China’s State Council has formally issued the ‘Carbon Peaking Action Plan by 2030’ which aims to promote smooth low-carbon transition in China. The Plan proposes that by 2025 the proportion of non-fossil energy consumption will reach about 20% and energy consumption per unit of GDP will be reduced by 13.5% compared to 2020. Carbon dioxide emissions per unit of GDP will also be reduced by 18% compared to 2020.
By 2030, the proportion of non-fossil energy consumption will reach about 25%, and carbon dioxide emissions per unit of GDP will be reduced by more than 65% in comparison with 2005. What impact will these low-carbon targets have on China’s steel industry?
Steel supply
Carbon reduction as well as carbon peaking actions in the industrial sector and the circular economy will impact the steel industry. The development of the supply side has a profound impact. Strict control of energy intensity and reasonable control over total energy consumption will limit the release of existing steel production capacity.
In the industrial sector, low-carbon transformation and high-quality development will be the top priority, and the supply-side structural reform of the steel industry will be deepened, thereby limiting the expansion of steel production capacity and optimising existing steel production capacity.
This is expected to accelerate the adoption of advanced smelting technology to tap potential energy savings and carbon reduction in steel smelting. Improvement of resource utilisation efficiency in the circular economy will also help the low-carbon structural transformation of the steel industry by encouraging recycling in the entire steel production process.
Steel demand
Overall low-carbon action will enable the domestic steel industry to move towards high-quality demand. The demand for green energy and low-carbon transition will mainly come from speeding up the construction of a clean, low-carbon, safe and energy-efficient system.
It is vital to accelerate the construction of new power systems, which will significantly increase investment in new energy. Demand for steel will grow for wind power, solar, hydropower, and nuclear power construction and the existing coal-fired power generation units will also carry out energy-saving upgrades.
Energy-saving projects in key industries will be implemented, and power, steel, non-ferrous metals, building materials, petrochemical and chemical industries will have to carry out carbon-reduction transformation, which will drive steel demand for green equipment.
For urban and rural construction projects, the focus will be on new types of buildings, prefabricated buildings and promoting steel structural housing, which will promote demand for construction steel to facilitate the shift to high-quality steel.
Promoting low-carbon transformation of transportation equipment and accelerating the construction of green transportation infrastructure will be the focus, mainly to promote the electric substitution of urban public service vehicles, and promote electricity, hydrogen fuel, and LNG power. Heavy freight vehicles will be key, which will bring new growth momentum to steel.
The ‘Carbon Peaking Action Plan by 2030’ will restrict the release of steel capacity and optimise and adjust the present capacity structure, while the demand for steel will mainly increase downstream. The demand for quality steel will re-shape the downstream demand structure of steel.
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