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Singing from the same song sheet: How can we speed up the implementation of steel decarbonisation in Asia?

4 June 2024, 9:00 UTC 4 min read

Steelmakers. Steel users. Investors. Policymakers. They’re all part of the steel value chain. Like parts of a choir, they play different roles within the steel ecosystem. Yet we need them singing from the same song sheet with a common and aligned focus to implement steel decarbonisation and drive urgent emissions reductions.

Nowhere is this more important than in Asia, where around 70% of the world’s steel is produced. We need its steel value chains aligned to lead the global steel transition. Fast. 

As global steel trade dynamics become more competitive, with the EU’s CBAM and negotiations with the US regarding the GSSA, low emission trade zones will penalise dirtier steel. Asia’s economies and businesses have huge opportunities to seize in the green economy – if they fully commit to the transition. They have the scale to do so. 

RE100’s Asia Renewables Growth Forum focused on how to collectively remove barriers to scale up renewables in the region, a critical jigsaw piece for steel decarbonisation. So, we sat down with some of the Forum’s speakers from the worlds of finance, business, and policy to ask how we can best work together to do just that. 

Sending the right policy signals 

Policymakers in Asia must grab with both hands the role they need to play in unlocking effective action to implement the transition. 

Governments like Chungcheongnam-do in South Korea recognise this. In May 2024, they became the first government to officially endorse our SteelZero initiative. Governor Kim Tae-heum underlined the critical role both businesses and governments must play in advancing the steel industry's transition. Such action gives the certainty, clarity, and the support signal the wider value chain needs to make strategic decisions and effectively seize opportunities. 

For Martijn Hoogerwerf at ING, government support must serve to align action and help banks play their part financing the transition through creating “a policy environment facilitative to the right investments.” Hoogerwerf noted they need to see policymakers implement frameworks that include “measures such as carbon pricing, protection from less eco-friendly imports, guarantees for the substantial investments required, and government grants or subsidies.” This helps banks see the business case and rationale in financing clients’ decarbonisation plans. 

Raising standards 

ING is playing a leading role, Hoogerwerf said. In 2022, it jointly established the Sustainable STEEL Principles, a common measurement and disclosure framework for banks to support the steel industry’s transition to net zero emissions. 

Nothing speaks more to the need to be singing from the same song sheet than alignment on standards. SKF have already embedded their SteelZero commitment into their specifications and supplier engagement, Cearo Wang noted. He went on to highlight the need for standards alignment across the value chain, specifically citing the need for “comparable product Life Cycle Assessment and decarbonisation plans by steelmakers and other suppliers.” 

Governments also should be aligned with net zero steel standards and definitions. 25% of steel globally is used by the public sector – around 27% in India, 13% in Japan and 11% in South Korea, for example. Governments at all levels can lead by example by aligning on standards and adopting them into their own procurement rules and specifications. 

We need convergence at all points in the value chain to laser focus action. 

Making the investment case 

Critically, banks must show steelmakers that failing to decarbonise now is an inherent business risk, a risk to future access to finance. Hoogerwerf notes: “ING no longer provides new dedicated finance for new unabated steel blast furnaces and for the extension of existing ones because of climate impacts. We also no longer finance new coking (metallurgical) coal mines or the expansion of existing ones.” 

This way, banks can make steelmakers see access to investment only through committing to green steel production projects. Hoogerwerf highlighted the economic reality of this: “From a capital flow perspective, we can only support our clients if their transition plans make economic sense”. 

So how can businesses show banks like ING that supporting investments in steel emissions reduction plans make ‘economic sense’? 

Steel users members are leading the way

Our SteelZero initiative is bringing together leading organisations to signal demand for net zero steel by mobilising business commitments to 100% use of net zero steel by 2050. Collectively, as Cearo Wang puts it, we’re “creating the market pull that will enable technological innovation and help develop new business models”, which we need more and more businesses to join forces with. 

Hoogerwerf agrees with the need for businesses to lead the charge: “Offtakers can clearly signal their desire to obtain green or less carbon intensive steel” and signal they’re “happy to enter into long-term offtake agreements with producers and paying a premium to compensate for higher costs.”

By doing so, businesses globally as well as those headquartered in Asia such as Hang Lung Properties and CIMC TCREA, are showing steel decarbonisation strategies do not necessarily stand in the way of making ‘business sense’.

Closing the implementation gap 

We’ve heard from the experts on the critical role each of their sector can play to support the transition. But crucially, we learned what they need from other parts of the value chain to make it happen.

Barriers remain that slow progress and we must move from isolated shoots of ambition to best practices becoming the norm in an aligned and integrated manner. Only then can we close the gaps and achieve the scale and speed of implementation needed.

Asia has the chance to lead the global steel industry’s net zero transition – if only all sing from the same song sheet and play their part in driving the transition.

Visit our Our Work page to learn more about our work driving steel decarbonisation in the region’s key geographies.