On April 17, 2024, the production line of Fangda Jiugang Company in the High-tech Industrial Park of Hukou County, Jiujiang City, Jiangxi Province, was busy. Visual China | fig
"We're small fish in the sea and we need to swim together, make ripples, create scale, go from 1 million, 10 million, to 100 million, until we have a fair share of influence. "Jen Carson remains confident that steel accounts for 8% of global carbon emissions and that global steel production is close to 2 billion tonnes.
On April 22, 2024, Earth Day, Shanghai Climate Week kicked off at the Museum of Art Pudong in Shanghai, bringing together people from all walks of life around the world to discuss strategies and pathways to combat climate change. Jen Carson, the Climate Group's special representative and global leader in decarbonizing the industrial system, was invited to participate in the opening ceremony, hoping to contribute to climate action through clean steel, electric vehicles, renewable energy and energy efficiency.
The Climate Group was founded in London in 2004 to tackle climate change by working closely with governments and businesses. The group focuses on high-emission areas and has co-sponsored several global initiatives, such as RE100, which requires organizations to publicly commit to "achieving 100% renewable energy generation by 2040", which has been joined by more than 400 organizations such as Apple and Google, as well as Chinese companies Goldwind, Tongwei and LONGi Green Energy.
In recent years, climate groups have focused on specific energy-intensive and high-emission industries, launching SteelZero, a global initiative in 2020 that requires companies and institutions to publicly commit to using 50% "low-carbon steel" by 2030 and 100% net-zero carbon steel by 2050. Jen Carson told Southern Weekend that the SteelZero initiative calls on downstream steel-using industries such as automobiles to carry out responsible procurement, leverage upstream emission reductions from the demand side, and in the next step, it will also focus on high-emission industries such as concrete.
But how can a car company or a building use less steel than a steel company's output? On April 22, a reporter from Southern Weekend interviewed Jen Carson.
Jen Carson, Special Representative of the Climate Group and leader in decarbonizing the global industrial system. Photo courtesy of the interviewee
Start with the buyer and drive upstream emissions reductions
Southern Weekly: There have been many initiatives to reduce carbon emissions for companies, such as RE100 and SBTi, but apart from focusing on the steel industry, what is the difference between SteelZero and other initiatives?
Jen Carson: Unlike other initiatives, our focus is on the demand side, advocating for buyers to make quantitative commitments over time. After more than a year of intensive consultations with industry stakeholders before the official launch of the initiative three years ago, more than 40 companies are now on board, from major brands in the steel consuming industry, such as Maersk in the shipping, automotive, and construction industries, CIMC Tongchuang, a holding company of CIMC Group, Volvo Cars, Hang Lung Properties, and others.
Southern Weekly: Do companies that join SteelZero need to be certified?
Jen Carson: We have a technical partnership with Responsible Steel™, the steel industry's first global multi-stakeholder certification standard, which develops standards and certifies them, and is working with the likes of Tata Steel and the AFNOR Group.
We at the Climate Group do not certify companies, but rather help companies report their own supply chain carbon data. At present, the understanding of steel environmental data is still in the initial stage.
Southern Weekly: What information do companies that join SteelZero need to disclose to the public, whether this data is public, and will it leak the company's production secrets?
Jen Carson: What is the data, how do you get it, how can it be trusted? We have a framework in place for disclosing the data, and members are required to disclose annually how much steel they purchase and how much carbon they emit.
The data we currently disclose is the total amount of steel that members have collectively committed to decarbonising, and many companies have already disclosed the carbon footprint of their supply chains, and we do not anticipate revealing sensitive information that could affect future work.
Southern Weekly: How to Prevent Greenwashing?
Jen Carson: We take greenwashing very seriously, the risks of greenwashing are everywhere, and the only way to deal with it is to make actions speak louder than words and be accountable to the public. Business leaders need to be open and ambitious about their goals, but also be clear about their capabilities and limitations, and take responsibility for their work.
This requires companies to recognise the significance of carbon reduction from the bottom of their hearts: low-carbon actions have a profound impact on the sustainable development of enterprises. This is what The Climate Group is working to do, so that companies can accelerate their climate action while also reaping economic benefits.
Southern Weekly: You mentioned demand-side management, green supply chain is an important way to promote upstream enterprises to reduce emissions, and industries such as automobiles can pass on the pressure of emission reduction to upstream steel mills, but the order volume of a car company is much smaller than the output of steel mills.
Jen Carson: Four-to-two is at the heart of what SteelZero does. We started with leading companies, and the current annual steel demand of more than 40 members is about 10 million tons, and the global steel production is close to 2 billion tons, which is just a drop in the ocean. We're small fish in the sea and we need to swim together, make ripples, create scale, go from 1 million, 10 million, to 100 million, until we have a fair share of influence. This is just the beginning, and we need to expand messaging and support for the supply side.
Southern Weekly: For consumers at the end of the supply chain, such as an ordinary person who is ready to buy a car, they are not willing to pay a premium for a sustainable product. How to increase these terminal needs?
Jen Carson: Yes, we ordinary people tend not to think about the steel in a car, a washing machine, or a television. Consumers need to look at steel from the consumer's point of view, communicate with them, and raise awareness before they are willing to bear the green premium.
At present, most of our members purchase steel in a B-to-B way, and enterprises first know how much green and low-carbon steel is in the market, so as to leverage demand, and then form a sustainable business model to pass it downstream. For example, Sweden advertised hydrogen-based steel in public advertising, and it was the first time I saw a change from the supply chain to the consumer side.
Southern Weekly: But green labels are not particularly effective in motivating consumers to pay for them. For example, the increase in sales of electric vehicles is not because electric vehicles are more environmentally friendly, but because the technological development over the years has finally achieved high quality and low price. Similarly, how can we reduce costs and make steel greener and cheaper?
Jen Carson: Looking back at the typical history of innovative technologies, products and solutions, solar and wind energy used to be more expensive, and the current price of steel is naturally the same. We are also tracking the cost of green steel technology.
For example, downstream companies can adjust their internal business models to screen a greener supplier to compensate for the green premium. Volvo Cars, for example, has set an internal carbon price to deal with this problem. This case is one of the innovative measures for enterprises to adopt green steel, and more and more extensive innovations and solutions require the joint efforts of upstream and downstream enterprises in the industrial chain to continue to exchange and share.
Southern Weekly: How do companies get companies to act ahead of policies such as the EU carbon tariff (CBAM) when they set internal carbon prices?
Jen Carson: It's not just Volvo Cars, it's other companies looking at this issue and developing ways to reflect the cost of high-carbon products in the future. They are proactively adapting to change, rather than waiting for policies such as the EU's carbon tariffs to be implemented and then reactively.
This is a strategic decision made by the top leadership of the enterprise. In addition to internal carbon taxes, automakers also need to take action on engine electrification, materials, and more.
In her remarks at the opening ceremony of Shanghai Climate Week 2024, Jen Carson introduced the climate group's SteelZero initiative. Photo courtesy of the interviewee
Reducing costs requires the cooperation of all stakeholders
Southern Weekly: Most industries mainly reduce emissions through renewable energy and other means, and blast furnace steelmaking is a unique carbon emission of steel production, and it is also one of the most emitting links.
Jen Carson: There are two main types of steelmaking processes: the production of new steel, also known as long-process steelmaking, and the recycled steel, also known as short-process steelmaking. The secondary steelmaking of recycled steel uses an electric arc furnace, which is powered by electricity and can switch the fuel from coal to renewable energy generation.
The production of new steel requires a reduction from iron ore, which requires higher temperatures that cannot be achieved by electricity alone. Previously, we used to use coke in blast furnaces to reach high temperatures, but now we need to make the transition to green hydrogen.
Southern Weekly: Are there no technical barriers to reducing carbon emissions in both long-process and short-process steelmaking?
Jen Carson: The technology is there, but it's only in the experimental phase, and now we need skilled practitioners to commercialize it.
Southern Weekly: How can the cost of these technologies be reduced?
Jen Carson: We bring together key players and decision-makers. Not only steel producers, but also energy supply, power generation, transmission and distribution, infrastructure, steel producers, steel buyers, consumers, policymakers, banks, investors...... Even insurance companies, through cooperation between them, carry out pilots.
For example, the current cost of green hydrogen is relatively high, including green electricity, electrolytic hydrogen tanks, transportation, etc., and many infrastructure facilities are not perfect. There is no one-time solution to reduce costs, and it needs to be driven by many stakeholders.
Southern Weekly: How does SteelZero unite stakeholders to drive down the cost of these technologies?
Jen Carson: We transform the value chain step by step by understanding the needs and working their way up. There are many types of steel, including special steels and high-strength steels. We first need to understand what kind of steel is needed by downstream enterprises. For example, Maersk Group is a company that does container transportation, we need to know what kind of steel it uses, and then go to the upstream of the industrial chain to find which company to provide this kind of steel, and then find which bank to provide financial support for the production of this type of green steel.
In the case of a successful case in which SteelZero invited Volvo Cars, SKF (bearing manufacturer) and Thyssen Krupp AG (steel producer) to participate in the seminar. As stakeholders in the steel industry, the three shared their observations and experiences, discussed the impact of the transformation on their respective businesses, and how to respond to this industry trend. This kind of in-depth exchange and discussion helps companies to improve their business models.
Southern Weekly: If there is no platform like SteelZero, will these stakeholders take the initiative to gather and discuss on their own, and why should SteelZero be used as a glue?
Jen Carson: One of the biggest values that SteelZero provides to businesses is to come together with other companies that are at the forefront and learn from them to drive demand for net-zero steel in the process. The demand side does need to join forces and drive decarbonization action on a global scale. We bring the demand side together and use this collective buying power and influence to send a strong signal of demand to steel producers, investors and policymakers to accelerate the large-scale production of net-zero steel.
Southern Weekly: Which Chinese companies are joining SteelZero, what are their commonalities and characteristics, and what are your milestones in China?
Jen Carson: There are two Chinese companies that are currently joining: Shenzhen CIMC Tongchuang Supply Chain Co., Ltd., a direct subsidiary of China International Marine Containers (Group) Co., Ltd., and Hang Lung Properties, which is the first real estate company in China to join SteelZero. Under China's "3060" dual carbon goal, it is believed that more companies from different industries will join in the future.
What these two companies have in common is that they focus not only on operations internally, but also on the supply chain. They all want to know who are the most forward-looking, innovative and competitive steel producers in the supply chain.
Next, we will support stakeholders along the steel-centric value chain from both the demand side of the buyer side and the supply side of the manufacturer, and support more Chinese companies to see the opportunities of green steel.
Southern Weekly reporter Wang Tao
Editor-in-charge: Cao Haidong