China may become the leading producer of green steel by 2030 – forecast

By 2030, China could become the largest producer of green primary steel thanks to its competitive advantages in renewable electricity and green hydrogen production. Such a forecast is provided by the non-governmental organization Transition Asia.

The organization believes that policy discussions and modeling for the country’s next five-year plan should codify these ambitions and formalize subsidies.

The recently announced production of hydrogen-based DRI by almost all major steel companies, notes Transition Asia, indicates that China should reach production volumes of low-carbon primary steel of 15-20 million tons per year by 2030. However, within the country there will be various regional leaders and outsiders.

The driving force for the Chinese market in the near term will be demand from the country’s electric vehicle manufacturers and strong signals of interest in green steel, rather than international carbon price adjustments. These effects will be felt throughout the supply chain, all the way to suppliers of high-grade iron ore.

The current EAF share target of 15% by 2025, the organization believes, should be increased to 20% by 2030.

«We do not consider the suspension of the replacement mechanism for steelmaking capacities or the consolidation of the market as barriers to the transition to electric steelmaking for both secondary and primary “green” steel,» Transition Asia notes.

Currently, most of the hydrogen in China’s limited DRI projects comes from either coke batteries or natural gas, with only a limited amount coming from renewable electricity sources.

However, a massive increase in the production of green hydrogen is needed and predicted in China. The medium- and long-term plan for the development of the country’s hydrogen industry (2021-2035) is quite complex. In particular, it sets targets for the production of hydrogen from renewable sources in the amount of 100,000 to 200,000 tons per year by 2025 as part of supply-side initiatives.

It is expected that by the end of this year, China will install 2.5 GW of electrolyzer capacity, which will allow the production of 220 thousand tons of green hydrogen per year, and will exceed the target indicators a year ahead of schedule.

As GMK Center reported earlier, in July 2024, China updated the road map for achieving carbon neutrality in steel industry. The country maintains a goal of reducing carbon dioxide emissions in the steel industry by 40% in 2040, by 85% in 2050 and by 95% in 2060. Limited investment cycles and expensive energy carriers (natural gas and hydrogen), which are needed in the long term, are considered problems on the way to decarbonization for Chinese steel producers.