Pivotal Shift for Steel Industry

A report from Global Energy Monitor shows a pivotal shift in the steel industry away from coal and towards lower-carbon forms of production, but it remains short of the target needed to keep global warming below 1.5 degrees C.

The report shows that 43% of planned steelmaking capacity is now based on electric-arc furnace technology, while 57% still uses coal-based blast furnaces. The ratio has shifted significantly in the past year, according to reporting from Carbon Brief. “The last year was pivotal for heavy-industry decarbonisation,” write the authors of the report. “Steel has moved from inertia to progress.”

 However, the coal-based capacity under development increased from 2022 to 2023, with almost all of it in Asia, particularly China and India which hold 79% of the capacity together. India is now in the lead, with 40% of coal-based capacity under development.

According to the International Energy Agency’s net-zero by 2050 scenario, the total share of electric-arc furnace capacity should reach 53% by 2050. This means 347 million metric tonnes (Mt) of coal-based capacity would need to be retired or cancelled and 610 Mt of electric-arc furnace capacity would need to be added to the current fleet.

“Steel producers and consumers need to raise ambition for decarbonisation plans,” said Caitlin Swalec, programme director for heavy industry at Global Energy Monitor. “The transition away from coal-based steelmaking is under way but moving far too slowly. Developers that add coal-based capacity now run the risk of facing billions in write-downs in the future.”