Page 5 - AsiaElec Week 08 2022

AsiaElec COMMENTARY AsiaElec

Steel
In the steel sector, China is rapidly replacing emissions per unit of GDP by over 65% from the
aged coal-based steel plants with new capacity. 2005 level, to raise the share of non-fossil fuels
74 million tonnes of new coal-based steelmaking in primary energy consumption to around 25%
capacity was approved in 2021, rebounding from and to increase the forest stock volume by 6bn
a hiatus in 2020, and 15 times the annual aver- cubic metres from the 2005 level.
age capacity additions in the rest of the world in It also aims to bring total installed capacity
2016–2020. of wind and solar to over 1.2mn MW by 2030.
The capacity approved in 2021 also exceeds
all of the coal-based steel capacity under devel- Call to action
opment in the rest of the world. The briefing called for China to redirect all new
New coal-based power plants and integrated generation investments into clean energy, and
steel plants have a typical lifetime of 20–40 increase scale of these investments to match the
years and will lock the sectors further into coal projected growth in electricity demand, in order
dependency. to peak power sector CO2 emissions as a matter
There is no space for this new capacity to be of urgency.
utilised under the goals of the Paris Agreement. Given that China’s power sector has been the
The new coal-based steel projects initiated in main source of increases in global fossil emis-
2021 alone will entail approximately $70-110bn sions in the past two years, this would be a cru-
in stranded assets when the carbon emission cial contribution to meeting the goals of the Paris
reduction targets are realized, and the coal power agreement.
plants imply a further stranded investment of Such an increase is also eminently achievable
$20bn. given the scale that China has already achieved
The briefing warned that these decisions in clean energy, requiring less than a doubling of
would put Beijing’s declared target of reaching annual capacity installations.
net zero by 2060 in danger. A complete shift of Beijing also needs to align plans for invest-
new investments into clean capacity is needed ment in new iron & steel capacity with the
to put China on track to peak CO2 emissions, aim for heavy industry sectors to peak their
which Beijing aims to reach by 2030 at the latest emissions early, increasing the share of non-
and probably 2028, and avoid a glut of unneeded coal-based steelmaking (direct reduced iron,
power and industrial capacity. hydrogen-based technology and electric arc
China said in October 2021 ahead of the furnaces), and retiring or relining older plants
COP26 conference in Glasgow that to achieve rather than replacing them with new coal-based
its 2030 and 2060 targets, it aimed to lower CO2 capacity.™

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