The Chinese are fond of saying that a journey of a thousand miles begins with a single step. In keeping with that notion, the decarbonisation of all steelmaking in China may have just taken a small but vital step forward. In June, Chinese state media reported that a group of activists from non-governmental organisations had successfully forced a coal-fired power company, Shangcheng Power, to meet its outstanding emissions obligations. This is the first publicly-reported case in China where environmental groups have sued a company that failed on its emissions obligations and it reflects the evolving role of such activists in the country’s carbon ecosystem. The China Environment News, which reported the Shangcheng case, is the mouthpiece of the Ministry of Ecology and Environment, which oversees the country’s carbon market development. The willingness to publicize this case shows the regulator´s inclination to tighten the enforcement of emissions rules. Industry observers say China is

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currently working to expand its compliance carbon market to cover more sectors besides power generation, notably iron and steel, cement and aluminium. If the activists subsequently set their sights on the Chinese steel industry, the ramifications will be massive. The country produces almost 60% of all the steel in the world and is logically therefore the biggest polluter. Although all steel manufacturing countries around the globe accept the steelmaking process needs to change, putting that acceptance into practise takes time and is expensive. At present, steelmaking remains very energy-hungry and is heavily reliant on coal, the most polluting fossil fuel. Worldwide steelmaking accounts for between 7 – 9% of global carbon pollution, and its impact could worsen if steel demand jumps by the projected 30% by 2050. Currently, the world consumes nearly two billion metric tonnes of steel each year.

The search for clean energy solutions and emissions-free manufacturing is being embraced with greater passion than ever before: and rightly so. Sustainability and green steel are the new bywords of a “Going Green” industry with bold endeavours to save the planet: and make a dollar along the way. The steel industry will need to change with the times.

Protection of a different kind manifested itself in late June when the European Commission extended its steel safeguard measures for a further two years. The Commission first introduced a provisional safeguard measure on imports of certain steel products in July 2018. The measure aimed to prevent the economic damage that cheap imports can cause to European Union steel producers. In 2019 the Commission confirmed the measure until the end of June 2021. The measure was subsequently extended again until 30 June 2024. Now it goes until 2026. Before making this latest ruling, the Commission noted the EU market remains attractive due to its size and prices, global overcapacity, numerous trade barriers, and market outlooks. The Commission concluded that if safeguards lapsed, imports would likely increase.

The safeguard measure takes the form of Tariff-Rate-Quotas reflecting traditional trade flows, above which a 25% duty is levied on imports. However, in addition to the two year extension, the Commission put into place another action. Effective 1 July, tariff-free imports from suppliers in the “other country” category will be restricted to 15% of the quarterly quota. The Commission had argued that imports from non-traditional suppliers such as Algeria, Egypt, Indonesia, Malaysia and Vietnam surged during 2022-2023 despite the safeguard measure. This caused significant market disturbances and sometimes undermined the effectiveness of the safeguard.

The European Steel Association (Eurofer) has welcomed the Commission´s decision. “Europe has become a favourite export market for carbon-intensive excess capacity, while we strive for decarbonisation leadership. This is a structural problem that poses an existential threat to all EU clean tech value chains at a crucial time for our transition. Safeguards will cease in just two years from now. We need to find a new, long-term solution to address this situation,” said Eurofer director general, Axel Eggert.

The Commission says that since 2021 steel import penetration in the EU has exceeded pre-safeguard levels, adversely impacting the industry. Despite the safeguard, global excess capacity increased by nearly 50 million metric tonnes from 2019 to 2023, with an additional 158 million metric tonnes expected by 2026. This surge is driven by regions like South-East Asia, the Middle East and North Africa, where capacity expansions far outstrip local demand, partly due to Chinese investments.