process.
