China must drastically reduce its steel output by 2025 to meet climate targets, according to a recent energy report. Coal-fired blast furnaces produced nearly 90% of the nation’s over a billion tons of crude steel last year. Helsinki’s Centre for Research on Energy and Clean Air issued a dire warning. It stated that China must reduce this process by over 90 million tons. Additionally, this cut is required to meet the nation’s green steel targets for 2025. It could cut emissions by over 160 million tons if it is successful.
The total output of the steel industry in the European Union is approximately equal to that. A significant step toward achieving global carbon goals would be such a cut. Additionally, it could reduce trade tensions by bringing China into line with global climate initiatives. The low adoption of electric furnace technology and industry headwinds present significant obstacles despite the goal.
Can Steel Output Shift to Cleaner Technology?
China is a major source of CO₂ emissions, producing more than half of the steel globally. Experts say Beijing needs to use electric furnaces to produce 15% of its steel. China still produces a far smaller percentage of electric furnace steel than the 30% global average.
On the other hand, nations such as the US and India have surpassed 50%. Additionally, China followed a misaligned position between 2021 and mid-2025, using blast furnaces more frequently than electric furnaces.
Additionally, market realities undermine the push for green steel. Stable electricity and recycled scrap are essential components of the cleaner approach, but both have limitations. Furthermore, investment in cleaner plants is restricted by low profit margins and high energy costs. This slows down the process of decarbonization.
Will China Fix Its Growing Export Problem?
China’s steel output growth is linked to the nation’s persistent problems with overcapacity and falling prices. Due to low domestic demand, the nation has consequently increased exports, which has caused concern globally. Consequently, a number of trading partners have imposed tariffs on the basis of environmental costs and unfair competition.
Green steel proponents emphasize that by utilizing fewer older, more polluting processes, trade tensions will be lessened. Furthermore, a credible reduction plan would address supply and emission concerns. Analysts believe China can lead if it combines economic reform with its climate strategy.
Steel Output Must Evolve for Climate Success
China’s climate pledges rely on the transition to green steel, despite the obstacles. As the world watches, the nation’s decisions in 2025 will impact global carbon targets. Increased use of electric furnace technology can lower trade barriers and drastically cut emissions.
Additionally, China possesses the means and ability to take the lead in environmentally friendly steel production. However, it requires cost-effective clean energy, robust policy action, and investment in scrap supply chains. These actions have the potential to change the industry’s future and serve as a national model if properly carried out.
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