A window of opportunity: five ways IFIs can support the transition to green steel in emerging and developing economies.

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 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 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.