The global steel industry will require huge investments in order to decarbonize by the middle of this century (2050); Being one of the heavy sectors whose emissions are difficult to reduce.
Research firm Wood Mackenzie asserts in a recent report that $1.4 trillion must be invested to decarbonize the global iron and steel industry by 2025, in line with the goals of the Paris climate agreement.
The world needs to produce 2.2 billion tons of steel to meet global demand by 2050, an increase of 15% from 2021, making decarbonization a difficult challenge, according to the report seen by the Energy Research Unit.
Iron and steel industry emissions
Global iron and steel production releases 3.4 billion tons of carbon annually, equivalent to 7 percent of global emissions, according to Wood Mackenzie.
In order to target a global temperature reduction of 1.5°C by 2050, steel emissions must be 90% below current levels.
To reduce these emissions, the iron and steel industry requires a revolution at every stage of the value chain, from mining to consumption, providing an investment opportunity for operators, according to the report seen by the Energy Research Unit.
In a previous report, Wood Mackenzie predicted that carbon emissions in the steel industry would decrease by 30% by 2050, to reach 2.332 billion tons, compared to the levels in 2021, which amounted to 3.338 billion tons, if the role of green hydrogen in the DIR process and CCS technology was enhanced. in steel production.
Wood Mackenzie believes that removing carbon from the existing steelmaking infrastructure would require an investment of between $800 billion and $900 billion in several technologies needed to reduce emissions, such as relying on hydrogen and promoting the use of electric arc furnaces, which are used to remelt scrap iron.
Low-carbon technologies must be used in three-quarters of global steel production in order to achieve carbon neutrality, with 50 million tons per year of green hydrogen available at competitive prices for this goal.
This is in addition to investments worth between $250 billion and $300 billion in new, high-quality mines, according to the report.
The following infographic captures the total global investment required for the energy transition by 2050.
Carbon offset measures
In addition to the aforementioned investments, $200 to $250 billion in carbon offsets will still need to be spent until the decarbonization goals take off.
Wood Mackenzie sees the need to boost CCS from 470 million tons of carbon capture and storage to reach the emissions target in 2050.
With the desire to decarbonize the steel industry, a green premium will be inevitable, as the introduction of new technologies and low-carbon feedstocks may increase steel production costs by 15-20% by 2050, which may be borne by the final consumer.
The green premium is the additional cost of choosing a technology that is clean instead of one that emits more greenhouse gases.
Finally, Wood Mackenzie explains that the iron and steel industry will also require support from global carbon policy, given the regional differences.
Since more than 60% of steel production comes from China, Beijing should implement a carbon pricing policy.
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