As four prominent steel companies – Cleveland Cliffs, POSCO, Tata and Bluescope – forge ahead with plans to reline their blast furnaces, Steelwatch and Solutions For Our Climate (SFOC) urge them (and other steelmakers) to reconsider and 'redline' any plans to reline and not to run counter to their nations' climate pledges.

The global steel industry, argues SteelWatch and SFOC, is still moving in the wrong direction in terms of saving the planet, and while IEA chairman Fatih Birol recently stated that advanced economies have 'special responsibilities in fighting climate change' it doesn't look as if they are taking their responsibilities seriously.

As the aforementioned steelmakers invest in relining activities, SteelWatch and SFOC argue that the actions of three of them – POSCO, Tata and Bluescope – 'fly in the face of commitments already made to align with the Paris climate trajectory as part of their Responsible Steel membership.'

"The announcements also undermine the credibility of the climate commitments of the countries where these investments will be driving emissions."

Steelwatch and Solutions For Our Climate

The announcements also undermine the credibility of the climate commitments of the countries where these investments will be driving emissions – in the USA, South Korea, the Netherlands and Australia as each nation signed up to the Steel Breakthrough Agenda at COP 26 in 2021 in Glasgow, which was set up to ensure that green steel will be cost competitive with coal-based steel by 2030.

According to Steelwatch/SFOC, the four nations each passed historic climate policies unlocking billions of state funds and/or powerful new regulations that will enable the deep decarbonization necessary for emissions-intensive industries like steel.

SteelWatch's own report, launched in June, highlighted how these planned relining activities crossed a red line. In the report, SteelWatch called for no relining of existing coal-based steel production by companies operating in or headquartered in OECD countries.

"Our report makes clear how reaching the 1.5 degree target is incompatible with coal-based steel production."

SteelWatch.

"Our report makes clear how reaching the 1.5 degree target is incompatible with coal-based steel production," says SteelWatch, adding that the planet cannot afford to lock in more coal-based steel. The organisation argues that 'OECD countries and companies have a responsibility to lead in phasing out coal from steel production due to their ability to make the technological shift faster AND because they have benefitted from the prosperity that has come with up to two centuries of coal-based steel production, enabling the industrialisation of their economies.'

Data from Agora Energiewende shows that 77.8% of coal-based capacity in OECD countries is likely to face a reline-or-transition decision before 2030. Japan, South Korea and the USA with 86, 53, and 35 million tonnes per annum of BF capacity respectively are most significant in terms of volume to be decided. So what these nations decide will affect hopes for a stable climate going forward.

However, it looks as if the cavalry, in the shape of the automotive industry, will have a major role to play in the way things go, says SteelWatch. Cleveland Cliffs, POSCO and Tata are major suppliers to the automotive industry with Cliffs claiming that 34% of sales in the last quarter came from auto customers like General Motors and Ford, both lucrative customers – and they all want cars manufactured with green steel before the end of this decade.

Similarly Kia, Hyundai and Toyota will be engaging their steelmakers (POSCO, Hyundai and Nippon Steel) in 'some tough conversations' or risk being less competitive in key customer markets.

With major automotive customers across Asia, the USA and Europe, POSCO reinvesting in coal-based production heightens the risk of the South Korean steel giant losing market share to fast-moving competitors, claims SteelWatch, adding that mechanisms like the EU's CBAM are already putting pressure on the company's automotive sheet exports to Europe.

SteelWatch and SFOC argue that car makers should prioritise a commitment to purchasing green steel going forward so that steelmakers like Cleveland Cliffs, POSCO, Tata and others see their future growth and stability as tied to phasing out coal. In short, 'coal-based steel production in blast furnaces needs to be consigned to the past'.