1、Unlocking the First Wave of Breakthrough Steel Investments in ChinaReport/November 2024rmi.org/2Unlocking the First Wave of Breakthrough Steel Investments in ChinaAbout RMIRMI is an independent nonprofit,founded in 1982 as Rocky Mountain Institute,that transforms global energy systems through market

2、-driven solutions to align with a 1.5C future and secure a clean,prosperous,zero-carbon future for all.We work in the worlds most critical geographies and engage businesses,policymakers,communities,and NGOs to identify and scale energy system interventions that will cut climate pollution at least 50

3、 percent by 2030.RMI has offices in Basalt and Boulder,Colorado;New York City;Oakland,California;Washington,D.C.;Abuja,Nigeria;and Beijing,Peoples Republic of China.rmi.org/3Unlocking the First Wave of Breakthrough Steel Investments in ChinaAuthors and AcknowledgmentsAuthorsShuyi LiTing LiYujun XueR

4、ong YanAuthors listed alphabetically.All authors from RMI unless otherwise noted.ContactsShuyi Li,slirmi.orgCopyrights and CitationShuyi Li,Yujun Xue,Rong Yan,et al.,Unlocking the First Wave of Breakthrough Steel Investments in China,RMI,2024,https:/rmi.org/insight/unlocking-the-first-wave-of-breakt

5、hrough-steel-investments-in-china/.RMI values collaboration and aims to accelerate the energy transition through sharing knowledge and insights.We therefore allow interested parties to reference,share,and cite our work through the Creative Commons CC BY-SA 4.0 license.https:/creativecommons.org/lice

6、nses/by-sa/4.0/.All images used are from iS unless otherwise noted.AcknowledgmentsThe authors warmly thank Chathu Gamage,Lachlan Wright,Rachel Wilmoth,Kaitlyn Ramirez,and Xiyuan Liu of RMI for their valuable comments on this report.In addition,special thanks to experts who provided insights and advi

7、ce for the analyses,including Guangyu Ma from Ansteel Iron and Steel Research Institute,Mingyue Wang and Xiang Meng from Baoshan Iron&Steel Co.,Ltd.,and more.The contents of this report do not represent the views of the above experts or organizations.rmi.org/4Unlocking the First Wave of Breakthrough

8、 Steel Investments in ChinaTable of ContentsIntroduction.51.Chinas Steel Industry under the Carbon Neutrality Goal.71.1 Transition Trends for Chinas Steel Industry.71.2 Status of Low-Carbon Metallurgy Projects.81.3 Enabling the First Wave of Near-Zero-Carbon Steel.112.Economics and Transition Costs.

9、122.1 Emissions Intensity and Economics of Steel Production Routes.122.2 From Technical Production Route to Transition Path.182.3 Transition Costs of Multiple Paths.203.Integrated Solutions to Solve the Cost Puzzle.233.1 Roles of Policy,Demand Side,and Finance.233.2 Practices and Trends in China.253

10、.3 Integrated Solutions for Each Transition Path:A Quantitative Analysis of Scenarios.284.Recommendations.33Endnotes.36rmi.org/5Unlocking the First Wave of Breakthrough Steel Investments in ChinaIntroductionThe production of steel is an energy-intensive and high-emissions industry.In 2020,the direct

11、 carbon emissions from the global steel industry reached 2.6 billion tons,accounting for about 7%of global emissions.1 Chinas steel industry emitted 1.81 billion tons,accounting for about 16%of the countrys total.2 As a raw material industry,the steel industry is one of the pillars for steady econom

12、ic and social development.The low-carbon and near-zero-carbon transition of the steel industry is crucial to meeting worldwide climate goals and it introduces opportunities for high-quality development for the industry and its downstream partners.At the industry level,the China Iron and Steel Associ

13、ation(CISA)issued the Carbon Neutrality Vision and Technology Roadmap for the Steel Industry in August 2022,which has been updated to the second edition.3 The roadmap plans key technologies from the current level to the carbon peaking and carbon neutrality stages,providing a direction for industry t

14、ransition from a technical perspective.At the enterprise level,both state-owned and private enterprises have actively set carbon targets and emissions reduction roadmaps to help enable the industry transition.At the project level,pioneering companies such as Baowu Group and HBIS Group have planned a

15、nd are operating low-carbon and near-zero-carbon projects such as hydrogen metallurgy.They have capabilities of producing standard-compliant products.The continual advancement and popularization of low-carbon technology offers the possibility of producing near-zero-carbon steeli,but the high cost is

16、 still a major challenge for implementation.At present,most of the investment in existing projects such as hydrogen metallurgy relies on companies own capital.These companies have taken the lead in commissioning and operating low-carbon and near-zero-carbon projects as early demonstrations.However,t

17、he economic challenges will be magnified as the projects progress and cost competitiveness needs to be proven in the market.If uncertainty exists about the projects medium-and long-term economic performance,companies are more likely to maintain a conservative attitude toward capital-intensive near-z

18、ero-carbon projects.This can negatively impact the industrys transition process.However,the steel industry has an imminent need for the transition to low-carbon and near-zero-carbon production.It is estimated that to keep the temperature rise within 1.5C,the global near-zero-carbon steel production

19、capacity will need to reach about 190 million tons(Mt)by 2030.At present,however,the total capacity in the pipeline is only about 60 Mt.4 Most of the blast furnace(BF)and basic oxygen furnace(BOF)equipment commonly used in steel production has a service life of 20 years,which can be extended through

20、 equipment relining.In China,a significant portion of the BFs and BOFs will reach their 20-year service life in following years.If near-zero-carbon steel projects are not deployed fast enough,there is a risk of locking in more carbon emissions as capital is invested in another round of equipment rel

21、ining.Deploying near-zero-carbon projects at that time may lead to the early retirement of asset-heavy BF and BOF equipment,causing financing pressures and a waste of resources.iNear-zero-carbon steel needs to meet the Class A carbon efficiency rating of the CISAs Methods for the Assessment of China

22、 Decarbonized Ecological Future-oriented Steel.For near-zero-carbon steel projects,as green power is fully applied in the mid-and long-term,indirect emissions are significantly reduced to near-zero.Emissions per ton of steel will be below the Class A carbon efficiency threshold.rmi.org/6Unlocking th

23、e First Wave of Breakthrough Steel Investments in ChinaTherefore,accelerating the deployment of near-zero-carbon steel projects requires actively seeking solutions to economic challenges.In practice,project-level economic assessment is a particularly important aspect of the process.Near-zero carbon

24、emissions is the long-term goal of these projects,but reasonable application of transitional technologies can be considered in the short to medium term.As a result,the technical production routes adopted at different stages of the same project may change.The development of various low-carbon and nea

25、r-zero-carbon technical production routes is gradually improving the technical and economic feasibilities.The economic assessment should fully consider the dynamic transition path under each technology iteration instead of the static assumption of a single technical production route.Therefore,this s

26、tudy temporally integrates various technical production routes for steel,progressing from higher-carbon to lower-carbon,and finally to near-zero-carbon routes,creating a defined transition pathway.The cost of the transition path is assessed based on the cost per ton of steel for each technical produ

27、ction route.This report is based on a project-level economic assessment model that quantifies the economics of the key technical production routes and representative transition paths.By evaluating project net present value(NPV)and payback period,it provides a reference for determining the final inve

28、stment decision.The study also analyzes how policy,demand-side,and financial stakeholders are supporting the transition of the steel industry.The model quantifies the contribution of each type of supporting levers and its ability to solve economic challenges and to create a comprehensive solution th

29、at enhances the projects potential profitability and sustainability.These include,but are not limited to,policy instruments such as green hydrogen subsidies and the carbon market,as well as market instruments such as green premiums paid by buyers,forward offtake agreements,and preferential interest

30、rates offered by financial institutions.Finally,the report presents six action recommendations,with the goal of mobilizing stakeholders to jointly create favorable conditions that accelerate the deployment of near-zero-carbon steel projects.rmi.org/7Unlocking the First Wave of Breakthrough Steel Inv

31、estments in China1.Chinas Steel Industry under the Carbon Neutrality Goal1.1 Transition Trends for Chinas Steel IndustryChina is the worlds largest producer and consumer of steel,accounting for over half of the worlds crude steel production and emissions from steel production.In China,direct emissio

32、ns from the steel industry account for 14%of the countrys total.Also noteworthy is that a significant proportion of emissions are generated from electricity use by the steel industry.5 Therefore,the transition of Chinas steel industry is crucial to meeting the global climate goal and Chinas dual car

33、bon targets.Compared with steel companies in other countries,Chinese steel producers are more reliant on the use of coal,with a low share of short-process production(i.e.,processes based mostly on recycled scrap being melted in a single step via a electric-arc furnace).Due to the coal-rich,oil-poor,

34、gas-poor energy structure,coal accounts for 76%of the energy used in the Chinese steel industry,compared to 44%in Europe and 24%in the United States.Although the energy used in steel production in Europe and the United States is also dominated by fossil energy,natural gas plays a considerable part.6

35、In addition,steel produced by the short process accounts for less than 10%of total production in China,lower than the international level.7 This is because steel scrap has not yet been collected at scale in China due to its late industrialization and urbanization,causing temporary insufficiency and

36、high price.This,coupled with the impact of electricity prices,limits the economics of short-process steelmaking.The high proportion of coal and the low proportion of short-process production introduces both a severe cost challenge to the transition of the Chinese steel industry and a huge potential

37、for emissions reduction.For example,as industrial and urban infrastructure construction gradually start upgrading,the scrapping of existing machinery and buildings will lead to an increase in scrap steel resources.Combined with planned improvement of the recycling system,short-process steel producti

38、on will have a potential increase.In terms of timing,a significant portion of long-process(i.e.,fully integrated steelmaking usually including sintering,blast furnace and basic oxygen furnace on a single site)equipments are about to be commissioned for their first full 20-year life cycle.If the near

39、-zero-carbon steel projects are not deployed fast enough,the capital will be invested in equipment relining to extend their life cycle,which means that more carbon emissions will be locked in for up to a decade or more.8 As a result,when focusing on the transition path of the Chinese steel industry

40、and planning out investments in near-zero-carbon production,the unique features of the industry should be considered.Investment cycle opportunities should be seized,and proactive,decisive actions should be taken to accelerate the renewal of production capacity by adopting an appropriate pace and met

41、hodology.In addition,care should be taken to prevent the risk of stranded assets that would harm the interests of the companies and the industry.rmi.org/8Unlocking the First Wave of Breakthrough Steel Investments in ChinaAt present,the Chinese steel industry has clear technical routes for carbon red

42、uction.Key production routes for the steel industry transition include at-scale utilization of scrap steel and green hydrogen metallurgy(as Exhibit 1).Policy support and leading corporate actions are actively promoted.By 2050,the share of scrap-based short-process production is expected to grow from

43、 the current level of below 10%to 60%as the recycling rate of scrap steel increases.The production of near-zero-carbon primary steel will reach nearly 240 Mt with the cost reduction of green hydrogen,carbon capture,and other deep emissions reduction technologies.9Exhibit 1 Chinas steel production ro

44、ute outlook Note:CCS=carbon capture storage;EAF=electric arc furnace.RMI Graphic.Source:RMI analysis1.2 Status of Low-Carbon Metallurgy ProjectsUnder the guidance of the“1+N”policy system,policies such as Guiding Opinions on Promoting High-Quality Development of the Iron and Steel Industry have give

45、n a strong impetus to carbon reduction in the steel industry.Meanwhile,cross-industry supporting policies such as a circular economy,carbon market,development of hydrogen energy,low-carbon procurement,and green financing are continually shaping and strengthening favorable conditions for the transiti

46、on and carbon reduction of the steel industry.Driven and supported by the policies,many steel companies have announced targets and plans for carbon peaking and carbon neutrality actions(Exhibit 2).The output of steel companies with carbon peaking and carbon neutrality plans in place accounts for abo

47、ut 38%of the countrys total.At the project level,low-carbon and near-zero-carbon steel projects,such as hydrogen metallurgy,have also emerged(Exhibit 3),and the total production capacity planned or in operation that has been disclosed exceeds 9 Mt.12108642024202612840Crude steel production(100 Mt/ye

48、ar)Annual carbon emissions(100 Mt CO2/year)2020203020402050Short process-EAFPrimary steel-hydrogenPrimary steel-CCSBlast furnace&other long processesCarbon emissionsrmi.org/9Unlocking the First Wave of Breakthrough Steel Investments in ChinaExhibit 2 Carbon peaking and carbon neutrality targets of C

49、hinese steel companiesCompanyCrude steel production*Carbon peakCarbon neutralBase yearOther phased targets202520302030205020502060130.8202320502020Technology with 30%carbon reduction potential readyBy 2035,30%carbon intensity and total emissions reduction55.920252050PeakBy 2035,30%carbon reduction f

50、rom peak,30%carbon intensity reduction41.320222050Peak10%total emissions reduction from peak30%total emissions reduction from peak37202520602020 and peakBy 2033,20%carbon reduction from peak,25%carbon intensity reduction from 202033.62025205020602020 and peakAbility to reduce 60%carbon for some prod

51、uctsAbility to reduce 30%carbon from 2020 for low-carbon product lineBy 2035,30%carbon reduction from peak19.52030205020205%intensity reduction compared to 202020%carbon intensity reduction.Ability for 30%intensity reduction15.220232050PeakTechnology with 30%carbon intensity reduction potentialBy 20

52、42,50%total emissions reduction14.520282050-2060PeakBy 2035,significant total emissions reduction from peak;By 2040,more significant total emissions reduction14.220302060PeakBy 2035,20%intensity reduction from peakBy 2060,80%total emissions reduction,neutrality with offset12.6n/a205020187%total emis

53、sions reduction25%total emissions reduction920302060Peak33.2%green powerBy 2040,50%green power,30%total emissions reductionBy 2050,70%-90%green power,66%total emissions reduction*million tons/year,2023RMI Graphic.Source:RMI analysisrmi.org/10Unlocking the First Wave of Breakthrough Steel Investments

54、 in ChinaExhibit 3 Overview of hydrogen metallurgy projects in China CompanyProvinceCityTechnologyProjectOperation yearGreen hydrogen plan1GuangdongZhanjiangH2-DRI1 million tons/year shaft furnace2023Firstphaseby-producthydrogen,COG,naturalgasSecondphasegreenhydrogen2HebeiZhangjiakouH2-DRI1.2 millio

55、n tons/year shaft furnace2022FirstphaseCOGSecondphasegreenhydrogen3LiaoningBayuquanH2-DRI10,000 tons/year fluidized bedConstructionGreenhydrogen4XinjiangUrumqiH2-BF2,500 m3 BF2023Gray hydrogen with self-circular process5ShanxiLinfenH2-BF1,860 m3 BF2021By-product hydrogen6ShanxiJinzhongH2-DRI300,000

56、tons/year shaft furnace2022100%COG7Inner MongoliaWuhaiH2-smelting300,000 tons/year smelter2021By-product hydrogen8HebeiQinhuangdaoH2-BF40 m3 hydrogen-rich BFTrialRenewable-basedwaterelectrolysiswithLONGi9GansuJiayuguanH2-DRIRotary kilnTrialGray hydrogen10HebeiXingtaiH2-smelting550,000 tons smelter*3

57、ConstructionNo details11ShandongLinyiH2-DRI50,000 tons/year shaft furnace2024Gray hydrogen/by-product hydrogen12HebeiTangshanH2-BF2300 m3 BF*22023By-product hydrogenNote:BF=blast furnace;COG=coke oven gas;and DRI=direct reduced iron.RMI Graphic.Source:RMI analysisChina hydrogen-based metallurgy proj

58、ect 4975 12 2 1 8 361011Crude steel production(10,000 tons/year,2020)Data unavailable or no production reported01,0001,0005,0005,00010,00010,00020,00020,00030,000With a green hydrogen utilization planWithout a green hydrogen utilization planrmi.org/11Unlocking the First Wave of Breakthrough Steel In

59、vestments in China1.3 Enabling the First Wave of Near-Zero-Carbon SteelLow-carbon and near-zero-carbon steel projects generally face higher costs.This study combines different steel technical production routes in the temporal dimension to create the transition path,that is,a technology mix from high

60、er-carbon technical production routes to lower-carbon routes,and finally to near-zero-carbon routes.The overall cost of a transition path is assessed based on the cost per ton of steel under different technical production routes.Specifically,this study builds a project-level economics model for the

61、different transition paths and evaluates the projects NPV,payback period,and others.The impacts of policy,demand-side,and financing supporting levers on the financial performance of the projects are also analyzed and quantified,creating an integrated multistakeholder solution that provides a referen

62、ce for the steel industry and companies.The study also encourages stakeholders to create favorable conditions for a system that contributes to the low-carbon development of the steel industry.The overall structure of the project-level economics model built in this study is shown in Exhibit 4.At the

63、core is the cash flow model that generates core results such as project NPV,production cost of steel,and other financial outputs.The required direct inputs and assumptions include feedstock costs and product prices,financial data,and data related to policies such as hydrogen subsidies and carbon pri

64、cing.The mass balance model also provides key inputs related to the technical routes of the cash flow model.With inputs of physical and project operational parameters,the model outputs emissions intensity,emissions of different ranges,and other information.The green hydrogen value chain stand-alone

65、model inputs hydrogen prices into the cash flow model.These prices vary depending on time,location,technological advancements,and other factors.Exhibit 4 Overall structure of the project-level economics modelNote:BF-BOF=blast furnacebasic oxygen furnace;CCS=carbon capture and storage;DRI=direct redu

66、ced iron;EAF=electric arc furnace;and NPV=net present value.RMI Graphic.Source:RMI analysisInputs and assumptions for project operational and physical parametersInputs and assumptions for financial dataInputs and assumptions for feedstock costs and product pricesPolicy inputs(hydrogen subsidy,carbon

67、 price,etc.)Mass balance modelCash flow modelGreen hydrogen value chainstand-alone modelEmissions output(direct emissions,indirect emissions)Financial outputs(NPV,production cost of steel,etc.)Main technical production routes:BF-BOF(+CCS)H2 DRI-EAFInputsCalculationOutputsrmi.org/12Unlocking the Firs

68、t Wave of Breakthrough Steel Investments in China2.Economics and Transition Costs2.1 Emissions Intensity and Economics of Steel Production RoutesAs shown in Exhibit 5,this study selects and categorizes eight typical technical routes of steel production into long process,short process,and direct redu

69、ction.The long-process category includes the technical production routes based on the blast furnacebasic oxygen furnace(BF-BOF)method.The short-process category includes the routes that use scrap steel as feedstock,excluding the short process using direct reduced iron(DRI)as feedstock.The direct red

70、uction category obtains sponge iron through solid-state reduction under a temperature lower than that of ferrous feedstock melting,and inputs it into the electric arc furnace(EAF)or other devices for steelmaking.These categories of technical production routes have been streamlined here for ease of s

71、tudy.In practice,overlaps exist between the technical production routes;for example,the melted iron in the long process will enter the EAF in the short process.The technical production routes are also categorized according to their stage in the near-zero-carbon transition as basic,transitional,and u

72、ltimate routes.The basic route is the mainstream route at present with high efficiency but large emissions.The basic route requires gradual transformation.The transitional routes are the technology routes that have certain carbon reduction effects and high feasibility at present,but cannot meet the

73、long-term carbon neutrality goals due to limited resources,costs,and emissions reduction potential.The ultimate routes are the production routes adapted to the long-term carbon neutrality goal that can be deployed at a larger scale as the technology matures.rmi.org/13Unlocking the First Wave of Brea

74、kthrough Steel Investments in ChinaExhibit 5 Categorization and characteristics of steel production routesCategoryProductionrouteReducingagentMainequipmentFeaturesLongprocessBF-BOFBlast furnacebasic oxygen furnace CokeBlast furnacebasic oxygen furnaceBasic route with high efficiency and high emissio

75、nsBF-BOFCOG-INJBlast furnace-basic oxygen furnace with coke oven gas injectionCoke,coke oven gasBlast furnacebasic oxygen furnaceBlast furnace with coke oven gas injection,replacing pulverized coal injection and a small amount of cokeBF-BOFCCSBlast furnacebasic oxygen furnace with carbon capture and

76、 storageCokeBlast furnacebasic oxygen furnace,carbon capture and storageFeatures CCS to capture carbon emissions from blast furnace and power generation processesShortprocessScrap-basedEAFScrap-based electric arc furnaceNoneBlast furnacebasic oxygen furnace,carbon capture and storageUses scrap steel

77、 as ferrous feedstock,low emissions,and affected by scrap steel resourcesDirectreductionCOGDRI-EAFCoke oven gas direct reduced iron with electric arc furnace Coke oven gasShaft furnace,electric arc furnaceTransitional route for pure green hydrogen DRI,utilizing hydrogen-rich by-product coke oven gas

78、COG/H2DRI-EAFCoke oven gas/H2 direct reduced iron with electric arc furnace Coke oven gas,green hydrogenShaft furnace,electric arc furnaceTransitional route for pure green hydrogen DRI,blending green hydrogen with coke oven gasH2DRI-EAFH2 direct reduced iron with electric arc furnaceGreen hydrogenSh

79、aft furnace,electric arc furnacePure green hydrogen DRIH2DRI-ESF-BOFH2 direct reduced iron,electric smelting furnace,basic oxygen furnaceGreen hydrogenShaft furnace,electric smelting furnace,basic oxygen furnaceMedium-grade pellets can be used,smelting DRI with electric smelting furnace after shaft

80、furnace,steelmaking in basic oxygen furnaceRMI Graphic.Source:RMI analysisThe low-carbon transition of Chinas steel industry is a gradual process that will require full consideration of the industry status and current technological development.It involves moving from the basic route to a transitiona

81、l route in a timely manner,and finally to a ultimate route.For example,based on the status of the Chinese steel industry,DRI using coke oven gas(COG)is a feasible transitional route and gradually transitions to green hydrogen DRI as the cost of green hydrogen reduces.This section provides an in-dept

82、h comparative analysis of the features,carbon emissions,and economics of each technical production route as a basis for transition path analysis(as Exhibit 6 and Exhibit 7).Basic routeTransitional routeUltimate routermi.org/14Unlocking the First Wave of Breakthrough Steel Investments in ChinaLong-pr

83、ocess categoryBF-BOFBF-BOF is the most widely adopted technical route for steel production in China,using coke generated from metallurgical coal as the main reducing agent.This route has a high yield and is flexible to use varying metal feedstocks but the carbon emissions per ton of steel is up to 2

84、.2 tons of CO2 equivalent(tCO2e).The carbon emissions of this technical production route are mainly generated from the use of coke and pulverized coal injection in the blast furnace process,while the methane emissions from the upstream coal mining process cannot be ignored.BF-BOF with COG injection(

85、BF-BOF COG-INJ)Carbon emissions are reduced to a certain extent by injecting COG into the blast furnace to replace part of the pulverized coal injection and coke.COG contains around 60%hydrogen and 20%methane.More hydrogen could be produced from methane through further reforming.This technical produ

86、ction route can effectively avoid the early retirement of young blast furnace equipment and enable recycling of coke oven by-product gas.However,it has a maximum limit on the amount of COG that can be injected,and cannot completely replace coke and pulverized coal injection the carbon reduction rate

87、 is around 20%for ironmaking.In the long run,with the advancement of low-carbon transition of the steel industry,COG resources will continue to reduce.For this reason,although this production route can be used as a transitional technology in the near future,it will gradually be replaced by ultimate

88、near-zero-carbon technical production routes in the medium and long term.BF-BOF with carbon capture and storage(BF-BOF CCS)Carbon emissions from the BF-BOF route can be captured using amine absorption or other CCS technologies.For example,in steel production,carbon emissions are mostly in the blast

89、furnace process,accounting for 72%of the total emissions.10 As a result,this process is also key to installing carbon capture devices.Meanwhile,the residual heat from ironmaking can also effectively improve the resolution efficiency of the capture solution.The carbon capture rate can reach up to 90%

90、in the blast furnace process,despite its limited role in other processes.The carbon emissions of this production route can thus be as low as 1.3 tCO2e per ton of steel.However,the low-concentration CO2 in the blast furnace,the high cost of capture,and the high reliance on infrastructure for downstre

91、am carbon transportation and storage have introduced uncertainty for the application of carbon capture and storage(CCS)technology in the steel industry.In spite of this,CCS can be leveraged as a transitional route based on the consideration of fully utilizing the existing BF-BOF assets.rmi.org/15Unl

92、ocking the First Wave of Breakthrough Steel Investments in ChinaShort-process categoryScrap-based EAFScrap-based EAF is a steelmaking process that utilizes only scrap steel as the ferrous feedstock and electricity as the major energy source.Because the feedstock is scrap steel,this technical product

93、ion route does not require an ironmaking process,only an EAF processii.As urbanization and industrialization in China enter the next stage,more scrap steel resources will be available and the price will stabilize,accelerating the scrap-based EAF route.At present,Chinas share of EAF-based production

94、is about 10%and is expected to reach 60%by 2050.11Scrap-based EAF is one of the critical ultimate technology routes for steel production because its emissions are as low as 0.4 tCO2e per ton of steel,and can be further reduced to less than 0.2 tCO2e per ton of steel with the widespread adoption of g

95、reen power.Direct reduction categoryCOG DRI with EAF(COG DRI-EAF)This technical production route leverages COG as a reducing agent and shaft furnaces as the main ironmaking equipment.The product of the ironmaking process,solid DRI(also known as sponge iron),can be fed into the EAF in the steelmaking

96、 process.In the Middle East and the United States,where natural gas resources are abundant,cheap,and widely used in the steel industry,the large-scale capacities of a shaft furnace that leverages natural gas as a reducing agent have brought experience in DRI.In China,this technical production route

97、can take full advantage of COG resources,improving the technical level and at-scale capacity of DRI and shaft furnace equipment.Although a by-product gas,COG is emissions-intensive due to the fossil energy consumed in the coking process.The carbon emissions of this production route are about 1.2 tCO

98、2e per ton of steel,which is 45%lower than that of the long process.As a transitional production route,it can partially reduce carbon emissions while building a solid foundation for the gradual expansion of green hydrogen.H2 DRI with EAF(H2 DRI-EAF)This production route leverages 100%green hydrogen

99、as a reducing agent for direct reduction of pellet ore for ironmaking and for further steelmaking in an EAF.The direct reduction takes place at a lower temperature than blast furnace ironmaking and reacts in between the solid state and the gaseous state,which is less reduction-reaction efficient tha

100、n the long process.However,the reaction by-product of this production route is water instead of carbon dioxide,significantly reducing carbon emissions in the ironmaking process.iiCurrent analysis doesnt cover EAF with hot metal blended as feedstock.rmi.org/16Unlocking the First Wave of Breakthrough

101、Steel Investments in ChinaAs the costs of green electricity and electrolyzer decrease in the future,green hydrogen will have great potential for cost optimization.Under this production route,carbon emissions per ton of steel can be as low as 0.5 tCO2e,down nearly 80%compared to the long process.The

102、transition from COG DRI-EAF to H2 DRI-EAF is enabled by gradually increasing the blending ratio of green hydrogen in COG.H2 DRI,electric smelting furnace,BOF(H2 DRI-ESF-BOF)This technical production route adds an electric smelting furnace(ESF)after H2 DRI smelts the sponge iron into melted iron and

103、feeds it into a BOF.DRI requires a high grade of ferrous feedstocks,usually high-grade pellets of 66%or more,also known as DR-grade pellets.12 DRI itself does not need high-grade iron ore,but the impurities in the medium and low-grade iron ore cannot be removed in the ironmaking process.The shaft fu

104、rnace,EAF and BOF all lack effective slagging capacity,and the impurity content of steel products will be too high.The ESF can enhance the slagging capacity of the process,reduce the impurity content of steel products,and improve the applicability of medium-grade iron ore.China relies heavily on hig

105、h-grade iron ore imports and this production route could mitigate the challenge of the shortage of high-quality iron ore in China.Additionally,the introduction of an ESF can also better utilize the BOF in the steelmaking process,avoiding early decommissioning of BOF assets.Because the smelting of DR

106、I consumes energy in an ESF,and the steelmaking process needs to maintain high temperature,this route consumes more energy than H2 DRI-EAF and results in 0.6 tCO2e of emissions per ton of steel.Exhibit 6 Carbon emissions across technical production routes of steelNote:Direct and indirect emissions a

107、re in the boundary of cradle-to-gate,including greenhouse gases such as methane emitted during the mining of coal and iron ore.The product boundary is hot rolled strip steel.Analysis assumes that the electricity for the metallurgical process is from the grid and the electricity for the green hydroge

108、n electrolysis is from renewables.RMI Graphic.Source:RMI analysisCarbon emissions(tCO2e/ton hot rolled steel)BF-BOFBF-BOF COG-INJBF-BOF CCSScrap-based EAFCOG DRI-EAFH2 DRI-EAF80%H2 DRI-EAF30%H2 DRI-EAFH2 DRI-ESF-BOF2.421.61.20.80.40Direct emissionsIndirect emissionsrmi.org/17Unlocking the First Wave

109、 of Breakthrough Steel Investments in ChinaNear-zero-carbon steel needs to meet the Class A carbon efficiency rating of the CISAs Methods for the Assessment of China Decarbonized Ecological Future-oriented Steel.For near-zero-carbon steel projects,as green power is fully applied in the mid-and long-

110、term,indirect emissions are significantly reduced to near zero.Emissions per ton of steel will be below the Class A carbon efficiency threshold.13 The A-level carbon efficiency thresholds for HRC products are 0.05 t CO2/t with 100%scrap and 0.33 t CO2/t with 20%scrap.With near zero indirect emission

111、s,Scrap-based EAF,H2 DRI-EAF,and H2 DRI-ESF-BOF are qualified to be near-zero-carbon steel.In terms of economics,Exhibit 7 shows the cost per ton of steel for each technical production route calculated by the model of this study.The cost of BF-BOF is about 3,200 RMB/ton,mainly consisting of the purc

112、hase cost of feedstocks such as coal and iron ore.The cost of BF-BOF COG-INJ is slightly higher due to the use of COG.Because the dependence on infrastructure for carbon transportation and storage is high,the uncertainty of additional cost for BF-BOF CCS is high with a risk of cost increase.The cost

113、 of scrap-based EAF is about 3,300 RMB/ton,which is slightly higher than that of long process and greatly affected by the prices of scrap steel and electricity.Some of the short-process steel plants can only make profits by producing in the price trough of electricity.The cost of COG DRI is about 3,

114、900 RMB/ton;this is 20%higher than that of long process and mainly consists of high-grade ferrous feedstocks and COG.In addition,the shaft furnace also requires larger capital investments.The cost of COG has a vital impact on the financial performance of the COG DRI-EAF production route.The economic

115、s of COG DRI-EAF can be further improved if the COG is sourced from internal business lines of the steel company,which can be sold at a price lower than the market price.The future economics for the DRI technical route(based on green hydrogen)will improve as the cost of green hydrogen decreases.Gree

116、n hydrogen can be blended in COG for the reduction reaction.From a full project cycle perspective,the 30%H2 DRI-EAF production route with 30%green hydrogen blending is economically superior to the COG DRI-EAF,i.e.,a moderate amount of green hydrogen blending has a favorable effect on the financial p

117、erformance of the project.As the green hydrogen blending ratio increases,additional green hydrogen storage units may be required to maintain the consistent stability of industrial production.This study assumes that the green hydrogen blending threshold required for hydrogen storage is 80%,which mean

118、s 80%of H2 DRI-EAF,H2 DRI-EAF,and H2 DRI-ESF-BOF will all involve the additional cost of hydrogen storage.As a result,the cost per ton of steel for H2 DRI-EAF,which mainly consists of high-grade iron ore and green hydrogen,could be around RMB 4,100 27%higher than that of BF-BOF.The cost per ton of s

119、teel for the H2 DRI-ESF-BOF technical production route is slightly higher than that of H2 DRI-EAF.The ESF utilization has a relatively wide cost range.The increase in electricity consumption of ESF can lead to further upward fluctuation in the production cost of steel.rmi.org/18Unlocking the First W

120、ave of Breakthrough Steel Investments in ChinaExhibit 7 Comparison of the economics across technology production routes of steelNote:The model assumes an annual capacity of 1 Mt of hot rolled steel and a utilization rate of 90%;20%scrap steel blending for all technical routes except scrap-based EAF

121、that uses 100%scrap steel;the cost of green hydrogen production is 16 RMB/kg in 2026,decreasing to 12 RMB/kg in 2030 and 10 RMB/kg in 2035.Costs of commodities such as natural gas and coal refer to historical market prices.RMI Graphic.Source:RMI analysis2.2 From Technical Production Route to Transit

122、ion PathThe previous section details the main technical production routes of steel production and their economics,which can be classified into basic,transitional,and ultimate routes.Note that transitioning steel projects from their current stage to progressive application of new technologies,and ult

123、imately to a near-zero-carbon steel project,does not happen overnight.In addition to aspects such as the maturity and cost of the technical production route,elements directly related to the project should be fully considered to reduce the burden of the transition process on companies.These include t

124、he longevity and condition of the project production facilities,the talent pool,and the resources availability near the project location.This study seeks to reflect the reality of achieving a near-zero-carbon transition in steel production as much as possible by identifying six transition processes

125、that start from different status points and adopt different technical production routes incrementally over time.In this study,the combination of technical production routes that evolve over time is called the transition path.4,5004,0003,5003,0002,5002,0001,5001,0005000+27%Production cost(RMB/ton hot

126、 rolled steel)BF-BOFBF-BOF COG-INJBF-BOF CCSScrap-based EAFCOG DRI-EAFH2 DRI-EAF80%H2 DRI-EAF30%H2 DRI-EAFH2 DRI-ESF-BOFCCSEquipmentOperation and maintenanceOther energy sourcesGreen hydrogenFerrous feedstocksrmi.org/19Unlocking the First Wave of Breakthrough Steel Investments in ChinaExhibit 8 Typi

127、cal transition paths covered in this studyIGreenfield BF-BOF baseline scenarioBF-BOFIIGreenfield BF-BOF with CCSBF-BOF CCSIIIGreenfield scrap-based EAFScrap-based EAFIVBrownfield BF-BOF transitions to DRI-ESF-BOFBF-BOFH2 DRI-ESF-BOFVBrownfield BF-BOF COG-INJ gradually transitions to pure hydrogen DR

128、IBF-BOF COG-INJ30%H2 DRI-EAFH2 DRI-EAFVIGreenfield COG DRI-EAF gradually transitions to pure hydrogen DRICOG DRI-EAF80%H2 DRI-EAFH2 DRI-EAFNote:Retrofit for green hydrogen refers to the modification of the equipment for the reduction gas from low to high hydrogen content in DRI,and mainly covers the

129、 costs of compressors,heating equipment,etc.This is because the higher the hydrogen content,the higher the flow and temperature requirements of the reducing gas.RMI Graphic.Source:RMI analysisExhibit 8 shows six typical transition paths covered in this study,all assuming that the project will start

130、operation in 2026 for a 20-year cycle.Transition Path I is the baseline scenario,which will start operation of the BF-BOF capacity in 2026 with no CCS additions,and keep running until 2045.Transition Path II adds CCS equipment based on Transition Path I,with the CCS equipment operating from the time

131、 it is built in 2026.Transition Path III follows the scrap-based EAF technical production route throughout with no changes in technologies.Transition Paths IV,V,and VI are all transition paths related to hydrogen metallurgy.Transition Path IV transitions the existing BF-BOF capacity to DRI-ESF-BOF w

132、ith the retrofit taking place in 2030.Transition Paths V and VI both enable transition to the H2 DRI-EAF technical route in 2035.Transition Path V adopts transitional production route of BF-BOF COG-INJ firstly,and will transition to the DRI technology that blends COG with 30%green hydrogen in 2030,a

133、nd then move to 100%green hydrogen DRI eventually.20262030203520402045Retrofit for green hydrogenRetrofit for green hydrogenRetrofit for green hydrogenGreenfield projectBrownfield projectrmi.org/20Unlocking the First Wave of Breakthrough Steel Investments in ChinaSimilarly,Transition Path VI plans t

134、o construct a new DRI facility using COG and adapt the facility to green hydrogen in 2030.However,it will use 80%green hydrogen,and transition to 100%green hydrogen DRI in five years.Note that retiring a BF and building a DRI shaft furnace in Transition Path V is more technically difficult,while the

135、 COG DRI facility that is the starting technology for Transition Path VI is already well established.This study assumes that Transition Path VI will use a higher percentage of green hydrogen as a reducing agent during the 203035 transition period.The six transition paths above incorporate various ca

136、pital expenditures and operating expenses.For example,capital expenditures involve blast furnace relining and retrofit for green hydrogen,and operating expenses involve the use of different types and combinations of reducing agents(coke,COG,green hydrogen,etc.).Both are key inputs to the model.2.3 T

137、ransition Costs of Multiple PathsThis study adopts the project-level economics modeliii mentioned in Section 1.3 to measure the cash flow,EBITDAiv,and other indexes of a typical project targeting near-zero carbon under each of the above transition paths without considering external supporting levers

138、 such as policies and markets.The aim is to measure the revenue and profitability of a project.To simplify the comparative study of the transition paths and to exclude the impact of product price fluctuations on the financial performance of the project as much as possible,the price of hot rolled ste

139、el in this study is set at a level such that the NPV of the baseline scenario is zero to better reflect and compare the profitability of different transition paths.The results of the calculation are summarized in Exhibit 9.iiiAssuming a project capacity of 1 million tons of hot rolled steel/year,the

140、 scrap-based EAF has a scrap ratio of 100%and the rest of the production routes have a scrap ratio of 20%.ivEBITDA=earnings before interest,taxes,depreciation,and amortizationrmi.org/21Unlocking the First Wave of Breakthrough Steel Investments in ChinaExhibit 9 Project cash flows and EBITDA in trans

141、ition paths targeting near-zero carbon emissionsIGreenfieldBF-BOFbaselinescenarioIIGreenfieldBF-BOFwithCCSIIIGreenfieldscrap-basedEAFIVBrownfieldBF-BOFtransitionstoDRI-ESF-BOFVBrownfieldBF-BOFCOG-INJgraduallytransitionstopurehydrogenDRIVIGreenfieldCOGDRI-EAFgraduallytransitionstopurehydrogenDRIRMI G

142、raphic.Source:RMI analysisCash flow and EBITDA(100M RMB)Cash flow and EBITDA (100M RMB)Cash flow and EBITDA(100M RMB)Cash flow and EBITDA(100M RMB)Cash flow and EBITDA (100M RMB)Cash flow and EBITDA (100M RMB)0-4-8-12-16-20-24-280-4-8-12-16-20-24-28-32-36151050-5-10-15-200-4-8-12-16-20-24-28-32Cash

143、flowEBITDA151050-5-10-15-200-4-8-12-16-20-24-28-32-36-40-44-48Construction05 years510 years1015 years1520 yearsConstruction05 years510 years1015 years1520 yearsConstruction05 years510 years1015 years1520 yearsConstruction05 years510 years1015 years1520 yearsConstruction05 years510 years1015 years152

144、0 yearsConstruction05 years510 years1015 years1520 yearsrmi.org/22Unlocking the First Wave of Breakthrough Steel Investments in ChinaBy comparing the baseline scenario with the other five transition paths,the following conclusions are drawn:Without considering external support conditions such as pol

145、icies and markets,the financial performance of a project under the transition paths targeting near-zero carbon emissions is mostly less satisfactory.In general,this is the result of the combined effect of one-time capital expenditures for newly constructed and renovated equipment involving carbon re

146、duction and operating expenses such as CCS equipment operation and green hydrogen utilization.Transition Path III(greenfield scrap-based EAF)shows a slightly worse financial performance than the baseline scenario,with lower equipment investment than other transition paths.Given the limited scrap ste

147、el resources,scrap-based EAF cannot support all the needs of the near-zero-carbon transition in the steel industry,so development of other transition paths is still essential.Transition Path II(greenfield BF-BOF with CCS)and Transition Path III(greenfield scrap-based EAF)maintain relatively stable c

148、ash flow and profitability after large inputs during the construction period,while Transition Paths IV,V,and VI,which are related to hydrogen metallurgy,improve faster economically with the falling cost of green hydrogen,but are still incapable of enabling profitability of projects.For the near-zero

149、-carbon transition paths,the ultimate technical production route that meets the near-zero-carbon steel standard should be adopted in the mid-and long-term of the project.Of the six transition paths in this study,Transition Paths III,IV,V,VI meet the requirements of near-zero-carbon transition paths,

150、and can be used as project-level guidelines for steel industry near-zero-carbon development.rmi.org/23Unlocking the First Wave of Breakthrough Steel Investments in China3.Integrated Solutions to Solve the Cost Puzzle3.1 Roles of Policy,Demand Side,and FinanceFor a near-zero-carbon steel project to b

151、e successful,the improvement of economic performance and the implementation of final investment decisions require not only the efforts of the steel company as the project operator,but also support from policy,demand-side,and finance stakeholders(as Exhibit 10).Exhibit 10 Supporting levers for near-z

152、ero-carbon steel projects from stakeholdersStakeholdersSupporting leversExamplesProducer leverProducers leverage their own capital and resources to promote low-carbon projectsSelf-owned capital support,low-cost feedstocks,and labor supportConnect upstream and downstream resources;prioritize near-zer

153、o-carbon project productsPolicy leverMeasures to accelerate industrial decarbonization implemented by governments and regulators at the national or local levelCarbon market,carbon tax,production subsidies,equipment subsidiesCapacity swap policy,infrastructure construction and planningFinance leverFi

154、nancial institutions support for project financing,reducing the capital cost of projectsTransition loans,transition bonds,sustainability-linked bonds,and green equity investmentCredit guarantee,transition financial allianceDemand-side leverDemand-side stakeholders willingness to pay green premiums a

155、nd commit to procurementGreen premium in low-carbon procurementProcurement commitments and supply agreementsRMI Graphic.Source:RMI analysisAs project operators,steel companies can leverage their own capital and resources to promote the transition to near-zero-carbon projects.Under this approach,they

156、 tap into their initiative and coordinate resources in a more targeted manner,but they are potentially limited by their business scope and scale.Policies are also a powerful supporting tool for advancing the deployment of near-zero-carbon steel projects.Binding policies feature stronger enforcement

157、and wider coverage,while encouraging policies play a certain role in guidance and motivation.In addition,carbon markets,carbon taxes,subsidies,and special funds also have a direct impact on economics.rmi.org/24Unlocking the First Wave of Breakthrough Steel Investments in ChinaAmong these,carbon mark

158、ets and carbon taxes introduce an advantage to lower-carbon production by increasing the cost of higher carbon-emitting production.Subsidies can be provided in many forms.These can include production-based subsidies for feedstocks(e.g.,green hydrogen utilization)and products that meet certain requir

159、ements(e.g.,steel that meets low-carbon standards),or subsidies based on a percentage of the capital investment in key equipment for low-carbon metallurgy(e.g.,DRI shaft furnaces,electrolyzers).On the demand side,the main downstream buyers of steel include construction,automotive,and machinery.Where

160、 steel product performance meets the standard,these buyers pay an additional premium for steel with lower carbon emissions in recognition of its low-carbon environmental attributes.Buyers commitments to purchase low-carbon and near-zero-carbon steel and willingness to pay a green premium for it also

161、 help stabilize sales channels and cash flows for low-carbon and near-zero-carbon steel.This initiative not only contributes to carbon reduction in the buyers own supply chain,but also helps accelerate the development of steel with lower carbon emissions.At present,the premium for green hydrogen met

162、allurgy is up to 20%30%internationally.14 In addition to reflecting the recognition of low-carbon attributes in the selling price,the buyers commitment to large-scale or continuous procurement of low-carbon and near-zero-carbon steel reduces the risk of inventory overstock,helping stabilize those pr

163、ojects.By providing financing supporting lever or lowering the cost of capital for companies and projects that meet certain low-carbon requirements,finance also helps reduce the pressure on companies lacking corporate capital.Low-carbon and near-zero-carbon steel projects have large initial investme

164、nts and long payback cycles.Support from financial institutions can help steel companies build confidence and facilitate the investment decisions of the project and the construction of new or retrofitted facilities.Financing supporting lever for the transition within the industrial sector typically

165、includes transition loans,transition bonds,sustainability-linked bonds(SLBs),and green equity investments.These are usually slightly lowering the companies cost of capital and directly improving the project economics.Although the steel industry is not eligible for green loans and green bonds due to

166、its high emissions,v transition loans and transition bonds that focus on supporting carbon emissions reduction can effectively reduce financing costs of transition projects.Additionally,SLBs,which take green parameters as key performance indicators(KPIs),have gradually become a financing preference

167、of the steel industry.This is because the mechanism of linking interest rates to KPIs provides a higher ceiling on the extent to which the cost of capital can be reduced.Green equity investments can be broadly categorized into financial investment and strategic investment.The former is mostly indepe

168、ndent venture capital funds with the theme of green transition that focus on financial return.The latter is mostly corporate venture capital attached to large enterprises that is focused on connecting the industrial chain and serving corporate strategy.Both could provide financial supports to near-z

169、ero-carbon steel projects.Cases in which the deployment of near-zero-carbon steel projects were effectively accelerated through the previously mentioned multistakeholder synergies can be found internationally.One notable case is Stegra(formerly H2 Green Steel),a Swedish company developing a green hy

170、drogen-based DRI-EAF steelmaking project in Boden,Sweden.The project can reduce up to 95%of emissions per ton of steel and is expected vGreen finance(bond/loan)and transition finance(bond/loan)are different terms in China.The former is mostly valid for“pure green”sectors like renewable electricity,w

171、hile the latter could be suitable for heavy industry decarbonization.For other countries or standards,green bond and transition bond could be interchangeable terms.rmi.org/25Unlocking the First Wave of Breakthrough Steel Investments in Chinato start operation in 2025.Prior to this,Stegra signed proc

172、urement contracts for more than 50%of the initial production with downstream companies that have large-scale needs,including Porsche and Mercedes-Benz.These contracts contain procurement agreements lasting up to seven years,and the green premiums are mostly above 20%.15 Meanwhile,the project has bee

173、n supported by government grants from the Swedish Energy Agency and the EU.The latest of these supports offers an amount of 260 million from the Recovery and Resilience Facility.16 On the financial side,Stegra has received senior debt from UniCredit and Socit Gnrale,and subordinated debt from relati

174、vely small institutions,backed by guarantees from credit insurers such as Euler Hermes.Equity investors include financial investors such as Singapore GIC and the European Investment Bank,as well as strategic investors such as Mercedes-Benz Group and Hitachi Energy.17Various types of supporting lever

175、s from multiple stakeholders could be further integrated to amplify these efforts.For example,long-term procurement contracts on the demand side can be financing collaterals,while support from the Swedish National Debt Office could be a guarantee for green credits.18 This is evidence that the smooth

176、 establishment and steady construction of the project not only relies on the efforts of the operator,but is the result of the joint efforts made by multiple stakeholders.3.2 Practices and Trends in ChinaAt present,the low-carbon transition of the Chinese steel industry is mainly led by large enterpr

177、ises,especially large centralized state-owned enterprises(SOEs).Large steel companies have stronger capital and resources to invest in asset-heavy low-carbon and near-zero-carbon steel projects.Large enterprises,especially centralized SOEs,are often driven by stronger social responsibility and leade

178、rship.To build on these advanced practices and accelerate the marketization of low-carbon and near-zero-carbon steel,it is necessary to create a comprehensive solution that integrates policy,demand-side,and financial levers that accelerate the implementation and at-scale development of near-zero-car

179、bon steel production capacity.The aim is to create economies of scale to further reduce costs and establish a virtuous cycle.Exploration and practice started in China at various levels bring a strong impetus to the steel transition (as Exhibit 11).Looking ahead,multistakeholder solutions can be crea

180、ted based on these practices to accelerate the transition to near-zero-carbon steel.rmi.org/26Unlocking the First Wave of Breakthrough Steel Investments in ChinaExhibit 11 Supporting levers from Chinese stakeholders for accelerating low-carbon steel transitionStakeholdersSupporting leversExamplesPol

181、icyCarbon reduction incentives implemented by government ministries at national and provincial levelsCarbon priceThe steel industry is included in the national carbon market and carbon allowance trading will begin in 2025.Subsidies,incentivesJilin Province has subsidized projects that produce more t

182、han 100 tons of green hydrogen per year for three consecutive years at 15/12/9 RMB/kg,and subsidizes 20%of the investment in green hydrogen storage equipment.FinanceLower interest rates,reducing the financing cost of the projectTransition loan/bondStandard Chartered China provided the first transiti

183、on financing loan for the HBIS Supply Chain management company;Baosteel issued a low-carbon transition green bond for Zhanjiang hydrogen-based metallurgy with an issue rate of 2.68%.Other financial instrumentsSustainability-linked bonds,sustainability-linked loans,green equity investment,etc.Demand

184、sideBuyers willingness to pay the green premium,and procurement commitmentsGreen premiumHBIS produces low-carbon green cast steel used in bulk in electric vehicles such as Tesla,which is more than 18%more expensive than ordinary cast steel.Procurement commitmentsBMW and HBIS signed a memorandum of u

185、nderstanding on the green low-carbon steel supply chain.BMWs Shenyang production base will gradually begin using HBISs low-carbon automotive steel in mass-produced models.OthersOther possible measuresSpecial fundsDaye mines integrated project of green power and green hydrogen received RMB 120 millio

186、n of investment from the central budget of NDRCs Clean and Low-Carbon Hydrogen Energy Innovation and Application Project.RMI Graphic.Source:RMI analysisOn the policy side,authorities have planned or implemented carbon reduction incentives at the national and local levels.Among them,the inclusion of

187、the national carbon market for the steel industry will enhance the competitiveness of steel with low carbon emissions.According to the Work Plan for National Carbon Emissions Trading Market Covering Cement,Steel,and Primary Aluminum Sectors(Draft for Public Comments)issued by the Ministry of Ecology

188、 and Environment in September 2024,the steel industry enters its first year of control in 2024 and will complete its first compliance by 2025.19 In terms of subsidies,China has existing domestic practices of subsidizing the production and consumption of green hydrogen in place,which play a role in s

189、upporting hydrogen metallurgy.For example,Jilin Province has subsidized projects that produce over 100 tons of green hydrogen per year for three consecutive years at the rate of 15,12,and 9 RMB/kg in sequence.It also subsidizes 20%of the investment in green hydrogen storage equipment.20 However,the

190、debt pressure on local governments has added uncertainty to the implementation of the subsidies,and no subsidy policy is in place specifically for the hydrogen utilization in the steel sector.21rmi.org/27Unlocking the First Wave of Breakthrough Steel Investments in ChinaIn terms of finance,the green

191、 financial system for the renewables industry in China is relatively mature,but the transition financial system for high-emissions industries such as steel is still under development.Bank loans are an important means of financing for heavy industrial enterprises,and transition loans also play an imp

192、ortant role in providing loan support at lower interest rates for transition projects.For example,Standard Chartered China provided the first transition loan to the HBIS Supply Chain management company.22 Transition bonds,which have high requirements for data disclosure and regulated operations,are

193、also becoming a favored financing tool for the steel industry.Baosteel,a subsidiary of Baowu Group,issued low-carbon transition green bonds for its hydrogen metallurgy demonstration project in Zhanjiang at an interest rate of 2.68%,23 while the Bank of China issued the worlds first financial bond fo

194、r steel transition to accelerate the transition of the Hebei steel industry.24 SLBs are a relatively new financing tool that can provide more flexible financing solutions for the transition of the steel industry,generating incentives to reduce emissions through KPIs.For example,Ansteel issued RMB 2

195、billion of SLBs with the KPI of comprehensive energy consumption per ton of steel in its production bases.25 Strategic cooperation agreements between steel companies and financial institutions also guide specific financing support.For example,the Anshan Branch of the Peoples Bank of China organized

196、15 banks and financial institutions under its jurisdiction to sign the Framework Agreement on Cooperation in Green Finance Alliance with Ansteel.26In terms of demand side,the concerted action of the steel-automotive industry chain is a representative demand-side action that supports the low-carbon t

197、ransition of the steel industry.It also contributes to the carbon emissions reduction goals of automotive companies.Multinational automotive companies such as Mercedes-Benz,BMW,and Volvo are making an early start,while Chinese automotive companies such as Great Wall and Chery are also rapidly implem

198、enting procurement of steel with low carbon emissions.Take HBIS and its downstream buyers practice as an example.The low-carbon green cast steel produced by HBIS,which is over 18%more expensive than ordinary cast steel,will be used in bulk in Teslas electric vehicle production.27 BMW and HBIS signed

199、 a memorandum of understanding on the green low-carbon steel supply chain,stating that the BMW Shenyang production base will begin to use HBISs low-carbon automotive steel in mass production models.However,buyers willingness to pay the green premium is relatively low due to the lack of a broad and t

200、ransparent premium standard reference in the Chinese market as well as the difficulty of measuring the level of emissions reduction of steel with low carbon emissions.28 In October 2024,CISA issued the social organization standard,Methods for the Assessment of China Decarbonized Ecological Future-or

201、iented Steel,which will build a solid foundation for the comparability of the level of emissions reduction of steel.The standard will also facilitate the procurement of steel with low carbon emissions and the collaborative carbon reduction of the industrial chain.29In addition,dedicated support for

202、the first-of-a-kind equipment sets has also played a positive role.Such support is mostly on an application basis,and the evaluation criteria are adjusted in line with industry and technology evolvement.For example,the National Development and Reform Commission(NDRC)Clean Low-Carbon Hydrogen Energy

203、Innovation and Application Project has a certain special fund budget that provides financing support for innovative low-carbon projects,including RMB 120 million of support rmi.org/28Unlocking the First Wave of Breakthrough Steel Investments in Chinato Daye mines integrated project of green power an

204、d green hydrogen.30 HBIS launched Chinas first“hydrogen-based shaft furnace,new short-process technology development and application project of near-zero-carbon EAF.”project.The project is listed as the NDRC core special technology research project and granted the national special fund of RMB 95 mil

205、lion.313.3 Integrated Solutions for Each Transition Path:A Quantitative Analysis of ScenariosChapter 2 analyzed the cost of each technical production route of low-carbon and near-zero-carbon steel production,and further identified the overall cost of transition from higher-carbon to near-zero-carbon

206、 technical production routes.Due to higher transition cost,the low-carbon transition efforts of steel companies need combined supporting levers from policy,demand-side,and financial sectors.Despite the various pioneering practices in China and the world,more immediate action is needed to discover ho

207、w these stakeholders can work together to achieve an orderly and effective transition.Based on this,this section offers a quantitative analysis of the impact of the multiple stakeholder support regarding the transition cost based on the six transition paths outlined earlier in this report(as Exhibit

208、 12).The goal is an integrated solution to high transition cost to provide guidelines for policy development,demand-side actions,and financing mechanism design.This study provides scenario assumptions for the changes of each influencing factor over time based on existing domestic policy,demand-side,

209、and financial practices and their supporting levers,as well as reasonable judgments regarding future trends.PolicyIn the case that the project starts operation in 2026,subsidies will be provided according to the amount of green hydrogen utilized at a conservative assumption of 2.8 RMB/kg.From 2032 o

210、nward,the subsidies will be progressively reduced and fully phased out in 2037.The investment subsidy for low-carbon equipment is maintained at 20%of the total equipment investment.viFor carbon markets,it is assumed that the carbon price will reach 100,150,and 500 RMB/ton in 2026,2030,and 2050,respe

211、ctively.vii The baseline allocation of allowances for long process and short process have different values,and the baseline allocation of allowances for DRI is referred to for long process.However,note that some uncertainty will exist in the level of the carbon price and the way in which allowances

212、will be allocated in the future,which in turn will play a role in the results of the quantitative analysis in this study.viRefer to the subsidy of green hydrogen storage equipment investment in Jilin Province.viiThe carbon price forecast for 2050 in Tsinghua Universitys“Scenario Analysis of Low-Carb

213、on Energy Transition under the Carbon Neutral Goal in 2060”is 115 USD/ton,and the carbon price forecast for 2050 in Slater H.et al.s“Carbon Price Survey Report of China in 2022”is 239 RMB/ton.This research takes the average value as around 500 RMB/ton.rmi.org/29Unlocking the First Wave of Breakthrou

214、gh Steel Investments in ChinaDemand sideBuyers willingness to pay the green premium is mainly based on currently available practices,with an assumption that the premium level for transitional technologies such as CCS and COG DRI is 10%and that for pure green hydrogen DRI is 20%.In the long term of p

215、rojects,as the production cost of low-carbon and near-zero-carbon steel falls,the green premium to be paid will decrease over time.FinanceThe transition loan is selected as a representative financing instrument that acts on the debt portion of the project capital structure,providing a 50 basis point

216、(bp)discount on the interest rate for debt to reduce the project financing cost.Exhibit 12 Model assumptions on stakeholders levers in the beginning of a projectLevers from stakeholdersLever typeValueUnitCarbon marketPolicy lever100RMB/ton of carbonGreen hydrogen subsidyPolicy lever2.8RMB/kgDRI cape

217、x subsidyPolicy lever20%Interest rate reduction for transition loanFinancial lever50bpGreen premium(transitional technology)Demand-side lever10%Green premium(green H2 DRI)Demand-side lever20%RMI Graphic.Source:RMI analysisThe changes in the technical production route and carbon emissions reduction i

218、ntensity of different project stages vary across the transition paths.This results in differences in the stage where each of the above factors has an effect.For example,in Transition Path V(brownfield BF-BOF COG-INJ gradually transitions to pure hydrogen DRI)the production route in the initial stage

219、 of the project is blast furnace injection with no additional premium payment for the corresponding products.Buyers will pay a 10%green premium when the technology production route transitions to 30%green hydrogen DRI,and up to a 20%green premium when it completely switches to pure green hydrogen DR

220、I.With policy,demand-side,and financing levers,the financial performance of the project in transition paths is improved to different degrees(as Exhibit 13 and Exhibit 14):In Transition Path II(greenfield BF-BOF with CCS),the projects NPV improves by RMB 4.7 billion,mainly from the green premium of p

221、roducts brought by partial carbon emissions reduction as well as the gain achieved in carbon trading.Despite the large improvement in NPV,the NPV is still negative,which means it is difficult to have additional benefits compared to the configuration without CCS.Because CCS is an additional unit adde

222、d to the existing route with additional cost,parity with the original route cannot be reached.Additionally,CCS is less efficient in processes other than blast furnaces and captive power plants,and its downstream CO2 transportation,utilization,and storage chain is complicated and relies on infrastruc

223、ture maturity and geological resource availability.As a result,CCS plays a limited role in the near-zero-carbon transition of the steel industry.rmi.org/30Unlocking the First Wave of Breakthrough Steel Investments in ChinaTransition Path III(greenfield scrap-based EAF)achieves slightly negative proj

224、ect NPV without additional support,which means a bit worse benefits compared to the baseline scenario.The cost competitiveness of the scrap-based EAF is better with the integrated efforts of multiple stakeholders.Among them,the carbon market has the most pronounced impact on the financial performanc

225、e of projects in the scrap-based EAF transition path.In practice,this impact will largely depend on the rules set for the method of allocating short-process-related allowances in the carbon market.Transition Path IV(brownfield BF-BOF transitions to DRI-ESF-BOF)shows higher transition cost without ad

226、ditional support.With policy,demand-side,and financing levers,the project NPV can grow from RMB 6.6 billion to RMB 0.8 billion.Compared with the baseline scenario,the project turns from loss to gain with a payback period of about 12 years.Transition Path V(brownfield BF-BOF COG-INJ gradually transit

227、ions to pure hydrogen DRI)also turns loss to gain with support from multiple stakeholders with an estimated payback period of 12 years.In addition to the impact of the carbon market,this transition path is supported by demand-side buyers with varying levels of bargaining and willingness to pay green

228、 premiums in the process of reaching low carbon.In addition to pure green hydrogenbased DRI products,buyers also pay a moderate premium for low-carbon products produced using COG blended with green hydrogen during the transition period.Transition Path VI(greenfield COG DRI-EAF gradually transitions

229、to pure hydrogen DRI)is the most cost challenging and thus requires more robust measures to support its development.In the early stage of the transition,a certain degree of premium payment for products that can achieve partial carbon emissions reduction will significantly contribute to the improveme

230、nt of the overall project NPV.For example,at the stage where the production route is COG DRI,if the buyer pays a green premium of about 10%,the project NPV will significantly increase.With integrated supporting levers from multiple stakeholders,the project NPV in this transition path can also outper

231、form the baseline scenario,but the payback period is longer than Transition Paths IV and V.The contributions of various types of levers to project NPV improvement vary in different periods of transition.Based on this,the priorities and strengths of policy,demand-side,financial,and other supporting t

232、ools in the short,medium,and long term can be identified through comparison,creating a scenario that meets the stage-specific features of the industry development to support near-zero-carbon steel in a targeted manner.Take the 20-year project cycle assumed in this studys model as an example.In the e

233、arly stage(first five years),the policy,demand-side,and finance levers are particularly important,and will require combined efforts to provide incentives that get more projects started and successfully push them toward stable operation.In addition,the roles different support levers play in the short

234、,medium,and long term are different.For example,some transition paths require large initial capital investments as they introduce DRI;thus,policy lever such as subsidies and special funds is particularly important.Also in the early stage of the transition,buyers may pay a relatively low premium for

235、products with partial carbon emissions reduction and a higher premium for products with more carbon emissions reduction.As technological development and economies of scale emerge in the mid-and long-term of the transition,the cost of low-carbon and near-zero-carbon steel will decline,and buyers can

236、pay lower premiums or even purchase products with lower carbon emissions levels at parity or low prices.The role of the carbon market also becomes increasingly prominent in the mid-to-late transition stage as total carbon emissions requirements are gradually tightened and the price of carbon rises.r

237、mi.org/31Unlocking the First Wave of Breakthrough Steel Investments in ChinaExhibit 13 Impact of supporting levers on the financial performance of projects in different transition pathsNote:In order to exclude as much as possible the impact of product price fluctuations on the projects financial per

238、formance,the price of hot rolled steel is set at a level that makes the baseline scenario NPV as zero.The NPVs of the other transition paths are the difference from the baseline scenario,not the absolute NPV of the project.RMI Graphic.Source:RMI analysisProjectNPVunderleversfromstakeholdersRoleofsup

239、portfromstakeholdersatdifferentprojectstagesIII Greenfield scrap-based EAF353025201510503020100-10-20-30-40-50-60-70-80-90Project NPV(RMB 100M)V Brownfield BF-BOF COG-INJ gradually transitions to pure hydrogen DRI353025201510503020100-10-20-30-40-50-60-70-80-90Project NPV(RMB 100M)II Greenfield BF-B

240、OF with CCS3020100-10-20-30-40-50-60-70-80-9035302520151050Project NPV(RMB 100M)Carbon marketGreen hydrogen subsidyGreen premium(green H2 DRI)Green premium(transitional technology)Transition financeDRI capex subsidyNPV with leversNPV without leversCarbon marketGreen hydrogen subsidyGreen premium(gre

241、en H2 DRI)Green premium(transitional technology)Transition financeDRI capex subsidyNPV with leversNPV without leversCarbon marketGreen hydrogen subsidyGreen premium(green H2 DRI)Green premium(transitional technology)Transition financeDRI capex subsidyNPV with leversNPV without leversCarbon marketGre

242、en hydrogen subsidyGreen premium(green H2 DRI)Green premium(transitional technology)Transition financeDRI capex subsidyNPV with leversNPV without leversCarbon marketGreen hydrogen subsidyGreen premium(green H2 DRI)Green premium(transitional technology)Transition financeDRI capex subsidyNPV with leve

243、rsNPV without levers510 years510 years510 years510 years510 years1015 years1015 years1015 years1015 years1015 years1520 years1520 years1520 years1520 years1520 yearsConstruction period+05 yearsConstruction period+05 yearsConstruction period+05 yearsConstruction period+05 yearsConstruction period+05

244、yearsProject NPV levers(RMB 100M)Project NPV levers(RMB 100M)Project NPV levers(RMB 100M)Project NPV levers(RMB 100M)Project NPV levers(RMB 100M)VI Greenfield COG DRI-EAF gradually transitions to pure hydrogen DRI353025201510503020100-10-20-30-40-50-60-70-80-90Project NPV(RMB 100M)NPVPolicy leverDem

245、and-side leverFinancial leverDRI capex subsidyGreen premium(green H2 DRI)Carbon marketGreen premium(transitional technology)Transition financeGreen hydrogen subsidyIV Brownfield BF-BOF transitions to DRI-ESF-BOF353025201510503020100-10-20-30-40-50-60-70-80-90Project NPV(RMB 100M)rmi.org/32Unlocking

246、the First Wave of Breakthrough Steel Investments in ChinaExhibit 14 Financial performance of projects in different transition paths with and without integrated solutionsTransition pathsSupporting leversNPV(RMB 100M)Payback periodIGreenfield BF-BOF baseline scenarioNoneIIGreenfield BF-BOF with CCSCar

247、bon markets,green premium(transitional technology),transition financeIIIGreenfield scrap-based EAFCarbon markets,transition financeIVBrownfield BF-BOF transitions to DRI-ESF-BOFCarbon market,green hydrogen subsidy,green premium(green H2 DRI),transition finance,DRI capex subsidyVBrownfield BF-BOF COG

248、-INJ gradually transitions to pure hydrogen DRICarbon market,green hydrogen subsidy,green premium(green H2 DRI),green premium(transitional technology),transition finance,DRI capex subsidyVIGreenfield COG DRI-EAF gradually transitions to pure hydrogen DRICarbon market,green hydrogen subsidy,green pre

249、mium(green H2 DRI),green premium(transitional technology),transition finance,DRI capex subsidyNote:In order to exclude as much as possible the impact of product price fluctuations on the projects financial performance,the price of hot rolled steel is set at a level that makes the baseline scenario N

250、PV as zero.The NPVs of the other transition paths are the difference from the baseline scenario,not the absolute NPV of the project.Similarly,the payback periods are all referenced to the 20 years of the baseline scenario.RMI Graphic.Source:RMI analysisWith leversWithout leversDifficult to payback i

251、n 20 yearsDifficult to payback in 20 yearsDifficult to payback in 20 yearsDifficult to payback in 20 yearsDifficult to payback in 20 yearsDifficult to payback in 20 years20 years20 years12 years12 years14 years20 years00-86-48-66-63198-16-341rmi.org/33Unlocking the First Wave of Breakthrough Steel I

252、nvestments in China4.RecommendationsThe steel industry is a basic and pillar industry in Chinas economic and social system.Its transition to low carbon and near-zero carbon is not only a developing trend,but also has an important impact on the sustainable development and carbon reduction of all stak

253、eholders in the industrial chain.Moving from strategy toward target,route,and action requires that the first low-carbon and near-zero-carbon projects are put into production successfully and stably operate as early as possible to build the foundation for further scale-up.Facing large inputs,high cos

254、ts,limited funding,and other challenges,steel companies need to take a rational and forward-looking approach to deploy economically viable low-carbon and near-zero-carbon technical production routes at the right time to create a successful transition path.At the same time,policymakers,demand-side ac

255、tors,and the financial sector should empower the industry and provide supporting levers across the stages of transition.To facilitate the transition to low-carbon and near-zero-carbon steel production,and to accelerate investment decisions and the implementation of transition projects,this report of

256、fers the following six suggestions for action:Deepen research on the economics of low-carbon and near-zero-carbon technical production routes and transition paths,and implement them in corporate transformation and project planning.CISA released the Low-Carbon Development Technology Roadmap for the C

257、hinese Steel Industry in 2022 and updated it in 2024 to a detailed technology roadmap.Additionally,a significant portion of Chinese steel companies have actively set carbon reduction targets and roadmaps.The industry has reached a high-level consensus on the technology direction and deployment stage

258、.Research on the cost economics,especially at the project level,should be continually deepened and dynamically adjusted to support the implementation of the projects final investment decision and operational risk management.This study gives a scenario analysis for a number of transition paths based

259、on certain assumptions.In practice,due to the different capacity bases and resource availability of enterprises,it is still necessary to formulate targeted transition paths and comprehensively assess project-level economics,such as initial capital,payback period,net present value and so on,to optimi

260、ze the pace of the transition from existing capacity to new capacity.Play a leading role in the dominant regions by pioneering and implementing low-carbon and near-zero-carbon steel projects.At present,steel production capacity is mostly located in coastal areas,which are close to both iron ore reso

261、urces and the market.However,under carbon constraints,the location of renewables and other resources will also have an impact on the transition process.Regions with both a steel industry base and superior decarbonization resources can take the lead in clustering industrial decarbonization,more likel

262、y to be able to meet the resource requirements of the various transition paths at different stages.The regions could pioneer low-carbon and near-zero-carbon steel projects,and optimize economics to the greatest extent possible.For example,regions with larger steel production capacities are more like

263、ly to utilize existing equipment(infrastructure,auxiliary equipment,etc.)as much as possible.Making full use of the existing coke oven gas could provide a transitional gas source for direct reduction of iron.Regions with superior renewable energy resources can take the lead in exploring the implemen

264、tation of green hydrogenbased metallurgy projects,increasing the green hydrogen utilization ratio gradually.Similarly,regions with abundant scrap steel resources can explore the scale-up of EAF steel from scrap steel and increase the proportion of green power.rmi.org/34Unlocking the First Wave of Br

265、eakthrough Steel Investments in ChinaEnhance communication between all stakeholders in the industry chain,create consensus on transition,and explore cost-sharing mechanisms.Because low-carbon and near-zero-carbon technical production routes in steel production are costly,it is difficult to rely sole

266、ly on the strength of the industry and companies to enable marketization.Especially in the early stages,it is necessary to have appropriate support mechanisms in place that help create feasible cases.At the same time,the carbon reduction effect of the steel industry will also pass to downstream and

267、other stakeholders,driving their climate goals.The steel industry,along with policy,demand-side,and finance stakeholders need to create a close-knit system for low-carbon and near-zero-carbon transition,integrating and optimizing resources to help improve the economic performance and speed of deploy

268、ment of steel transition projects.During this process,rational mechanisms should be explored to share the costs of transition and the benefits of emissions reduction.At the initial stage of transition,the governments guiding and supporting role as well as the benchmarking role of leading enterprises

269、 will be brought into full play.Market-oriented enablers such as low-carbon procurement,carbon market and transition finance will be actively introduced to drive long-term benign development.Establish and improve targeted policies to provide support,especially in the early stage of projects.The stan

270、dardization and guidance of policies are essential to an industry transition that reduces carbon emissions.Policy tools could cover all aspects of carbon emissions reduction of the steel industry as much as possible,and develop targeted policies for key aspects such as the application of green hydro

271、gen.Binding policies should focus on legal compliance and drive the industrys overall carbon reduction level,encouraging policies should focus on accelerating the actions of pioneering enterprises.The target and level of subsidies should be purposeful to highlight the additional and environmental be

272、nefits of the project.It is important to focus on the introduction of subsidies and the design of the regression mechanism,providing support at an early stage while guiding projects to be more market-driven after production stabilizes.For example,for projects requiring investment in frontier equipme

273、nt,such as DRI,support will be provided at an appropriate proportion of fixed capital investment to alleviate the pressure on the operator to invest in heavy assets at an early stage.At operating stages,the subsidy mechanism for different segments such as green hydrogen,green iron,and green steel sh

274、ould be coordinated to improve the efficiency of resource utilization.The method of subsidy qualification should also be improved to prevent unqualified projects from affecting the fairness of the market.Promote low-carbon steel procurement to help establish the market by pioneering actions.Recognit

275、ion of low-carbon and near-zero-carbon products by downstream industries and companies,such as automotive and construction,is particularly important for the transition of the steel industry.In the early stages of a near-zero-carbon steel project,steel companies and downstream companies can reach agr

276、eement on procurement intentions through close communication,and leverage credible evaluation criteria to screen for high-quality low-carbon and near-zero-carbon steel projects and products.Purchasers are encouraged to pay a premium for products with lower carbon intensity,with appropriate premiums

277、for transitional and ultimate production routes,respectively.For example,a lower premium is conducted for blast furnace equipped with CCS,non-full green hydrogen DRI,upgraded scrap ratio,scrap-based EAF with non-green or partially green power,etc.A higher premium is conducted for green hydrogen DRI.

278、For scrap-based EAF,a higher but suitable premium could be conducted for benign development of scrap utilization,to avoid excessive premiums.Signing large,long-term procurement contracts at a premium for near-zero emissions performance will both improve the project business case and lower risk enabl

279、ing investment to flow to these projects.In long-term procurement,the premium can be phased down gradually,as first-mover markets are formed and the cost of low-and near-zero-carbon production declines.In addition,downstream companies could invest directly in low-carbon and near-zero-carbon steel pr

280、ojects,and steel companies should be encouraged to use purchase contracts as collateral for transition loans to further leverage additional support.rmi.org/35Unlocking the First Wave of Breakthrough Steel Investments in ChinaEnhance mutual trust and communication between the finance sector and the s

281、teel sector while increasing financing supporting lever for transition.Transition projects in the steel industry require large-scale investment,which can be effectively supported by loans and other financing instruments in addition to the enterprises own capital.For banks,funds,and other financial i

282、nstitutions,the importance of improving the awareness of controlling scope 3 emissions is becoming more prominent.Guidance and support for the steel industry transition can be enhanced through the assessment of the climate impact of financial asset transactions,loans,and investment activities.Specif

283、ically,financial stakeholders need to inspire instrumental innovation in transition finance,expand the scale of financial instruments such as transition loans and bonds,and consider new types of financial instruments with deep carbon reduction incentives,such as sustainable linked bonds.Additionally

284、,the development of financing standards applicable to the steel industry should be aligned with those used for corporate carbon reduction and low-carbon procurement,consistent with climate goals and operational in practice.rmi.org/36Unlocking the First Wave of Breakthrough Steel Investments in China

285、Endnotes1 Steel GHG Emissions Reporting Guidance,RMI,2023,https:/rmi.org/wp-content/uploads/2022/09/steel_emissions_reporting_guidance.pdf.2 Xuying Wang et al.,Chinas Iron and Steel Industry Carbon Emissions Peak Pathways,Research of Environmental Sciences,2022,http:/ Yan et al.,Pathway for Carbon D

286、ioxide Peaking in China Based on Sectoral Analysis,Research of Environmental Sciences,2022,http:/ This Meeting,the Low-Carbon Roadmap for the Steel Industry Completes an Important Update,”China Metallurgy,2024.4 Unlocking The First Wave Of Breakthrough Steel Investments,Energy Transitions Commission

287、,2023,https:/www.energy-transitions.org/wp-content/uploads/2023/04/Unlocking-the-First-Wave-of-Breakthrough-Steel-Investments-International-Opportunities-April-2023.pdf.5 Gang Yan,Yixuan Zheng,et al,Pathway for Carbon Dioxide Peaking in China Based on Sectoral Analysis,Research of Environmental Scie

288、nces,2022,http:/ Roadmap for Zero-Carbon Transition in Chinese Steel Industry,RMI,2021,https:/ to Achieve the Target of 15%of the Share of Electric Furnace Steel on Schedule,How to Implement,”China Steel News,2024,http:/ Steel Technology Roadmap,IEA,2020,https:/ Roadmap for Zero-Carbon Transition in

289、 Chinese Steel Industry,RMI,2021,https:/ Xuying Wang,Bing Li,et al,Chinas Iron and Steel Industry Carbon Emissions Peak Pathways,Research of Environmental Sciences,2022,http:/ Roadmap for Zero-Carbon Transition in Chinese Steel Industry,RMI,2021,https:/ Challenges for Hydrogen-Based Reduced Low Carb

290、on Steelmaking Technology,”World Metals,2023,http:/ Methods for the Assessment of China Decarbonized Ecological Future-oriented Steel,CISA,2024.14“H2 Green Steel:Decarbonizing Steel Production with Green Hydrogen,”Climate Rising,2024,https:/www.hbs.edu/environment/podcast/Pages/podcast-details.aspx?

291、episode=1069998114.15“H2 Green Steel Secures Another Seven-Year Offtake,as Lenders Hint at What Makes These Short-Term Deals Bankable,”Hydrogen Insight,2024,https:/ and H2 Green Steel Secure Supply Deal,”Mercedes-Benz Group,2024,https:/group.mercedes- Approves 265m for Swedens H2 Green Steel Plant,”

292、Hydrogen Europe,2024,https:/hydrogeneurope.eu/eu-approves-e265m-for-swedens-h2-green-steel-plant/.rmi.org/37Unlocking the First Wave of Breakthrough Steel Investments in China17“Five Lessons for Industrial Project Finance from H2 Green Steel,”RMI,2023,https:/rmi.org/five-lessons-for-industrial-proje

293、ct-finance-from-h2-green-steel/.18“Henrik Henriksson:Rapidly Scaling a Green Steel Start-Up,”McKinsey Sustainability,2023,https:/ Work Plan for National Carbon Emissions Trading Market Covering Cement,Steel,and Electrolytic Aluminum Sectors(Draft for Public Comments),Ministry of Ecology and Environm

294、ent,2024,https:/ Notice on the Issuance of Certain Policy Measures to Support the Development of the Hydrogen Energy Industry(for Trial Implementation),Jilin Government,2024,http:/ Government Bonding Reduction,How Good Is It for the Development of Hydrogen Energy Industry,”the Orange Group,2024,http

295、s:/ Chartered China Provides First Transition Loan to HBIS Supply Chain,Stimulating Carbon Reduction in Steel Industry,”China Economic Net,2023,https:/ Million Yuan,3-Year Term,Interest Rate 2.68%!Baosteel Issues Transition Bonds for Hydrogen Metallurgy Project,”China Metallurgy,2022.24“Bank of Chin

296、a Issues Worlds First Steel Transition Bond to Support the Transformation of Steel Industry in Hebei Province,”P,2023,http:/ Billion Yuan!Ansteel Successfully Issues Sustainability-Linked Bonds,”Sohu,2022,https:/ Survey on Financial Support for Green Transformation and Development of Steel Industry,

297、”Financial News,2024,https:/ the Green Steel New Material HBIS Zhangxuan Technology Global First Story,”China Steel News,2023,http:/ and BMW Join Hands to Create a Green,Low-Carbon Steel Supply Chain,”China Steel News,2022,http:/ a View to the Future,Chinas Version of the Low Carbon Emission Steel S

298、tandard is Released,”China Steel News,2024,http:/ Million Yuan!Hubeis First National Hydrogen Energy Program Approved,”China Energy News,2024,https:/ the New Track Hydrogen for a New Future,”China Steel News,2024,http:/ Li,Yujun Xue,Rong Yan,et al.,Unlocking the First Wave of Breakthrough Steel Inve

299、stments in China,RMI,2024,https:/rmi.org/insight/unlocking-the-first-wave-of-breakthrough-steel-investments-in-china/.RMI values collaboration and aims to accelerate the energy transition through sharing knowledge and insights.We therefore allow interested parties to reference,share,and cite our wor

300、k through the Creative Commons CC BY-SA 4.0 license.https:/creativecommons.org/licenses/by-sa/4.0/All images used are from iStock unless otherwise noted.RMI Innovation Center22830 Two Rivers RoadBasalt,CO 81621www.rmi.org November 2024 RMI.All rights reserved.Rocky Mountain Institute and RMI are registered trademarks.