The steel industry could face USD 518 billion in stranded asset risk as countries work towards meeting their long-term carbon neutrality commitments, if the 345.3 million tonnes per annum (mtpa) of emissions-heavy blast furnace basic oxygen furnace capacity (BF-BOF) proposed or under construction is fully developed, according to new data from Global Energy Monitor’s Global Steel Plant Tracker.
Much of this stranded asset risk is concentrated in Asia: 80% of the BOF steelmaking capacity under development globally is planned in China and India. An additional 14% of the BF-BOF steelmaking capacity under development is planned for Indonesia, Vietnam, and Malaysia.
Yet progress towards decarbonizing the sector by replacing BF-BOF steelmaking with the less emissions-intensive electric arc furnace (EAF) pathway is stagnant. According to the International Energy Agency’s Net-zero by 2050 scenario, the share of EAF steelmaking capacity should reach 37% by 2030 and 53% by 2050. This target requires an additional 576 mtpa EAF capacity while at the same time canceling or retiring 419 mtpa BOF capacity.
According to data in the Global Steel Plant Tracker, the shares of capacity by steelmaking technology would only shift from 69% BOF and 31% EAF in 2022 to 68% BOF and 32% EAF in 2030, and remain approximately the same through to 2050.
The report also finds that emissions estimates for steelmaking fail to account for emissions from metallurgical coal mining. The steel industry currently emits approximately 2.6 gigatonnes of direct CO2 emissions per year and 1.1 Gt of indirect CO2 emissions from the power sector and combustion of steel off-gasses. If the methane emissions from metallurgical coal mining are accounted for in global assessments of steelmaking emissions, the footprint of the steel industry may be as much as 27% (1 Gt CO2-e20) higher than currently reported.
The Global Steel Plant Tracker covers 2,208 mtpa operating crude steelmaking capacity, approximately 90% of global capacity according to OECD estimates. It also covers 1,417 mtpa operating BF capacity and 123 mtpa operating direct reduced iron capacity, approximately 89% and 90% of global capacity, respectively, making this the most up-to-date comprehensive tracker of global steel capacity developments.