China’s carbon reduction plans must start with the country’s steel sector, which contributes 15% of the country’s total carbon emissions.
One factory owned by China Baowu Steel Group Corp., Ltd.
Credit: Flickr / Erik Charlton
“Cut back on carbon emissions or cut output.”
That is stern warning government in China capital for steel production of Tangshan City in Hebei Province last month granted 23 local steelmakers, supported by directive Restrict their activities until December 31, 2021.
This order reflects official impatience with a toxic industrial smog associated with those plants. But it fits with Chinese President Xi Jinping in September 2020 pledge that China will act decisively to reduce its carbon footprint to achieve a carbon neutral state by 2060. Xi describe That carbon neutral goal is for China, the world biggest carbon waste water, as needed “to protect the Earth.” United Nations Intergovernmental Panel on Climate Change has warning that carbon cuts are essential to limit global warming to 1.5 degrees Celsius by 2050 and that failure to meet that target will significantly increase “the risks associated with climate to health, livelihoods, food security, water supply, human security and economic growth ”.
But the status of China is the largest place of the world The steelmaker argues that Tangshan’s time-limited, targeted shutdown is not enough to address the industry’s massive carbon footprint. China’s steel industry contributes one by one a whopping 15 percent total emissions by the country and its components 60% of the global steel industry carbon emissions. The dramatic reduction in carbon emissions requires the Chinese government to help its steel industry abandon the heavily polluting blast furnaces that dominate the industry into low-carbon and neutral carbon production methods. Options range from applying burning cleaner electric arc furnace to apply neutral carbon new technology Powered by renewable energy hydrogen or electrolysis.
China’s state-owned steel giants say they are ready for that transition. The country’s largest steel producer, China Baowu Steel Corporation, announced in January that it will achieve carbon neutrality by 2050. Chinese state steel producer HBIS last month disclosure Similar carbon reduction plans, which show increasing corporate purchases towards Xi’s official carbon neutralization goals and timetable. That is very encouraging. But the costs of moving China’s steel production facilities to carbon neutral would require an investment greater than the country’s best-resourced state-owned companies can afford. .
Energy consulting firm Wood Mackenzie estimates By October 2020, Xi’s national carbon neutrality target will require an interdisciplinary investment of up to $ 5 trillion. Rival South Korean steel giant POSCO last month highlighted the steel companies’ financial challenges in making that transition as disclosure that replacing the existing nine high-carbon blast furnaces with carbon neutral facilities would cost “the same as the company’s 30-year operating profit.” That means the Chinese steel sector’s desalination will require meaningful government involvement through funding backed by regulatory initiatives and supportive policies.
Chinese policymakers can seek inspiration for a new international multilateral policy tool dedicated to accelerating and scaling descaling in heavy industry to match the trajectory. global warming of 1.5 degrees Celsius The global framework principles for the carbon reduction heavy industry (“Framework Principle”) outlines the roles of government and private industry to ensure successful carbonization of heavy industries including steel, cement and chemicals through financial allocation. work for emission reduction plans. The framework principle states that investment in low-carbon and non-carbon technologies is a top priority for governments and businesses to help phase out the use of fossil fuels in industrial processes.
The Chinese government has a ready mechanism to conveniently allocate such funds – more exploitation 13.8 trillion USD in assets held by “four” state-owned commercial banks. The Chinese government has long brought huge financial resources Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China for policy purposes. These include government-led funding economic stimulus initiatives, to help implement overseas infrastructure-related initiatives Belt and Road Initiative and most recently to counteract the domestic economic effects of coronavirus economic impact of the pandemic. The government can prove that it is serious about carbon reduction by also implementing the state-owned China Development Bank (CDB) and Net worth $ 3.2 trillion to help finance the steel industry’s transition to a carbon neutral state. CDB has a proven track record in delivering Essential seed funding to China’s currently very successful solar power industry. That gives Chinese policymakers both the funding and the template to allocate the capital needed for carbon reduction in the heavy industry sector.
Such funding will be in line with both President Xi’s carbon neutral goals as well as the 2016 government’s intentions. Rule for “Setting Up a Green Financial System”. But the shifting of the Chinese state-banking sector’s substantial reserves to investment in de-carbonation in industry will also require clear directives from the People’s Bank of China (PBOC), the central bank of China. The country, indicating an official green light for funding carbon neutral projects. Such directives could be imminent. PBOC announced on March 25 that they planned to create “carbon reduction aid tools” along with guidance that would allow Chinese banks to increase support for “gas reduction initiatives.” carbon emissions in accordance with market principles ”. It will return to that rhetoric with specific government bank funding directives for carbon reduction in heavy industry.
President Xi Jinping strengthened his commitment to carbon neutrality in September 2020 with one call for a “scientific and technological revolution and industrial transformation” aimed at achieving a “green recovery of the world economy in the post-COVID era”. Now, he should manipulate the government’s finances and policy mechanisms to make de-carbonation in industry – starting with the steel sector – as the government’s top priority.