Societe Generale, Standard Chartered, and UniCredit also join working group to help unlock finance to support green steel projects
Six global banks have teamed up in a search of solutions that could unlock the significant private sector investment required to decarbonise the global steel industry and establish a pathway towards net zero emissions for steelmaking over the next 30 years.
ING, Citi, Goldman Sachs, Societe Generale, Standard Chartered, and UniCredit have together formed a working group to explore how to tackle the climate impact of the steel sector, with a view to attracting more financial institutions to join the group in the run up to the crucial COP26 Summit in Glasgow later this year, the banks announced last week.
The steel sector is widely regarded as one of the most challenging industries to decarbonise on the pathway to net zero emissions. The sector is estimated to emit roughly seven per cent of global energy emissions and while the development of greener production processes that utilise hydrogen or carbon capture technologies are beginning to gain traction, green steel projects remain in their infancy.
Scaling up the fledgling green steel sector will require significant investment in emerging low carbon solutions, but the six banks behind the new working group argued that financial institutions currently lack the practical tools to unlock the necessary capital.
As such, the Steel Climate-Aligned Finance Working Group, which includes senior representatives from each of the banks' metals and mining teams, said it aimed to draft a net zero aligned finance agreement for the sector setting out emissions pathways, methodologies, and governance structures that could serve to catalyse increased investment.
The goal is to set global best practices for financial institutions that facilitate steelmaking, it said.
"The challenge for the steel sector to decarbonise is significant, with alternative technology paths unproven and not yet commercialised," said Arnout van Heukelem, global head of metals, mining and fertilisers at ING. "By leading this working group, we signal our commitment to help define what the energy transition means for the sector and our clients. It will also help us to define our expectations for change and define an ambitious yet realistic trajectory to meet those ambitions."
The banks said the agreement would be modelled on the Poseiden Principles, a climate-aligned finance agreement aimed at decarbonising the maritime shipping sector, which since launching in 2019 has attracted 24 banking signatories representing $175bn of senior shipping debt.
Source : https://www.businessgreen.com/news