Key messages
The need for emerging and developing to leapfrog to green steel production provides a unique opportunity for international financial institutions to support the global steel transition by:
- Acting as knowledge partners for governments to strengthen an enabling policy framework for green steel
- Supporting country roadmaps for green hydrogen
- De-risking and financing first movers in industrial production, small and medium-sized enterprises in green value chains, and utility-scale renewables
- Supporting demand for green steel through procurement strategies in IFIs’ own operations
- Supporting secondary steel production and circular business models to scale up scrap-based production
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 financial 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 emerging economies 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 financial 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.
