China has not approved any new coal-fired steel projects in the first half of 2024, reports Euractiv. So the country is accelerating its transition to green steel production as it prepares for the impact of the new carbon tax on exports to Europe.
Local authorities approved 7,1 million metric tons of new steelmaking capacity from January to June. All the projects are with cleaner scrap-based electric arc furnaces (EAFs) rather than coal-intensive blast furnaces, the Center for Energy and Clean Air Research (CREA) said.
"China's efforts to reduce production and recycle more scrap through the EAF could reduce CO2 emissions from the steel industry by 200 million tonnes by 2026, equivalent to all emissions from the EU steel sector," CREA said.
China's steel industry, by far the largest in the world, is under increasing pressure to decarbonize. The industry is expected to join China's emissions trading scheme this year, and exports to Europe will be subject to the Carbon Boundary Adjustment Mechanism (CBAM) from next year.
"Chinese steelmakers targeting the EU market will need to take action to reduce the carbon intensity of their products to remain competitive," said Jinny Shen, co-author of the report.
Europe introduced CBAM to tackle the problem of "carbon leakage", which allows businesses to avoid the cost of carbon emissions by sourcing products from countries with weaker climate regulations. From 2026, importers of steel, fertilisers, cement and chemicals will pay fees based on the carbon footprint of the products they buy.
Analysts at the China Institute for the Advancement of Global Decarbonization (iGDP) said last week that China's steel industry could expect $811,09 million in total CBAM fees by 2030, depending on how much it cuts emissions.
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