Growing steel demand

Background

There is a straightforward approach to reducing steel-related emissions that does not require a technological transition: a reduction of overall steel demand could reduce the need for steel production, resulting in declining emissions.

Countries around the world continue to develop and generate economic growth, leading to the construction of large cities, infrastructure, technologies, and consumer goods. The demand for steel is thus projected to grow by approximately one-third by 2050.^[1]^[2] If no low-emissions processes are adopted, resulting greenhouse gas emissions will show a similar trend.^[3] Even if breakthrough technologies are implemented and scaled quickly, emissions cannot be stopped without addressing underlying demand.^[3]

Although improved recycling and production efficiency can reduce steel demand, the magnitude of the growing demand poses a challenge. Through 2050, the industry is asked to concurrently increase its capacity to continue supporting the economic development that many countries aim to achieve, as well as to change its production process in order to reduce carbon emissions. Addressing this challenge will require efforts to both reduce future demand and improve material efficiency.

Policy Action

Policy targets to reduce overall steel demand include:^[4]

Use financial instruments to increase steel prices, e.g., carbon pricing, taxes to account for externalities, etc.

Promote or require the transition away from carbon-heavy materials in the construction of products and infrastructure.^[5] This requires collaboration with steel consumers.
Promote or require smart designs of products and infrastructure, e.g., through building codes, product design standards, construction practices, etc.^[6]^[7] This requires collaboration with steel consumers.
Use standards and regulations to extend building and product lifetimes, e.g., increase durability and reusability.^[6]
Reduce the demand for steel products, such as cars and infrastructure, e.g., shared, service-oriented, and electric mobility systems; shared buildings; etc.^[5]^[6] This requires collaboration with investors and companies.
Use regulations and incentives to change consumer behaviors, e.g., impose lifecycle emission standards for products, pressure or incentivize steel consumers to decarbonize, etc.

Policy targets to increase material efficiency include:^[4]

Reduce waste in steel production to improve yields, e.g., improved manufacturing techniques, use of digitalization to increase performance, implementation of efficiency-promoting technologies, etc.^[6]^[8] This requires collaboration with steel companies.
Incentivize manufacturers to reduce steel waste during product manufacturing, e.g., awareness and capacity-building, implementation of efficiency-promoting technologies.^[6] This requires collaboration with steel consumers.
Use standards and regulations to reduce lifecycle emissions and improve product performance, e.g., mandatory efficiency and appliance standards.^[9]^[10]
Create and implement efficiency labels and certifications to promote low-emissions product demand.