We won't get to the net zero economy of tomorrow without decarbonising steel. The steel industry is one of the world's worst polluters - responsible for 11 per cent of global annual carbon emissions. If demand for steel increases as predicted, steel production will be on track to consume 25 per cent of the world's total remaining 1.5C carbon budget by 2050.
But steel is also a vital part of our everyday lives. We use it to make our buildings, bridges and surgical tools, as well as the wind turbines, electric cars and solar panels we need to decarbonise our economies.
Both governments and businesses understand the urgent need to incentivise net zero steel production to prevent catastrophic climate change - and this autumn, there are opportunities for action towards net zero steel to accelerate further.
Last weekend, for example, world leaders gathered in New Delhi for the G20 Summit. Unsurprisingly, the war in Ukraine dominated the diplomatic agenda and news headlines. However, attention was also on net zero steel. Ahead of the Summit, the G20 Task Force on ‘Refuelling Growth: Clean Energy and Green Transitions' set out a series of recommendations for how governments can collectively legislate for net zero steel, stressing the importance of low-emission steel procurement in both public and private sectors. These recommendations came at an opportune time and in an apt place - host India being the world's second largest steel producer, and the G20 countries producing around 85 per cent of the world's steel and consuming approximately 80 per cent of global steel supplies. The policy iron for net zero steel is hot, and governments must continue this dialogue into the autumn - both domestically and internationally.
Governments around the world are already beginning to take action. Indeed, global momentum is shifting with legislative ‘carrots' and ‘sticks'. The US Inflation Reduction Act (IRA) and the EU's Carbon Border Adjustment Mechanism (CBAM) - coming into force in October - will penalise companies that continue to buy high-emission steel. By the end of 2023, the European Parliament intends to approve both The Green Deal Industrial Plan and the Net-Zero Industry Act. Meanwhile, the European Hydrogen Bank will launch its first pilot auctions this autumn.
Progress is also being made at the subnational level, with policymakers committing to sourcing green steel for public sector procurement. Good examples of this include the Buy Clean California Act (which restricts the State of California from procuring steel when its embodied carbon exceeds the agreed Global Warming Potential (GWP) limit), and the German North-Rhine Westphalia region's goal to establish the first industrial-scale DRI plant for hydrogen-based steel by 2025.
But ultimately, bold action is required on the world's largest climate stage. This November, world leaders will gather in Dubai for COP28 Climate Summit to take part in the first Global Stocktake (GST) of the Paris Agreement. It is vital that steel forms a key part of the agenda - given its sizable contribution to climate change.
Governments have questions to answer in Dubai: How can the international community collectively promote green public procurement? How can governments and donors tailor ESG financing to speed up steel decarbonisation? And how can future Nationally Determined Contributions more effectively reflect countries' steel-related carbon emissions?
But governments cannot decarbonise steel alone. Public policies and commitments to net zero steel must go hand-in-hand with private procurement and corporate leadership.
Companies in sectors like construction and car manufacturing can use their voice to signal to steelmakers. In other words, say: "if you make net zero steel, we'll buy it". They can work alongside policymakers to further incentivise steel decarbonisation. Indeed, financial initiatives like the Poseidon Principles and Sustainable Steel Principles are already making it easier than ever for firms to access finance for green steel.
Another key way that firms can show leadership is by joining the Climate Group's SteelZero initiative - and committing to buy 100 per cent net zero steel by 2050 at the latest - in line with the International Energy Agency's net zero scenario.
The net zero steel business opportunity is there for the taking. By 2030, the global net zero sector will be worth up to $300bn. However, if all the world's planned traditional blast furnaces are built, the steel sector could be met with $518bn in stranded assets by 2050.
This autumn is not only the perfect opportunity, but also a necessity, in kick-starting the net zero steel transition. By working together to create public and private sector conditions for steel decarbonisation, both policymakers and business can be part of the solution to one of the planet's most urgent climate challenges.
*This article was originally published on BusinessGreen. You can find the article here.