Quantitative analysis of net-zero transition pathways and synergies in China's iron and steel industry

Abstract

Steel is a critical input to infrastructures required for the net-zero transition. Representing over 50% of global production and 15% of nationwide CO2 emissions, China's iron and steel industry (CISI) will play a pivotal role towards achieving its net-zero commitment. This study investigates a series of decarbonization pathways and their synergies in CISI using a bottom-up model. Policy and technology uncertainties are incorporated in decarbonization pathways through scenario and uncertainty analysis. Results show that: (1) Uncertainties have profound impacts on the time and technology mix required to achieve net-zero emissions. Uncertainty scenarios narrow the potential of emerging decarbonization measures, causing significant delays in reaching the net-zero target, as it takes on average an additional 5 years to achieve the same emission reductions compared to deterministic scenarios. Moreover, sensitivity analysis reveals that steel output and technology penetration rates are critical uncertainty parameters since slight perturbations from their nominal values significantly affect the decarbonization potential; (2) Switching to Scrap-electric arc furnace production and increasing the share of renewables in electrification can reduce emissions by 52% in 2060. Promoting material efficiency, energy efficiency, natural gas, and bioenergy are key near-term measures since they account for 37% of emission reduction. The application of CCUS and hydrogen is indispensable in the long run as they further reduce emissions by 11%; (3) Achieving the net-zero target reduces energy intensity by 34%, while pollutant emission intensities drop by 87–96%. Therefore, policymakers can resort to synergies of deep decarbonization to simultaneously realize energy conservation and pollution reduction targets.