The steel industry is a major contributor to global carbon emissions, accounting for up to 7% of global greenhouse gas emissions. As countries around the world seek to reduce their carbon footprint, the future of steelworks businesses is being called into question. In this blog post, we will explore the potential impact of carbon reduction programs on steelworks businesses and the steps that can be taken to ensure their survival.
The Challenge Facing Steelworks Businesses
Steelworks businesses are facing a major challenge as countries around the world seek to reduce their carbon footprint. Carbon reduction programs are designed to limit greenhouse gas emissions and slow down global warming. However, these programs could have a devastating impact on the steel industry, which is a major contributor to global carbon emissions.
Recent studies estimate that the global steel industry may find approximately 14 percent of steel companies’ potential value is at risk if they are unable to decrease their environmental impact. Consequently, decarbonization should be a top priority for remaining economically competitive and retaining the industry’s license to operate.McKinsey
The Impact of Carbon Reduction Programs on Steelworks Businesses
Carbon reduction programs are likely to have a significant impact on steelworks businesses. These programs could result in increased costs for steel manufacturers, making it difficult for them to remain competitive. In addition, steelworks businesses may be required to reduce their emissions or face penalties, further increasing their costs.
The Need for Sustainable Solutions
Coal currently meets around 75% of the energy demand of the sector, comparable to its share over the past decade. Electrification needs to accelerate rapidly to substitute coal in the context of the Net Zero Scenario, rising by more than 5 percentage points between now and 2030 through increased secondary production, electrolytic hydrogen and electric arc furnaces, compared with an increase of just 1 percentage point over the past decade.International Energy Agency (IEA)
The steel industry is vital to the global economy, and it is essential that steelworks businesses find ways to reduce their carbon emissions while remaining competitive. One solution is to invest in sustainable technologies that reduce carbon emissions, such as electric arc furnaces and hydrogen-based technologies. By adopting these technologies, steelworks businesses can reduce their carbon footprint and remain competitive in a carbon-constrained world.
The Role of Governments in Supporting Steelworks Businesses
Governments have a crucial role to play in supporting steelworks businesses as they transition to a low-carbon future. Governments can provide financial support to help steelworks businesses invest in sustainable technologies. They can also provide regulatory support, such as tax incentives and emissions trading schemes, to encourage the adoption of sustainable technologies.
The Future of Steelworks Businesses
The future of steelworks businesses is uncertain in a carbon-constrained world. However, by investing in sustainable technologies and receiving government support, these businesses can survive and even thrive in a low-carbon economy. The transition to a low-carbon future may be challenging, but it is essential for the survival of our planet and the prosperity of our economies.