Understanding the drivers of CO2 growth in China's iron and steel sector: An integrated analysis of the energy–material–economy nexus

Abstract

China's iron and steel sector has experienced a significant rise in CO2 emissions over recent decades, largely due to complex interplays among energy use, material demand, and economy growth along the steel flow chain. Understanding these interconnected drivers is crucial for effective decarbonization policies. To address this issue, this study integrates extended input-output analysis, material flow analysis, and CO2 accounting to quantitatively assess the relative impacts of these drivers within the energy–material–economy nexus. The concept of exergy is introduced to account for heterogeneous energy and material flows within the nexus. The findings highlight the primary narrative behind CO2 growth in China's iron and steel sector: substantial investments facilitated construction sector expansion, subsequently driving up crude steel production via blast furnace routes and escalating CO2 emissions due to extensive coke use. Historical decomposition analysis from 2002 to 2017 underscores construction sector investments as the primary driver of CO2 growth, while energy efficiency improvements in steel production processes progressively contribute to CO2 reduction. Nevertheless, efforts to shift steel production routes for CO2 reduction are challenged by limited scrap supply. Furthermore, the analytical approach holds potential for investigating the underlying narrative and drivers of CO2 growth in other metal sectors across China.