The carbon peaking plan for the steel industry is about to come out. How can green finance help the transformation?

The carbon peaking plan for the steel industry is about to come out.

On September 16, Feng Meng, deputy director of the Raw Materials Industry Department of the Ministry of Industry and Information Technology, said at a press conference that in accordance with the overall deployment of carbon peaking and carbon neutralization, the Ministry of Industry and Information Technology has cooperated to formulate implementation plans for carbon peaking in the petrochemical, chemical and steel industries.

Earlier in late August, the Steel Industry Low-Carbon Work Promotion Committee led by the China Iron and Steel Association released the "Carbon Neutral Vision and Low-Carbon Technology Roadmap for the Steel Industry", proposing four stages for the industry to implement the "dual-carbon" project.

"Time is tight and tasks are heavy." In the interview, he talked about the dual-carbon goal of the steel industry. Many people in the industry expressed emotion to the Shell Finance reporter.

Shell Finance reporters have noticed that capital is still one of the main pain points for the green and low-carbon transformation of steel enterprises. The Ministry of Industry and Information Technology stated at a press conference on September 16 that it took the lead in organizing the research on financial standards for the transformation of the steel industry. At present, 39 standards in 9 categories have been initially formed, which will be released publicly when the conditions are ripe.

Steel industry carbon reduction "time is tight, task is heavy"

Although the carbon peaking plan for the iron and steel industry has not yet been announced, documents to guide the carbon reduction of the iron and steel industry have appeared frequently at the level of policy orientation and industry opinions.

Shell Finance reporters noticed that the Steel Industry Low-Carbon Work Promotion Committee led by the China Iron and Steel Association (hereinafter referred to as the China Iron and Steel Association) released the "Carbon Neutral Vision and Low-Carbon Technology Roadmap for the Steel Industry" in mid-to-late August.

According to Mao Xinping, academician of the Chinese Academy of Engineering and director of the Expert Committee of the Low-Carbon Work Promotion Committee, the "Roadmap" proposes four stages for the implementation of the "dual-carbon" project: the first stage (before 2030), actively promote the steady realization of carbon peaks ; The second stage (2030-2040), innovation-driven to achieve deep decarbonization; the third stage (2040-2050), a major breakthrough and sprint limit carbon reduction; the fourth stage (2050-2060), integrated development to help carbon neutrality and.

It is reported that the "Roadmap" clarifies the "dual carbon" technology path of China's iron and steel industry - system energy efficiency improvement, resource recycling, process optimization and innovation, smelting process breakthrough, product iterative upgrade, capture and storage utilization.

As for the company itself, China Baowu is the first steel company in China to release the carbon neutral timetable for carbon peaking. achieve carbon neutrality in 2018.

Wang Guoqing, director of Lange Steel Research Center, told Shell Finance reporter that the green transformation path of the steel industry mainly includes: first, optimizing the industrial structure, encouraging qualified enterprises to realize the transformation from blast furnace to electric furnace production mode, and gradually developing low-carbon blast furnace hydrogen-rich smelting in the later stage. The R&D and industrial application of metallurgical technology help to smelt without fossil energy and reduce pollution and carbon at the source. The second is energy saving and emission reduction. Through the promotion of energy-saving processes and technologies in production and transportation, and ultra-low emission transformation, comprehensive improvement is carried out from both the source and emission, and the energy consumption per ton of steel and the emission index per ton of steel have been significantly improved.

"Time is tight and tasks are heavy." Many people in the industry feel so emotional when talking about the dual-carbon goal of the steel industry.

At present, many opinions have proposed that the steel industry will achieve a carbon peak in 2030 and even 2025.

In February this year, the "Guiding Opinions on Promoting the High-quality Development of the Iron and Steel Industry" jointly issued by the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Ecology and Environment also proposed that by 2025, more than 80% of the steel production capacity will be retrofitted with ultra-low emissions, and the comprehensive energy consumption per ton of steel will be reduced. 2% or more, and the water resource consumption intensity will be reduced by more than 10% to ensure that the carbon peak is reached by 2030.

"The steel industry is the main source of carbon emissions in the manufacturing industry, and its carbon emissions account for about 16% of my country's total emissions. The steel industry can be said to be a key industry for carbon emission reduction." SMM steel analyst Gu Yu told Shell Finance reporter that my country Under the current high-carbon energy consumption structure, the annual carbon emission is about 10 billion tons. The demand for economic development and energy consumption growth coexists with the pressure of emission reduction, and the time from carbon peak to carbon neutrality is only 30 years, which means that More effort is required.

Gu Yu said that considering the positive response of local governments to the dual-carbon policy, the elimination and replacement of outdated production capacity, and the overall policy of reducing crude steel production, it is expected that the steel industry is expected to reach the peak of carbon emissions in 2025.

Low-carbon transformation funds are still a pain point, and the financial standards for the transformation of the steel industry are expected to be released

"The industrial sector, especially the green and low-carbon transformation of traditional carbon-intensive industries, has a large financing gap and needs more flexible, targeted and adaptable financial support for transformation." Weng Qiwen, deputy director of the Ministry of Industry and Information Technology's Finance Department and * inspector, said in September at a press conference on the 16th.

For my country's steel industry, how big is the funding gap to carry out green transformation and achieve the dual-carbon goal?

"In order to achieve the carbon neutrality goal, in the steel industry, from 2020 to 2060, the steel industry will face a funding gap of about 3-4 trillion yuan in the field of steelmaking process optimization, accounting for half of the green financing gap in the entire steel industry. Wang Guoqing cited the report "Addressing China's Climate Challenge: Financing Transformation for a Net Zero Future" jointly released by Oliver Wyman and the World Economic Forum.

Some people in the steel industry told Shell Finance reporters that most of the environmental protection investment of steel enterprises still comes from their own funds, and the technological transformation of enterprises has limitations such as large investment, high risks, and insignificant short-term benefits.

However, Shell Finance reporters also noticed that in order to support the transformation of manufacturing enterprises, various financing tools in the financial market are frequently "new".

In late May, Baosteel Co., Ltd. (600019.SH), a subsidiary of China Baowu, successfully issued the country's first low-carbon transition green corporate bond on the Shanghai Stock Exchange, with an issuance scale of 500 million yuan. All the funds raised will be used for its subsidiary Zhanjiang Steel Hydrogen Base. Shaft furnace system project.

On June 22, the first batch of transformation bonds launched by the China Interbank Dealers Association was issued. Among the first five pilot enterprises, the largest issuance scale was Shandong Iron and Steel Group Co., Ltd. The raised funds were 1 billion yuan, which will be used for Shandong Iron and Steel (600022.SH) Laiwu Branch, a subsidiary of Shandong Iron and Steel Group, completed the construction of the optimization and upgrading project of the new and old kinetic energy conversion system.

The low-carbon transition/low-carbon transition-linked bonds of the exchange and the transition bonds of the NAFMII provide financing tools for economic activities in the low-carbon transition field. The transition bonds also define the industry in which the issuer is located. The pilot areas include Eight industries, including electricity, building materials, steel, nonferrous metals, petrochemicals, chemicals, papermaking, and civil aviation, are all traditional high-carbon emission industries.

"Financing transformation projects through the bond market will become an important way to meet the transformation and financing needs of traditional high-carbon enterprises." Gao Huike, senior director of research and development in the research and development department of China Securities Pengyuan, told Shell Finance reporters that it is expected that the participation in the green bond market will not be high. High traditional high carbon emission companies have great enthusiasm to issue transition bonds.

In response to the problem that traditional high-emission industries often face financing difficulties, Shao Shiyang, executive director of the Beijing Green Finance Association, previously told Shell Finance that for most companies, the main source of funds for technological transformation projects is still banks. However, due to the lack of clear definitions and guidance for low-carbon transformation projects, and the need to take into account the institutions' own green indicators, financial institutions are still cautious about financing projects in high-emission industries. With the gradual establishment of many standards for green finance in recent years, the attitude of financial institutions will become clearer.

"Everyone is in the exploratory stage. If some green finance demonstration projects are more successful, some more detailed standard systems can be introduced based on the practice cases of these projects." Shao Shiyang believes.

According to Weng Qiwen, the Ministry of Industry and Information Technology has taken the lead in organizing the research on financial standards for the transformation of the steel industry. By establishing relevant standards, it will guide financial institutions to innovate and transform financial products and services, and expand investment in green transformation of traditional industries. At present, 39 standards in 9 categories have been initially formed, and the conditions are ripe. It will be publicly released later.

In addition to the financial burden, Wang Guoqing also pointed out that many companies have shortcomings in R&D strength and talent reserves, which also restricts the overall green transformation process of the steel industry.

Weak demand, steel industry solutions are on the way

At the same time of the low-carbon transition, affected by the sluggish demand, the steel industry is going through a rare difficult time in recent years.

According to Choice statistics, among the 58 listed companies in the steel sector, 26 have a year-on-year decline in revenue in the first half of this year, and 45 have a year-on-year decline in net profit.

Statistics from China Iron and Steel Association ("China Iron and Steel Association") show that due to the high cost of raw materials and fuels, the decline in downstream steel consumer demand, and the sluggish steel prices, from January to July this year, especially since the second quarter, the economic growth of the steel industry has The operation shows an obvious downward trend. From January to July this year, there are 34 key statistical member companies of the Steel Association that have accumulated losses.

Wang Guoqing told the Shell Finance reporter that with the steady growth in the later period, downstream demand is expected to improve significantly in gold, nine silver and ten chains, which will drive the market to achieve a rebound in shock, and the industry's profitability is expected to be gradually repaired. Intertwined, industry profitability is still difficult to recover to an ideal level.

"The external changes on the demand side of the steel industry are difficult to change, but from the perspective of the industry itself, it is possible to adjust production on the supply side to determine production according to demand, avoid blind production and disorderly competition, and thus promote the healthy development of the industry." Wang Guoqing went on to say .

"The main problem in the current market lies on the steel demand side, but the real solution lies on the steel supply side." He Wenbo, Secretary of the Party Committee and Executive Chairman of the China Iron and Steel Association, previously proposed.

How to understand finding solutions through the supply side?

Gu Yu said that for the steel industry, mergers and acquisitions, crude steel reduction, and elimination of outdated production capacity can be used to further increase industry concentration, while strengthening technology research and development, and transforming the production of emerging materials such as special steel. The proportion of losses in the first half of the year of Yingpu Steel’s steel mills is significantly lower, and the loss ratio of steel mills mainly engaged in special steel is significantly lower. We believe that the transformation of the industry to high-quality production and emerging materials is more urgent.”

Liu Jianhui, Secretary of the Party Committee, Director and General Manager of Shougang Co., Ltd. proposed that the company will expand the production capacity of high-end products in a planned way through production line process optimization and related supporting production line construction. The proportion of product output will reach more than 70%

Xu Zhixin, chairman of Fangda Special Steel, said at the performance briefing on September 19 that in addition to stable and orderly production and reducing production costs, it will also strengthen technical exchanges and strategic consultation with colleges and universities, research institutions, etc., to promote the company's variety Structural and industrial upgrading. (Beijing News Shell Finance Zhu Yueyi)