Greenhouse gas emissions from the iron and steel sector increased by more than 4% in 2024, despite a 1.7% decrease in China's crude steel production. The increase in steel production in the last quarter of 2024, as a result of economic stimulus measures and efforts to compensate for the production decline in December 2023, was the main driver behind the increase in greenhouse gas emissions. On the other hand, challenges such as scrap shortages, high electricity costs and the fragmentation of the recycling industry have hindered the increased use of electric arc furnaces (EAF).
In this context, the Chinese government has implemented plans to reduce greenhouse gas emissions in the steel sector, with a target to reduce coal consumption by 20 million tons and carbon dioxide emissions by 53 million tons by the end of 2025. The main goals of these plans are to increase the share of steel production using electric arc furnaces to 15% and to consume 300 million tons of steel scrap by 2025. The government aims to increase the supply of steel scrap and develop the recycling industry by offering tax exemptions and financial incentives. Government programs include increasing the recycling of end-of-life vehicles and used household appliances. There are also plans to use technologies such as hydrogen metallurgy, carbon reduction in the electricity grid and fuel switching.
In addition to the transition to electric arc furnaces, in the short term, eliminating existing capacities that do not meet energy standards and focusing on high value-added steel production are key elements of the government's policy.
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