Join Hands to Build a More Efficient Green Steel Green Energy Green Finance Industry Collaborative Ecosystem

“Achieving the goal of ‘double carbon’ is a major strategic decision made by Party Central Committee after careful consideration. It is our solemn commitment to the international community and an inherent requirement for promoting high-quality development. Green and low-carbon are related to the healthy development and sustainable prosperity of the whole social system engineering is not a matter of an enterprise, nor a matter is not an industry. Before the proposition of this new era, each of our industries will encounter new challenges and find new opportunities in the challenges.” On March 2, the Green Steel, Green Energy, and Green Finance Industry Integration Conference were held in Jiayuguan City, Gansu Province. He Wenbo, Secretary of the Party Committee and Executive Chairman of the China Iron and Steel Industry Association(hereinafter referred to as CISA) said in his speech.

He Wenbo said: “I hope we can this meeting as an opportunity to work together to build a more efficient green steel, green energy, green financial industry collaborative ecosystem and build a green world together.”

The Steel industry operated smoothly in 2022

In this speech, He Wenbo first introduced the operation of China’s steel industry in 2022. Since 2022, due to international political and security turmoil and the impact of the COVID-19 pandemic, the downstream demand of the steel industry has reduced, steel prices have dropped and the cost of raw materials and fuels has risen. The external environment in which it is located is extremely severe. In this situation, CISA adheres to the policy of “reasonable market judgments, realistic specific measures, and positive overall response”, pays close attention to reducing costs and increasing efficiency, strictly controls operating risks, and strives to maintain a dynamic balance between market supply and demand. Played an important role in stabilizing the development of the national economy and fully meeting market demand.

In the case of reduced output and declining efficiency, the transformation and upgrading of the steel industry and the pace of high quality have not stopped, the investment in research and development has continued to increase, and the pace of green development has continued to increase, and the pace of green development has gradually increased. In 2022, industry-wide research and development expenses will continue to grow, the green and low-carbon investment will continue to increase, and various environmental protection indicators will continue to improve. In 2022, the research and development expenses of member enterprises of CISA will reach 119.7billion RMB, a year-on-year increase of 5.38%; according to 1.82% of operating income; industry energy conservation and environmental protection investment will be 37.144 billion RMB, a year-on-year increase of 11.95%, according for the annual investment completed 29.2% of the amount.

“In the face of the server situation of a sharp drop in demand and violent market fluctuations, CISA has always adhered to the ‘1231’ work focus in the industry.” He Wenbo pointed out, and focused on a fundamental task: to comprehensively improve the basic capabilities of the industrial chain; two development themes: green and low-carbon and intelligent manufacturing; focus on solving three major pain points: control capacity expansion, promote industrial concentration, and ensure resource security; continue to promote a process: continue to promote the internationalization of China’s steel industry.

“In accordance with the work requirements of ‘transforming strategies into tasks and transforming tasks into projects’, on the basis of extensively soliciting the opinions of major member units, we gradually formed the key work promote system includes: two basic measures, three major renovation projects and two plans of industrial development, which can be called the “232” key work promotion system” He Wenbo further explained that the two basic measures refer to “research and promotion of new mechanisms for capacity management” and “optimization and improvement of joint restructuring policies orientation” two tasks. “This is a basic measure to improve the operating order of the industry and optimize the development environment of the industry.” He Wenbo emphasized, “If the steel industry wants to have a good performance in the platform area, the first thing to do is doing these two things well.” The three major transformation project refers to the continuous promotion of the three major transformation projects of “capacity replacement”, “ultra-low emission” and “extreme energy efficiency”, striving to promote green and low-carbon development and improve industry competitiveness. The two major industrial development plans refer to continuing to recommend the “cornerstone plan” aimed at ensuring the security of iron resource supply and the “steel application expansion plan” aimed at expanding the application space of steel materials. Cooperate with upstream and downstream to open up space for industrial development, so that the green characteristics of steel materials can be released to the maximum extent.

“In short, ‘1231’ is the focus and direction, and it solves the problem of ‘what to do’, while ‘232’ is the method and plan, and it solves the problem of ‘how to do it’.” He Wenbo said, “Green low-carbon development runs through all works, it is the future transformation direction of the industry, the top priority of the industry work, and it is also the original intention of planning this conference.”

The steel industry has carried out a lot of green and low-carbon development work

He Wenbo introduced that in response to the core proposition of the transformation and low-carbon, the steel industry has carried out a lot of fruitful work, which is specifically reflected in the following aspects:

The first is to study and release the “Carbon Neutral Vision and Low-Carbon Technology Roadmap of the Iron and Steel Industry”, which clarifies the “dual carbon” goal and technology realization path of China’s iron and steel industry and organizes forces to propose to the state that the iron and steel industry needs national attention and support. Eight world-leading low-carbon technologies such as hydrogen metallurgy require industry-focused research, organizing innovation, and tackling key problems.

Second, the Iron and Steel Association(ISA), China Baowu, and the World Steel Association(WSA) jointly forum with the theme of “reshaping the key position of the steel industry in the process of sustainable human development”. Iron and steel leaders and scientists from the world’s major steel-producing countries gathered together to discuss the road to low-carbon development of the world’s steel industry, promote international cooperation in the low-carbon development of the steel industry, and form a consensus on cooperation.

The third is to build and launch the first Environment Product Declaration(EPD) platform in China’s industrial field- the EPD platform for the steel industry. It has completed the release of 35EPD reports for nearly 10 companies including China Baowu, Shougang, Shagang, Baotou Steel, and Jiugang. And achieved the world premiere of 6 iron ore EPD reports. “The life cycle green and low-carbon evaluation has been implemented in China’s steel industry over the years, and is currently actively connecting with upstream and downstream industries to promote international mutual recognition.” He Wenbo said.

The fourth is to continue to promote the most stringent ultra-low emission renovation project in the world. Ultra-low emission transformation is one of the three major projects in the steel industry. Up to now, 47 enterprises have completed the whole process of the ultra-low emission transformation formula, involving about 243 million tons of steel production capacity; 26 enterprises have completed part of the ultra-low emission transformation publicity, involving the steel production capacity is about 157 million tons; at present, there are still 53 companies in the process of expert review before publicity and further improvement and rectification of the company, involving about 91 million tons of steel production capacity.

The fifth is to promote “extreme energy efficiency” and cultivate energy efficiency benchmarks. With the strong support of the national ministries and commissions. The ISA planned and launched the ultimate energy efficiency project in the iron and steel industry, formed the “Three-Year Action Plan for Energy Efficiency Benchmarking in the Iron and Steel Industrial”, screened 50 mature and feasible technologies, formed and promulgated the “Extreme Energy Efficiency Technology List” and “Energy Conservation and Low Carbon Policy List”, to carry out the cultivation activity of “Double Carbon Best Practice Energy Efficiency Benchmarking Factory”, the first batch of plans to cultivate 21 advanced enterprises such as Baosteel, Zhanjiang Iron and Steel, Shougang Jingtang, Anshan Iron and Steel Bayuquan, etc. The goal is to reach the production capacity of 200–300 million tons of steel has reached the benchmark level of energy efficiency by 2025.

The iron and steel industry and the energy industry must exert a linkage effect

“The iron and steel industry is an important basic industry of the national economy and the food for industrial development. The energy industry is the source of power for the operation of China’s iron and steel industry, and it is also the main destination and field of steel consumption.” He Wenbo said that for a long time, China’s iron and steel industry and energy industrial development always complement each other, especially in the context of green and low-carbon, and the need for inter-industry linkage is more urgent.

First, the iron and steel industry guarantees the material demand of the green energy industry. According to data from the National Energy Administration, in 2022, the installed capacity of wind power across the country will increase by 37.63 million KW, and the installed capacity of solar power will increase by 87.41 million kW. It is estimated that the steel used for every 1MW of wind power installed capacity is about 100 tons, and the steel used for 1MW of photovoltaic installed capacity is about 30 tons. In 2022, China’s wind power installed capacity will use about 3.76 million tons of steel, and the steel used for photovoltaic installed capacity will be about 2.62 million tons.

“The operating environment of wind turbines is harsh, and the stress situation is complex, while the photovoltaic and low maintenance costs. The cylinder block enterprises actively cooperate with each other, providing comprehensive material solutions for the photovoltaic and wind power industries, and driving the upgrading of materials.” For example, Shangdong Iron and Steel Co., Ltd., Beijing University of Science and Technology, Goldwind Science and Technology, and other units established the “High-end Wind Power Steel Materials and Equipment Collaborative Innovation Center”, and the high-strength wind power steel produced completely replaces 355MPa-level ordinary wind power steel; the high-strength steel for photovoltaic brackets custom-developed by Baosteel has been demonstrated and applied to Hubei 350 MPa photovoltaic power generation projects.

“The Opinions on Completely, Accurately and Comprehensively Implementing the New Development Concept and Doing a Good Job of Carbon Neutralization” pointed out that by 2030, the proportion of non-fossil energy consumption will reach about 25%, and the total installed capacity of wind power and solar power will reach more than 1.2 billion KW; by 2060, the proportion of non-fossil energy consumption will reach more than 80%. According to estimates, by 2060, the total installed capacity of wind power in my country will reach 3,000GW, with an average annual steel consumption of about a 22million tons; by 2050, the total installed capacity of photovoltaic power generation in my country will reach 5,000GW, with an average annual steel consumption of about 8million tons. “The development potential of the green energy industry is huge, and the steel industry will fully guarantee the material upgrading needs of the green energy industry.” He Wenbo said.

Second, the iron and steel industry provides a broad application scenario for the green energy industry. The “Action Plan for Carbon Peaking Before 2030” proposes that by 2025, the photovoltaic coverage rate of new public institution buildings and new factories will strive to reach 50%. “The iron and steel industry had high-quality roof resources, abundant green energy demand, and usually has the ability to generate self-generated peaks. It has actively explored and introduced a series of green energy projects.” He Wenbo said, for example, Zhanjiang Iron and Steel has built a total installed capacity of 46.89MW, covering “water, land, and air” distributed photovoltaic projects; relying on Jiuquan and Jiayuguan wind resources, and the peak-shaving capacity of its own power system, Jiuquan Steel is promoting the construction of 2400MW wind power projects; Egang, Taiyuan Iron and Steel, Jinnan Iron and Steel, Zhongtian Iron and steel enterprises such as Nantong, Lianyungang Yaxin Iron and Steel, Baotou Steel, and Shagang have all deployed photovoltaic power generation projects.

He Wenbo said: “In the future, the iron and steel industry still has a broad space for green energy project construction, and it is necessary to strengthen cooperation with the green energy industry to discuss and build together.”

Third, green and low-carbon development promotes the resonance of industries at the same frequency. At present, the new energy industry is promoting the development of BIPV (building integrated photovoltaic), in which steel structure buildings are an important part. Compared with concrete buildings, steel structure buildings are more closely integrated with photovoltaic products, are highly compatible, can reduce system costs, and are effective means for the development of carbon reduction in the construction industry.

“In the future, the steel industry will cooperate with the steel structure industry chain to provide material solutions with both cost benefits and green benefits for the steel structure industry and even the green energy industry chain. Under the background of green and low carbon, the development ideas of the two industries coincide with each other, and photovoltaic companies are welcome to actively participate in related work.” He Wenbo proposed.

Making good use of green finance to accelerate the realization of low-carbon transformation

“Accelerating the promotion of low-carbon transformation is the only way for the transformation and upgrading of the steel industry and high-quality development. The production method of China’s steel enterprises is mainly based on long-process steelmaking, which is highly dependent on iron ore resources, coal, coke, and other energy sources, and consumes a lot of resources and energy. The green and low-carbon transformation of the steel industry has a long way to go.” He Wenbo pointed out that high investment and operating costs are one of the problems that the steel industry is or will face in the green and low-carbon transformation.

In terms of environmental protection, according to incomplete statistics, the investment in ultra-low emission transformation of the whole industry has exceeded 150 billion RMB. According to the national requirements, more than 80% of iron and steel enterprises will complete the transformation by the end of 2025, and a large amount of capital investment will still be needed in the next three years. In terms of energy saving, at the end of 2022, with the strong support of the national ministries and commissions, ISA planned and launched the ultimate energy efficiency project in the steel industry, and formed the “Three-Year Action Plan for Energy Efficiency Benchmarking in the Iron and Steel Industry”. Closely integrated with the financial industry.

“Financial services are an important lever for economic development and technological innovation. The green and low-carbon transformation of the steel industry requires huge funds. Green finance is becoming an important force to promote the steel industry to achieve the ‘double carbon’ goal.” He Wenbo said that relevant state departments have all been deployed at green bonds, green credit, and innovation and implemented in the steel industry.

He Wenbo gave an example that China Baowu and the National Green Development Fund Co., Ltd. initiated the establishment of the Baowu Carbon Neutral Equity Investment Fund in 2021, with a total scale of 50 billion RMB and an initial phase of 10 billion RMB. It is the largest in the domestic market. The carbon-neutral theme fund is committed to exploring potential development areas of clean energy such as wind and light and investing in high-quality carbon-neutral industrial projects in the market; Baosteel Co., Ltd. issued the country’s first low-carbon transition green corporate bond with a scale of 500 million RMB for Zhanjiang Iron and Steel Hydrogen-based Shaft Furnace System Project; Anshan Iron and Steel issued a medium-term green bond of 300 million RMB to promote the “double carbon” goal; Shanxi Iron and Steel pilot issued a transformation bond of 1 billion RMB to be used for the optimization and upgrading of Laiwu Iron and Steel’s new and old kinetic energy conversion system. ; Some iron and steel enterprises cooperate with environmental protection/low-carbon facility suppliers, adopting “investment by the contractor, lease by the steel enterprise”, similar to the BOO (build-own-operate) or BOT (investment-build-operate-transfer) model, reducing one time sexual investment. In addition, steel enterprises such as Jianlong and Liuzhou Iron and Steel have actively applied for and been approved for green credit support.

“Overall, despite the above-mentioned exploration and progress, the utilization of green financial instruments in the process of low-carbon transformation of the steel industry is still relatively low.” He Wenbo said frankly that as of the end of last year, only 10 steel issuers had participated in green bonds (carbon-neutral bonds), accounting for only 1% of the total green bond issuance.

“Whether it is ultra-low emissions, extreme energy efficiency, or collaborative research and development of low-carbon new technologies, the energy-saving, emission-reduction, and carbon-reduction projects being promoted in the steel industry are related to whether the enterprise can maintain long-term competitiveness and are the core assets of the enterprise, because of its clear income, it is also a good financial target.” He Wenbo said, the list catalogs, such as “Guidelines for the Implementation of Energy Conservation and Carbon Reduction Transformation and Upgrading in Key Areas of High Energy Consumption Industries”, “Extreme Energy Efficiency Technology List of ISA”, “Ultra-low Emissions of Iron and Steel Enterprises Lists Retrofit Technology Guidance” can help financial institutions identify high-quality green and low-carbon projects.

He Wenbo said that in the future, the iron and steel industry should make good connections with financial institutions, make good use of green finance, and accelerate the realization of low-carbon transformation.

The first is to identify high-quality enterprises and advantageous projects and implement a white list system. He Wenbo proposed that the iron and steel industry and financial institutions should jointly establish and improve the green and low-carbon development task list and project list of the iron and steel industry, implement refined, differentiated, and dynamic management, and whitelist key advantageous enterprises and typical green and low-carbon projects, provide sustainable financial support, and increase the proportion of medium and long-term loans and direct financing.

The second is to set up an approval channel, and there is no separate threshold for steel. “The iron and steel industry has further promoted supply-side structural reforms and has achieved remarkable results in accelerating structural adjustment and transformation and upgrading. However, the society’s understanding of steel does not match the status of this industry in the global steel industry, and the proportion of bond issuance does not match.” He Wenbo suggested that regulatory agencies provide green fast approval channels, clearly introduce detailed financial policies to support the green development of iron and steel enterprises, and promote the implementation of green loans to be effective.

The third is to innovate financial products and stimulate the drive for low-carbon transformation. He Wenbo proposed that it is necessary to strengthen policy tracking and industry docking to realize the coordinated support of transformational finance and green finance to the steel industry. Innovate the product category of transformational finance, link the financing cost of iron and steel enterprises with their carbon footprint, and provide credit, bond issuance, and equity financing for key enterprises in the low-carbon transformation and low-carbon projects such as CCUS, scrap steel recycling, and electrolytic hydrogen. Make full use of financial and financial synergy to establish a long-term financing mechanism.

have experienced the stage of rapid development of China’s economy and steel industry, and I have also experienced the hardships of climbing up and down. During this process, our focus has gradually extended from production lines to the industrial chain, and then expand from the industrial chain to the ecological circle.” He Wenbo said that this ecological circle is an ecological circle that includes production, design, research, service, supervision, and finance. Integration can provide better support for promoting industrial transformation and upgrading, cultivating new advantages in industrial competition, and realizing mutual penetration between industries, so as to continuously expand and cultivate new industries, new formats, and new models.