Climate Transition Framework Analysis: Taking the Steel Industry as an Example

To achieve carbon neutrality goals, high-carbon industries must first understand the sources of their carbon emissions through carbon accounting, and then plan short-, medium-, and long-term decarbonization strategies—progressively moving toward decarbonization through scientifically designed emission-reduction pathways. Given the capital, operational, and R&D expenditures required for emissions reductions, high-carbon industries should develop financial and financing plans, and provide the market with necessary climate-transition information to enable stakeholders to make informed decisions.

Steel is a typical high-carbon industry. Taking it as an example, this article outlines a climate-transition framework for the steel industry, including the key information that must be covered and the channels for publication. It then analyzes how domestic and international frameworks are constructed and the existing challenges, to support discussion.

Steel Industry Climate Transition and Capital Needs

Most of the steel industry’s carbon emissions come from the production process. Decarbonization therefore requires changing its production processes and energy-consumption patterns through emission-reduction technologies. Specifically, 14% of the steel industry’s carbon emissions are produced by high-temperature reactions between coal and iron ore, where coal functions as a reducing agent; the remaining 81% of carbon emissions are produced by coal used as a fuel. Therefore, to achieve full decarbonization, the steel industry must either adopt entirely new processes to replace previous carbon-containing feedstocks or fuels, or use carbon-removal technologies.

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