Stegra CEO, Henrik Henriksson
Last week, Stegra CEO Henrik Henriksson said of the prospects of his company's northern Sweden green steel plant in Boden, which will be ready to produce steel in late 2026:
– There is low-hanging fruit, as there isn't a dominant green steel industry in China.
When I read that I felt a little shiver of concern: was Henriksson's confidence built on truth or complacency?
I decided to conduct my own research.
Well, it turns out that China, the globe's undisputed steel titan, churning out over half the world's supply, has a monumental job on its hands, cleaning up its own enormous mess, so it can start catching up on green steel.
For a start, Chinese steel mills alone spew out around 17% of China's total carbon emissions. That means it's crunch time for Beijing's "Dual-Carbon Goals" – hit peak emissions by 2030, then go full carbon-neutral by 2060. A tall order, even for them.
Right now, China's green steel push is in its infancy, but don't let that fool you – they're moving fast. Beijing's laid down big markers: cut steel capacity by 15% by 2025 and swing hard towards cleaner production.
They're also forcing mergers, aiming for the top ten firms to control 60% of output by 2025, hoping that'll streamline the green shift. We're talking electric arc furnaces (EAFs), hydrogen-based steel, and even carbon capture.
What's interesting is their massive investment in electrolyzers for green hydrogen. That could very well make them a global leader in hydrogen-powered steel by the end of the decade.
So, are they behind Europe? On the innovation front for near-zero emissions, Europe's often seen as ahead, particularly with hydrogen-DRI and EAF tech. But here's the rub: China's got the sheer size, the cash to burn, and a hungry domestic market (think electric cars).
That could see them not just catch up, but blow past Europe in pure green steel volumes. Especially when you consider their edge in cheap renewable electricity and making those hydrogen-producing electrolysers. And let's not forget the EU's new carbon tariffs – that's a hefty incentive for Chinese exporters to clean up their act, fast.
Now, for the major obstacles. China's green steel dream is riddled with challenges, and they're not just minor headaches:
Too much steel, too little profit: They're churning out far more steel than they need, pushing profit margins through the floor. Hard to invest in fancy green tech when you're barely breaking even.
Old school tech reigns: Most of their steel comes from dirty blast furnaces. These aren't old relics; many are barely a decade old. Replacing or retrofitting them? A colossal bill.
EAFs stuck in low gear: Electric arc furnaces, the cleaner option, are barely hitting 10% of production. The government wants 15% by next year. Still a long way to go, partly down to how they handle scrap metal.
The green premium: Green steel costs more. Simple as that. Beijing's carbon price would need to skyrocket to make it truly competitive.
Bureaucratic maze: Policies are there, but actually getting things done, cutting through the red tape, and hitting consistent standards? That's another story.
Property slump: China's housing market, usually a steel guzzler, is in the doldrums. Less demand means more pressure on already struggling mills.
The next few years are going to be crunch time for China's green steel. Expect more industry consolidation, and they're still pushing to slash production – another 200 million tonnes by next year, 150 million more by 2030. There will be cash poured into cleaner tech like EAFs and pilot hydrogen projects.
But let's be realistic: don't expect a rapid, deep decarbonisation just yet. The money squeeze on those mills and the sheer cost of ditching old blast furnaces mean things will move slowly in the short term.
The Chinese government needs to step up with solid policy, clearer carbon pricing, and real financial incentives to get hydrogen and EAFs truly moving.
China might just have the raw potential to lead in primary green steel by 2030, thanks to all that renewable energy.
But it all comes down to some very tough choices: huge investments, and the courage to actually shut down the not-so-old, dirty capacity. It’s a race against time, and against their own ingrained habits.
Europe still holds the advantage and, as Henrik Henriksson said, Stegra can forge ahead.