Steel Giants Struggle with Carbon Transition

The global steel industry, a linchpin of infrastructure and economic development, finds itself under growing scrutiny as it navigates the urgent challenge of decarbonisation. Accounting for approximately 7% of global carbon dioxide emissions—equivalent to the entire annual emissions of India—this sector is at the centre of the global climate debate.

Despite the availability of promising green technologies such as electric arc furnaces (EAFs) and green hydrogen, the industry’s transition to sustainable practices has been sluggish. High costs associated with these cleaner alternatives remain a formidable barrier. Sweden’s SSAB, with 19% renewable energy integration, is a rare exemplar, significantly outpacing its global peers. In contrast, South Korean steelmakers like Hyundai Steel and Posco, despite employing EAFs, show limited progress in their renewable energy adoption strategies. India’s JSW Steel represents a glimmer of hope, having outlined ambitious plans to enhance its clean energy portfolio by 2030. However, entrenched investments in fossil fuels across the sector impede transformative shifts, even as carbon pricing regimes loom on the horizon. This financial inertia underscores the industry’s classification as a ‘hard-to-abate’ sector, where economic hurdles outweigh technological impediments.

For investors, this transitional phase represents both a challenge and an opportunity. Adopting greener production methods could lead to reduced regulatory burdens and lower carbon-related costs in the long term, potentially reshaping market dynamics. Companies proactively addressing their carbon footprints are likely to emerge as leaders in an increasingly sustainability-focused marketplace. The steel industry’s decarbonisation journey will ripple across global supply chains, affecting sectors like construction and automotive. This transition could establish benchmarks for other heavy industries grappling with similar dilemmas, demonstrating how economic growth can coexist with environmental stewardship.