ResponsibleSteel and
Sustainable Steel Principles Association hail deal as major milestone in
efforts to decarbonise steel industry
The
ResponsibleSteel coalition has inked a new partnership with the Sustainable
Steel Principles Association (SSPA), in a move which the two companies said
could pave the way for the faster decarbonisation of the steel industry.
SSPA
provides a framework for banks to be able to assess the decarbonisation of the
steel companies within their portfolios, as well as the climate alignment of
their steel lending portfolios. The group brings together the six top lenders
to the global steel sector.
The
ResponsibleSteel group, meanwhile, has developed an international standard for
steel sites to be certified against. It brings together steel producers, steel
customers and NGOs who have backed an
ResponsibleSteel
CEO Annie Heaton welcomed the new deal as a milestone in the decarbonisation of
the emissions intensive industry. "The MoU between the SSPA and
ResponsibleSteel signifies a continued determination by banks, the steel
industry and wider stakeholders to achieve real progress towards net zero by
2050, and all the complexities which that entails," she said.
Heaton
said progress would depend on a revolution in decarbonisation project
financing. "[Climate] solutions need to be based on technological
breakthroughs, innovation and creative problem solving," she said.
"They also need to be global. None of this will be possible without a
radical step change in how we finance these breakthroughs so industries like
steel can decarbonise rapidly and be a force for good."
Decarbonising
steel is critical to global climate goals, with the energy-intensive setor
estimated to be responsible for roughly seven per cent of global carbon
emissions. Steel is a building block of many of the technologies required for a
zero carbon economy, from clean energy and low carbon homes to electric cars
and electricity transmission infrastructure. Demand for the material is
expected to increase over the coming decades as the population grows and the
net zero transition gathers place.
Long
perceived as a major challenge for global efforts to reach climate goals, a
raft of reports in recent years have argued a significant reduction in steel
emissions is possible by 2035, largely by phasing out the blast furnace basic
oxygen furnace process of primary steelmaking, in which iron ore is smelted
from heat generated from burning coal, with the fossil fuel also acting as a
reducing agent to turn the ore into metal.
Erik van Doezum, global steel lead at
ING and chair of the
SSP, said the decarbonisation of the sector globally would require
"significant investments to be made".
"Banks
therefore will have to identify high quality decarbonisation business plans,
allowing them to guide their assets into investments compatible with a 1.5C
future," he added. "Building consistent and transparent data via
reporting requirements for the steel sector will be paramount to facilitating
financing for the decarbonisation of the sector."
Van
Doezum added that the MoU would also help all parties involved in the
steelmaking industry - including steelmakers, lenders and other stakeholders -
use and better understand common measures of progress towards decarbonisation.
ResponsibleSteel
has also announced it will launch a Finance Working Group (FWG) bringing
together key voices from the steel industry, global finance, investment and
civil society. The group's goal will be to facilitate dialogue including
benchmarking carbon requirements within the ResponsibleSteel Standard and
certification programme, in order to facilitate capital flows to meet
decarbonisation requirements, it said.
The
working group wll host an initial round of discussions this month and is
expected to publish recommendations by the end of the year, according to the
update.