The global iron and steel industry made major strides towards achieving its net-zero goals in the past year, with more lower-emission steelmaking electric arc furnaces (EAFs) coming online and entering the development pipeline than ever before, Global Energy Monitor’s (GEM’s) ‘Pedal to the Metal 2024’ report shows.
The report shows two trends supporting this shift. First, nearly all newly announced steelmaking capacity follows the EAF production route – 93%, which indicates a strong boost in EAF steelmaking in the years to come.
Second, planned capacity and retirements indicate a transition away from coal-based steelmaking.
The global fleet will count an additional 171-million tonnes a year of basic oxygen furnace (BOF) capacity, 310-million tonnes a year of EAF capacity, and 80-million tonnes a year of capacity with unknown technology.
GEM project manager Marie Armbruster explains that, should all planned retirements and developing projects in the 2024 Global Steel Plant Tracker (GSPT) go forward as currently planned, she says the global BOF fleet would count a net gain of 171-million tonnes a year of operating capacity.
“However, we will likely see fluctuations in the global operating BOF capacity from year to year as plans develop and change. The pace of construction can vary greatly from company to company and country to country.
“As of the 2024 GSPT release, 96-million tonnes a year of BOF capacity is under construction and 261-million tonnes a year of BOF capacity has been announced. About 125-million tonnes a year of BOF capacity is planned to retire by 2045 and 61-million tonnes a year of BOF capacity is planned to retire but does not have a set date to do so,” says Armbruster.
If these developments and retirements take effect, GEM says global operating steel capacity should sit just under the International Energy Agency’s (IEA’s) net-zero-aligned target for 2030, and “with heightened momentum the goal is increasingly attainable”.
GEM notes that the IEA has called for a milestone of 37% EAF capacity by 2030, so it is the first time since the launch of the Global Steel Plant Tracker that this milestone is in sight.
The report warns, however, that while EAF steelmaking is being announced at record rates, less than 14% of this potential capacity has moved to the construction phase. Of all projects that have actually begun construction, nearly 46% are still emissions-intensive BOF-based.
GEM says this substantial buildout of new coal-based capacity is increasingly out of alignment with a net-zero future and poses a significant threat of carbon lock-in and stranded assets.
It notes that, at the country level, China maintains its enormous share of global operating capacity, but India has forged ahead as the largest developer of all upcoming iron and steel plants, particularly coal-based steelmaking.
“The progress is promising for a green steel transition. Never before has this much lower-emissions steelmaking been in the pipeline. At the same time, the buildout of coal-based capacity is concerning.
“What the industry needs now is to make these clean development plans a reality, while backing away from coal-based developments,” says GEM heavy industry programme director Caitlin Swalec.
Meanwhile, the report notes that blast furnaces are becoming riskier investments, with limited options to mitigate emissions from the furnace and upstream emissions from metallurgical coal mining.
It notes that, owing to the long operational lifetime of blast furnaces, these investments are becoming particularly risky in countries with net-zero targets where carbon pricing and other climate-aligned policies may challenge blast furnace production.
GEM uses developing BOF capacity as a proxy to estimate the stranded asset risk posed by newly developing blast furnace-BOF steelmaking based on an estimated investment of $1-billion to $1.5-billion per one-million tonnes a year of capacity at an integrated blast furnace-BOF site.
It explains that, with less integrated BOF capacity under development than in past editions of this report, future stranded asset risk has dropped slightly, from an upper estimate of $554-billion in 2023 to $400-billion in 2024.
As the largest developers of new blast furnace-BOF capacity, China and India have the potential to face large stranded asset risks, it argues.
The report notes that, in Southeast Asia, increasing blast furnace-BOF development carries carbon lock-in concerns. The region has been highlighted by Southeast Asia Iron and Steel Institute (SEAISI) as "de-greening" its iron and steel industry.
While global stranded asset risk has decreased since 'Pedal to the Metal 2023', GEM says stranded asset risk has increased in Malaysia and Cambodia owing to increased development of blast furnace-BOF capacity.
Additionally, Africa, though home to much less total capacity than Asia, faces an increasing risk of stranded assets owing to blast furnace buildout in Nigeria, Angola and Zimbabwe.
Africa is set to more than double its operating blast furnace capacity from five-million tonnes a year – less than 1% of global capacity – to 12-million tonnes a year if all developing blast furnace capacity goes into operation, the report says.
Armbruster explains that the timing of new blast furnace capacity entering operation in Africa depends on the construction progress of three plants in particular.
She notes that, according to the Global Blast Furnace Tracker, just over six-million tonnes a year of blast furnace capacity is currently under development in Africa. This capacity is at three different plants, one each in Angola, Nigeria and Zimbabwe.
While most of this capacity is in the announced phase, Armbruster says 1.6-million tonnes a year of this developing capacity has been projected to begin operating by the end of 2025.
Additionally, Swalec explains that South Africa predominantly operates emissions-intensive, coal-based capacity (blast furnace-BOF), which puts them in a tough position going forward in the global steel market with the EU’s Carbon Border Adjustment Mechanism and other carbon pricing and adjustment mechanisms coming.
“South Africa does have a significant share of clean capacity, or EAFs, under development right now, which is a good sign, but it's critical that these EAF plans are made to replace the existing blast furnace-BOF capacity. Shutting down blast furnace-BOF is just as important to South Africa's green steel transition as building out EAF,” she says.
South Africa’s biggest steel producer ArcelorMittal South Africa in April confirmed that it would convert one of the three blast furnaces at its Vanderbijlpark plant into an EAF by 2028.
Engineering News quoted AMSA CTO Werner Venter as saying that the company’s blast furnaces were the biggest contributors to the company’s carbon emissions.
By converting one blast furnace to an EAF and, by investing in a proposed 200 MW on-site solar PV power plant, AMSA expects to reduce its emissions by up to 25% by 2030.