Steel Industry
Highlights Importance of Trade Policy in Decarbonisation Efforts Ahead of COP28
At
a Public Forum panel on 13 September, leading steelmakers discussed how trade policy
can support a level playing field for steel decarbonization. Industry executives
highlighted in particular the importance of the WTO’s rules-based trading system
for addressing the growing risk of policy fragmentation.
In
her opening remarks, Director-General Ngozi Okonjo-Iweala
noted that the steel industry needs the right trade policy environment to support
its decarbonization efforts, stressing the importance of an environment which should
enable investments in breakthrough technologies, ensure availability of critical
inputs, and increase the demand and cost competitiveness of green steel.
While
a range of policy instruments will be needed to speed up decarbonization, including
price and non-price measures, incentives, and standards, the DG noted that the growing
fragmentation of trade policies is making it harder for the steel sector to decarbonize,
creating uncertainties for producers and hampering the cross-border movement of
green technologies and inputs.
She
said: “The WTO can play an important role as a forum for international cooperation
between private and public stakeholders to better align and coordinate trade policy
for a level playing field.”
Representing
the United Arab Emirates' Presidency of COP28, Dr Yasar Jarrar
said that enhancing coherence of steel decarbonization standards, inclusive access
to technologies, and market creation for green steel were priorities for COP28's
Energy and Industry Day, which will take place on 5 December. He also noted that
work by the WTO on steel industry decarbonization can make a positive contribution
to the upcoming COP28.
Xiao
Guodong, Chief Representative for Carbon Neutrality of
China Baowu Steel Group, the world's largest steelmaker,
said that decarbonization marks a revolution for the steel industry. Mutual recognition
of standards, including through the WTO, is important to allow steelmakers to efficiently
meet downstream consumer demands. When thinking about the decarbonization transition,
he said that the situation of developing countries should be considered in terms
of energy endowment, and access to technologies and inputs.
Noting
that carbon pricing has an important role to play in reaching net zero for greenhouse
gas emissions, Rajiv Mangal, Vice President for Safety, Health and Sustainability
of Tata Steel, said that implementation of a Carbon Border Adjustment Mechanism
could help provide a level playing field for steel in the European Union by ensuring
that the cost of carbon is passed on to consumers. He also highlighted the importance
of global convergence on financial reporting standards for emissions disclosure
to allow finance to flow to the right places.
Erika
Chan, Head of Sustainability at United States Steel, noted that the path to net
zero requires significant investment, not just in projects and infrastructure but
also in the workforce. However, she noted that the global steel market environment
is an inhibiting factor to profitability of such investments. As a company that
operates both blast furnaces and electric arc furnaces, she highlighted the importance
of a global approach to standards that recognize multiple production routes through
a sliding scale.
Ola
Hansén, Public Affairs Director at H2 Green Steel, emphasized
the need for a price on emissions and creating demand for near-zero steel. He also noted that in order
to secure investment in their green hydrogen-based steel production, which emits
95% less greenhouse gases as compared to traditional steel production, H2 Green
Steel relies on demand from upstream consumers, such as automakers, which is created
through their voluntary commitments under the Science Based Targets Initiative.
In
closing the session, WTO Deputy Director-General Jean-Marie Paugam
highlighted the opportunity to capitalize on the positive role that trade can play
for steel industry decarbonization at the upcoming COP28. He acknowledged that the
private sector is asking the WTO to do more, whether contributing to the alignment
of standards or making sense of divergent pricing and incentive policies.
The
Public Forum session was a follow-up to the first-ever WTO Trade Forum for Decarbonization
Standards: Promoting coherence and transparency in the iron and steel sector, held
in March 2023. The Trade Forum brought together officials and business leaders from
many of the world's largest steel-producing economies for a dialogue on how interoperable
standards for measuring greenhouse gas emissions can accelerate the global scale-up
of lower-emissions steelmaking.