This report identifies five key opportunities for IFIs to enable a transformation of the steel industry in emerging and developing economies: fund feasibility studies and development of policy frameworks for green steel, facilitate country roadmaps for green hydrogen, support demand for green steel, and support circular business models.
Steel production is set to increase with a significant amount of capacity added in developing and emerging economies. Emerging and developing countries could be at the forefront of the steel transition, but to achieve this, low-carbon technologies need to be financed and implemented – international finance institutions could kick-start the transition.
Demand for steel is expected to increase in the coming decades as population growth, industrialization, and urbanization in emerging economies continue. A substantial amount of new steelmaking capacity will be added in developing and emerging economies by 2030: this marks a geographic shift in global steel production to countries where there is the greatest need for support for implementing low-carbon steel production.
Research shows that all new plants post-2025 must be strictly low-emission, but there remains a large gap between announced carbon-intensive and low-carbon capacity in the pipeline. Most new low-carbon projects for primary production are in high-income countries and China, while developing and emerging economies to a large extent are planning on high carbon capacity additions.
Very few international finance institutions (IFI) have strategies to support green steel production but there is a growing momentum to develop them. IFIs can play an important role in kick-starting the transition to green steel, especially in emerging and developing regions.