Opinion | China has what it takes to lead the global green steel revolution

In 2024, China’s crude steel production remained above the 1-billion-tonne mark, while consumption fell to 892 million tonnes, a 5.4 per cent decline year on year. Thus, even as demand for steel has decreased, overcapacity has persisted. Meanwhile, carbon intensity remains relatively high due to the dominance of coal-reliant steelmaking production processes.

At the corporate level, factors such as green steel premiums and international tariffs are putting some pressure on profit margins, which could deter low-carbon investments and result in financial losses or even more significant challenges, ultimately slowing the industry’s transition to a low-carbon future.

To advance China’s peak carbon and carbon neutrality goals, the government has introduced a series of policies aimed at strengthening its dual-control system for carbon emissions, managing both the carbon emission intensity as well as total carbon emissions.

During the recent “two sessions”, the National Development and Reform Commission identified the continuing control of steel production and the industry’s capacity reduction and restructuring as key priorities in the 2025 national economic and social development Plan. China has also explicitly supported hydrogen metallurgy – a green approach to steel production using hydrogen instead of carbon as a reduction agent – and unveiled detailed plans to promote an integrated approach to steel decarbonisation.

This year marks the end of China’s 14th five-year plan and a pivotal moment for steel decarbonisation ahead of the 15th five-year plan. As we await key announcements on its currently suspended steel production capacity swap programme and the inclusion of steel in China’s carbon emissions trading market, the focus is on how China can leverage its significant advantages in green hydrogen and renewable energy to become a global leader in green steel production.

To reduce carbon emissions in steel production, electricity-based steel production methods must play a crucial role. Scrap steel and renewable energy sources such as green hydrogen are key resources that can help shift steel production away from coal and towards a fully low-carbon process.