<html
xmlns="http://www.w3.org/1999/xhtml"><head><title>China
accelerates green steel shift as EU levies loom, researchers
say</title></head><body>
SINGAPORE, July 11 (Reuters) -China approved no new coal-based
steel projects in the first half of 2024, researchers said on Thursday,
accelerating its shift towards green production as it prepares for the impact
of a new carbon levy on exports to Europe.
Local governments approved 7.1
million metric tons of new steelmaking capacity from January to June, but all
of it was for cleaner scrap-based electric arc furnace (EAF) projects, rather
than coal-intensive blast furnaces, said the Centre for Research on Energy and
Clean Air (CREA).
China's efforts to cut
production and recycle more scrap via EAF could reduce CO2 emissions from the
steel industry by 200 million tonnes by 2026, equal to the entire emissions of
the EU steel sector, CREA said.
China's steel industry, by far
the world's biggest, is under growing pressure to decarbonise. It is expected
to join China's own emissions trading scheme this year, and exports to Europe
will be subject to the Carbon Border Adjustment Mechanism (CBAM) starting from
next year, which could make them 11% more expensive by 2030.
"Chinese steelmakers
targeting the EU market will need to take action to reduce the carbon intensity
of their products in order to maintain competitiveness," said Xinyi Shen,
the report's co-author.
Europe introduced CBAM in
order to tackle the problem of "carbon leakage", which allows
businesses to avoid carbon costs by sourcing products from countries with
weaker climate compliance. Starting from 2026, importers of steel, fertiliser,
cement and chemicals will pay levies based on the carbon footprint of the
products they buy.
Researchers at China's
Institute for Global Decarbonization Progress (iGDP) said last week that
China's steel industry could face up to 5.9 billion yuan ($811.09 million) in
total CBAM levies by 2030, depending on how much it cuts emissions.
Traditional blast furnace steel could face
levies of around 250 yuan per ton by 2030, but scrap-based EAF would not yet
face any additional charge, it said.