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In the run-up to its G20 presidency, India emphasized the key role of Asia in steel decarbonization at the inaugural Global Clean Energy Action Forum (GCEAF) at a roundtable event on ‘Building leadership and accelerating action on steel decarbonization in Asia: Experiences of India and the Republic of Korea’.
Policymakers at the Global Clean Energy Action Forum (GCEAF) roundtable event
The GCEAF conference brought together members of the Clean Energy Ministerial (CEM) and the Mission Innovation (MI), both initiatives aimed at accelerating the clean energy transition. The three-day GCEAF conference featured events and roundtables with policymakers along with the private sector, civil society, and academia.
Leading the India delegation at GCEAF, Abhay Bakre, Director General, Bureau of Energy Efficiency, Government of India said, “India, as a developing country, is making all efforts to reduce its energy use and emissions of greenhouse gases. Almost all large industries in India are part of our flagship ‘Perform, Achieve and Trade (PAT)’ scheme, which is a regulatory instrument designed to make India’s industries energy efficient. Moving forward, long-term sectoral roadmaps will be very important in achieving Indias net-zero commitment. The steel sector has been an integral part of our action plans.”
The Asia roundtable, jointly organized by The Energy and Resources Institute (TERI), Climate Catalyst and Solutions for Our Climate (SFOC) focused on opportunities and policy levers to catalyze steel decarbonization in the region. In particular, it emphasized the importance of demand-side levers, from both private and public steel consumers, in sending a signal to accelerate the steel industry’s transition.
Jen Carson, Head of Industry at Climate Group who moderated the roundtable, emphasized the importance of accelerating demand-side activity in Asia. “To get the steel industry to net zero in India and around the world, we need to first create a market for responsibly produced steel. This year we launched SteelZero in India to do just that. We’re calling for leading Indian businesses to join SteelZero and to drive the market shift of one of the largest steel producing nations in the world. As a result, we will then be able to give steel producers the confidence to make the net zero transition.”
In addition to private procurement efforts, one pertinent example of government-led demand-side policies discussed at the event was green public procurement (GPP). The policy encourages governments to pledge to use low-carbon materials for their public works projects. GPP is a key initiative pushed by Industrial Deep Decarbonization Initiative (IDDI), a global coalition that consists of public and private sectors to promote the decarbonization of heavy industry. The group is led by the Indian and the UK government.
As part of the IDDI, the governments of the UK, India, US (who joined IDDI at the GCEAF), Germany, the UAE and Canada have pledged to buy more low-carbon industrial materials to expand the market. They are also calling on more steelmakers to join the initiative, especially those in Asia. Over 70 percent of steel use currently takes place in Asia, with South Korea consuming the most per capita.
The roundtable and GCEAF also emphasized the importance of public-private cooperation throughout the steel value chain. With a growing effort to produce green steel through green hydrogen and high-grade iron ore, key stakeholders in the steel industry, such as Australia which is a leading iron ore exporter, are expressing key interest in deepening cooperation with steel producers around the globe and particularly in Asia.
Peta Olsen, Director, Net Zero Innovation and Partnerships, Department of Climate Change, Energy, the Environment and Water, Australia said, “Australia recently launched the Net Zero Industries Mission, under Mission Innovation, and it will be an interesting place to share green steel pilot projects.” Additionally, while “Australia does not produce a lot of steel, it is the largest exporter of iron ore, and the iron ore story and how it fits into green steel pathways is critical. Within our bilateral partnerships with Japan and Korea, and also India, we have launched technology development programs that include a focus on green hydrogen for export. We are also hoping that we can move into the iron ore and green iron exports to feed into the DRI-EAF pathways.”
Araceli Fernandez, Head of Technology and Innovation Unit, Directorate of Sustainability, Technology and Outlooks, International Energy Agency likewise highlighted the importance of bilateral and multilateral cooperation on steel decarbonization. “Steel is a critical material, as it is to accelerate the transition towards near zero emissions steel. International collaboration remains fundamental to bring technologies that can enable such transition to commercial scale as soon as possible, and to create robust markets to get such technologies deploy in regions around the world.”
It was also noted that financing this transition would be a critical step to realising regional decarbonization efforts. Yoon Chung Chin, Principle Researcher of the ESG Research Division at POSCO Research Institute (POSRI) said, “In order to enable the steel industry’s transition, it is critical to create the necessary market conditions to ensure net zero steelmaking is commercially viable. This needs to be reflected in the policy priorities in a way of reducing uncertainties surrounding the development of the carbon price and setting direct/indirect incentives to stimulate additional demand for green steel. Providing better access to ‘transition finance’ is also an important aspect.”
Asia has a clear opportunity to lead on green steel production. In 2021, the region accounted for 72 percent of global steel production, mostly from China, India, Japan, and South Korea. In addition, there is an expansion of emission-intensive blast furnace-basic oxygen furnaces (BF-BOF) concentrated in the region. This method of steel production emits about two tonnes of CO2 for every tonne of steel.
Prabodha Acharya, Group Chief Sustainability Officer, JSW Steel noted the importance of green steel in India’s decarbonization pathways. “In India, the problem is especially acute given the steel production contributes 12% emissions and 2% to GDP. Further, given India’s massive 1.3 trillion infrastructure plan, the demand for steel is only going to go up and it becomes imperative to reduce emissions in order to tackle the adverse effects of climate change. A wide range of policy levers will be needed in order to scale-up demand in the near term and in the long term. And R&D collaboration is at the core of the industry transition.”
Currently, India is the world’s second-largest steelmaking country. The country’s steel demand is expected to surpass the rest of the world and related emissions to triple by 2050. Hence, to align with the global 1.5C target, there are growing efforts in India to decarbonize its industrial sectors and to lead the global transition to low-carbon industry via rallying investments and technological developments.
Speaking at the roundtable, Dr. Prahoro Yulijanto Nurtjahyo, Head of HRA, Ministry of Energy and Mineral Resources (MEMR), Republic of Indonesia, emphasized that as the current G20 presidency holder involved in the steel value chain, it is important to envision the future trajectory of energy and industry transformation. He reiterated that, “Indonesia is the 10th largest producer of steel and for decarbonization, the efforts are focussed on energy management and integration of renewable energy. Access to technology and finance are urgent needs of the country.”
About The Energy and Resources Institute (TERI)
The Energy and Resources Institute (TERI), based in India, is an independent, multi-dimensional research organization with capabilities in policy research, technology development, and implementation. An innovator and agent of change in the energy, environment, climate change and sustainability space, TERI has pioneered conversations and action in these areas for nearly five decades. Headquartered in New Delhi, it has centres in six Indian cities, and is supported by a multi-disciplinary team of scientists, sociologists, economists, engineers, administrative professional and state-of-the-art infrastructure.
About Solutions for Our Climate (SFOC)
Solutions for Our Climate (SFOC) is a South Korea-based group that advocates for stronger climate policies and reforms in power regulations. SFOC is led by legal, economic, financial, and environmental experts with experience in energy and climate policy and works closely with policymakers.
About Climate Catalyst
Climate Catalyst, is a not-for-profit organisation working to enable high-ambition coalitions – across governmental, non-governmental, for- and non-profit sectors, at national and international levels – to secure new public policy commitments that increase the scale and pace of emissions reductions in line with fair shares of the Paris Agreement goals. We work globally and our geographies of focus are Asia and Europe.