China steel output may rise 4%-7% this year, missing CO2 emissions curb target: TransitionZero
China, the world’s biggest steel producer, may produce 4%-7% more steel this year than last, missing its pollution control targets, according to a Sept. 3 report based on studies of satellite imagery of steel producers globally.
China’s government recently stated that it would limit its crude steel production this year to 2020 levels to curb CO2 emissions. However, the report drawn up by climatics analytics provider TransitionZero, a not for profit organization, says that s teel production in China may be 88.01 million mt for August, up 1% from July.
The Asian giant’s crude steel output from January to August was 734.99 million mt, up 6% on year, and mainly from carbon-intensive blast furnace and basic oxygen furnace production routes, according to the data gathered via satellite imagery by TransitionZero.
“China’s crude steel production could be up 4-7% this year, meaning the country’s ability to meet its Government target of limiting 2021 steel outputs to 2020 levels is unlikely without reform,” said Matthew Gray, TransitionZero energy analyst. “As a result, China risks emitting an additional 158 million mt of CO2 – the equivalent of the Netherlands’ total emissions.”
The target of limiting output to 2020 levels may now only be reached via a crackdown, particularly in the central and western areas, Gray said.
“China’s central authorities have made good progress in reducing production in Eastern provinces, but more needs to be done in Central and Western provinces to meet their production target,” Gray said. “With additional action, China could reduce emissions and show climate leadership in the run up to COP26.”
TransitionZero’s data is based on a scaling-factor comparison between its own data — which quantifies crude steel produced via the BF/BOF route via the heat intensity of furnace “hotspots” — and data from worldsteel, which provides monthly total crude steel production figures.
Analysts from Liberum bank said in an Aug. 31 report that “there is signal confusion caused by the Chinese government’s steel output cap.” Conflicting reports have emerged from different sources and regions as to the extent of its success .
‘Poor data visibility’ in steel
Growth in China’s steel production is likely due to the country’s stimulus-filled construction boom post-COVID-19, according to TransitionZero’s analysts.
Production of steel, considered a hard-to-abate industry, accounts for around 9% of CO2 emissions worldwide, but between 10% and 20% of emissions in China, according to various analyst estimates.
However, China is still expected to meet its overall net-zero carbon target by 2060 “because it won’t have any choice,” Gray told S&P Global Platts in an interview.
TransitionZero said its methodology uses a combination of satellite imagery and publicly available data to monitor steel production globally and make independent facility production estimates in near real-time. The methodology, which has also been used to measure China’s coal plant emissions, helps the power and heavy industries assess transition risks and opportunities as they look to decarbonize.
However, the company has not as yet consulted with the Chinese government on its data findings, although it “could expect them to collaborate,” Gray said.
The satellite data-based analysis company has chosen to focus on the steel industry in its move to collect data that could help speed the transition to a low-carbon economy. This is because in the steel sector overall “data availability… and visibility is very poor, mainly because steel is a globally traded commodity with fierce competition,” Gray said.