This briefing analyzes the climate policy engagement of the largest steelmakers in China, India, Japan and Korea. The steel industry in these four countries makes up 70% of global steel production. It builds on the analysis of InfluenceMap's April 2022 report on the Japanese and South Korean Steel Sectors, which found that steelmakers and their industry associations were actively engaged in influencing activities around a diverse range of climate policies including steel decarbonization policy, carbon pricing, emissions trading, GHG emissions reduction targets, and energy mix transition strategies.
InfluenceMap's LobbyMap data platform covers over 500 companies and 250 industry associations globally, based on the world's largest companies by economic size. This spans companies including the US, Europe, Japan, Korea, as well as a growing number of countries globally. InfluenceMap adapts its methodology to suit each region in which it assesses corporate interactions with policy globally. InfluenceMap has successfully adapted its methodology and scoring of companies to Japan and Korea, with the results evident on the Japan and Korea online data platforms. This content has been utilized by both global and local investors in Japanese and Korean companies extensively. InfluenceMap is now working to adapt its methodologies for China and India; both hugely important regions for climate action globally. The profiles of the Chinese and Indian corporates covered in this report reflect this adapted methodology but are still provisional as the regional methodologies are finalized.
The steel sector's direct industrial process emissions and its indirect emissions from power consumption account for 10% of the global energy system's CO2 emissions. The IEA defines 'energy systems emissions' as both those from the combustion of fossil fuels and industrial process emissions. As a supplier of raw materials for industry (the OECD notes that construction, transport, and machinery combined make up 70% of steel demand globally), the global steel sector is highly exposed to the decarbonization demands of other sectors. The IPCC, in its April 2022 Report on Mitigation of Climate Change, noted that hard-to-abate industries such as the steel sector would require ‘comprehensive and sequential industrial policy strategies leading to immediate action as well as preparedness for future decarbonization.’
Investor expectations, formalized by investor-representative groups such as the PRI, IIGCC, and Ceres, require companies to adopt Paris-aligned climate positions on policy, and to implement enhanced governance and disclosure processes to ensure industry associations' alignment to these positions. The Global Standard on Responsible Climate Lobbying, launched in March 2022, builds on these expectations and provides a framework for assessing direct and indirect corporate policy engagement against the 1.5℃ goal of the Paris Agreement. Investor groups AIGCC, IIGCC, Ceres, and IGCC also released the Investor Expectations of Steel Companies in 2018, which lays out expected standards for the steel sector, including expectations for engagement on climate policy by the company and its industry associations.
InfluenceMap refers to the UN's 2013 Guide for Responsible Corporate Engagement in Climate Policy as a guide for what constitutes engagement. This can include advertising, social media, public relations, sponsoring research, direct contact with regulators and elected officials, funding of campaigns and political parties, and participation in policy advisory committees.
To determine how an evidence piece is scored, InfluenceMap uses Government Policy Benchmarks and Science Based Policy Benchmarks, against which evidence of corporate policy engagement is compared. The level of support or opposition is thus determined by the extent to which there is alignment between the corporate’s position and the benchmark.
In addition, InfluenceMap uses adapted benchmarks to assess climate policy engagement in developing economies, based on IPCC analysis of the interaction between climate transition and sustainable development goals. The IPCC finds that rapid climate transition of developing economies, supported by international finance and technology transfer, has significant synergies with sustainable development. Therefore, supporting the highest level of climate ambition is considered best practice for corporations and industry associations in all countries, regardless of wealth or industrialisation status, with adapted scoring in developing economies for conditions around international support as well as capacity building to overcome policy implementation barriers.
For detailed information on InfluenceMap’s methodology, benchmarks and how they differ regionally, see Appendix A.
Table 1 below shows a scorecard ranking the climate policy engagement of the largest steel companies in China, India, Japan and Korea by market value, as well as the major steel industry associations in each country. The online profiles of companies can be viewed by clicking on their logo in the table.
Table 2 below shows a comparison of how steel sector entities are engaging with climate policy in their respective headquartered countries of China, India, Japan and Korea, ranging from negative policy engagement (indicating misalignment with the 1.5°C goal of the Paris Agreement) to positive policy engagement (indicating alignment with Paris Agreement goals). The table also shows how actively engaged the companies are on specific climate policy areas.
The Japanese steel sector displays the most active and negative engagement on climate policies. For instance, over many years it has systematically opposed regulated carbon pricing and emission trading schemes (ETS). Recent Japanese government deliberations on the introduction of a hybrid carbon pricing system that combines a ‘carbon levy’ with an undefined price level and voluntary emissions trading are conditionally supported by the Japan Iron and Steel Federation (JISF) and Nippon Steel as of early 2023.
While there are some cases of active support for national carbon neutrality targets among the steelmakers, there is also a considerable level of more ambiguous positioning, especially from Nippon Steel, the Korea Iron and Steel Association and Tata Steel. For instance, Nippon Steel did not welcome Japan’s 2030 GHG emission targets after their announcement in May 2021.
The Korean Steel sector has engaged extensively with the ETS, which covers steel sector emissions. It has not fully supported the ETS, with KOSA calling for the continuation of free allowances for the steel sector, and POSCO calling for reforms to K-ETS permits that would weaken the climate ambition of the policy.
The Climate Action Tracker’s assessment of Policies & Action of countries against their fair share ranks China, India and Japan as ‘Insufficient’, while ranking South Korea as ‘Highly Insufficient’. In this context of similar levels of climate regulation in the first three countries, steelmakers in India and China have not opposed the introduction of carbon pricing or emissions trading in as active a manner as in Japan. In July 2021, the China Iron and Steel Association (CISA) appeared to support the participation of the iron and steel industry in emissions trading developed in China.
The Japanese and Korean steel companies have been the most vocal and oppositional with regards to the EU CBAM, while the Indian and Chinese steelmakers have been comparatively less negative or active on the policy.
Table 3 below shows a comparison of the positions taken by steel sector companies on various pathways for steel decarbonization outlined by the IPCC. This Table contains company statements about sector-wide decarbonization and the society-wide transition of the energy mix, and does not evaluate operational investments or statements about individual business models. A detailed summary of IPCC excerpts can be found in Appendix II.
Scroll horizontally across the table to view company positions on different aspects of steel decarbonization
| Company / Industry Association | Summary of Alignment with IPCC Pathways | Steel Decarbonization Policy | Low-Carbon Fuels in Steelmaking | Electrification of Industry | Hydrogen-reduced Steel | Material Efficiency/Scrap Recycling | Decarbonization of Power Generation Mix |
|---|---|---|---|---|---|---|---|
| IPCC Guideline | n/a | Intensive production decarbonization policies are needed to accelerate the adoption of low-carbon steelmaking technologies. Broad and sequential policies that address multiple mitigation options can lead to effective emission reductions. Policies should be developed across domains to facilitate technology shifts and market creation. This will enable immediate action and future preparedness. | Decarbonizing steel production requires a mix of measures, including retrofitting existing facilities, implementing CCU and CCS technologies (with early scale-up a crucial factor), and transitioning to low- or zero-emissions production methods. For hydrogen to support decarbonization, it will need to be produced from zero-carbon or extremely low-carbon energy sources. Biomass-based coke production is potentially consistent with limiting warming to 1.5°C. | The electrification of production processes is an important mitigation option. Direct reduction with hydrogen combined with heat generation through electricity is potentially consistent with limiting warming to 1.5°C. To achieve electrification, industry must advance in technological development while ensuring a sufficient and affordable supply of low-emission electricity. | Hydrogen-based direct reduced ironmaking (DRI) can be nearly CO2-neutral with carbon-free hydrogen. Transitionally, methane or a mix of methane and hydrogen can be used. A combination of measures, including electrification, hydrogen DRI, CCU/CCS, and energy efficiency are needed for steel decarbonization. Hydrogen production improvements are needed for net-zero emissions at scale. | Integrated material efficiency, recycling, and production decarbonization policies are needed for very low to zero emissions steel. Material efficiency measures can reduce demand by 40%, and high-quality recycling for secondary production must be maximized for significant emissions savings (contingent on the availability of regional and global scrap supplies), while also requiring careful sorting and scrap management. | In IPCC-integrated models limiting warming to 1.5°C with no or limited overshoot, renewables make up on average 53.68% of the electricity generation mix by 2030 and reach 77.12% by 2050 globally. |
| Nippon Steel Corporation | While Nippon Steel has appeared to support the increased use of electric arc furnaces (EAF) and the development of hydrogen infrastructure, it appears to be misaligned with IPCC in its occasional ambiguity on decarbonizing hydrogen production, its support for the continued use of coking coal, as well as its support for thermal power and nuclear energy, at times seemingly over renewables. | Nippon Steel has strongly advocated for increased government investment to support steel decarbonization, while frequently remaining ambiguous on other policy solutions. Nippon Steel has called for the creation of international standards for green steel in line with Japan's circular economy roadmap over standards drafted by other countries. | Nippon Steel has supported a continued role for coking coal with CCUS in steelmaking, with ambiguities around a timeline for a transition from this to decarbonized production methods. It supports hydrogen and carbon-free power, although often remaining ambiguous about the decarbonization of hydrogen. | Nippon Steel has supported the increased use of electric arc furnaces (EAF), emphasizing the need for increased nuclear power to support the electrification of steelmaking. | Nippon Steel actively advocates for hydrogen infrastructure and government funding to support the development of hydrogen-reduction steelmaking. While it has specified support for green hydrogen on some occasions, it often remains ambiguous on decarbonizing hydrogen production. | Nippon Steel has supported the development of technologies and infrastructure for steel scrap, while stressing the costs. | Nippon Steel actively advocates for an increased role for nuclear power, often appearing to support it over renewable energy, citing cost and stability concerns for the latter. It has also supported a continued role for thermal power, including ammonia and biomass co-firing with coal, and coal conversion to Gas Turbine Combined Cycle (GTCC) without conditions for CCS. |
| JFE Steel | JFE Steel is partially aligned with IPCC guidelines in its support for various government policies for green hydrogen and electricity, electrification, and hydrogen-reduction steelmaking. There is partial misalignment in its support for a continued role for blast furnaces, its occasional ambiguity on decarbonizing hydrogen production, and its mixed positions on increasing the use of renewable energy. | Emphasizing the high costs involved with decarbonizing the industry, JFE Steel has strongly advocated for government-led investment and incentives to develop technologies and supply green hydrogen and electricity for steel production. It has also supported policies such as green public procurement. | JFE Steel has strongly advocated for government support for green hydrogen and carbon-free electricity, with occasional ambiguity around the decarbonization of hydrogen, but has also supported a continued role for blast furnaces alongside CCUS. It has also appeared to support ammonia and hydrogen over solar and wind energy to power steel production. | JFE Steel has recognized the importance of promoting electrification, while emphasizing concerns due to high electricity prices and the need for an inexpensive and stable power supply. | JFE Steel supports the development of hydrogen-reduction steelmaking, and has requested government support for green hydrogen and carbon-free electricity. It has occasionally supported hydrogen without specifying a position on its decarbonization. | No position detected by InfluenceMap | JFE Steel has taken mixed positions on the energy transition, supporting nuclear and renewable energy with ambiguity around timelines. |
| Japan Iron and Steel Federation (JISF) | JISF appears partially aligned with IPCC guidelines in its support for government policies promoting technology development for decarbonization, carbon-free hydrogen and power, and CCUS for hydrogen-reduction ironmaking using blast furnaces. However, it appears misaligned in its occasional ambiguity around decarbonizing hydrogen production, support for coking coal, support for thermal power and ambiguous position on the need to increase renewable energy. | JISF strongly advocates for government funding to support technological development to decarbonize the steel industry. It has suggested a policy package similar to the Green Deal to support R&D in Japan, and has also supported tax and public procurement policies. | JISF has advocated for tax exemptions and a continued role for coking coal in steelmaking, while also supporting hydrogen and carbon-free power, although often remaining ambiguous about the decarbonization of hydrogen and emphasizing high hurdles for technological development. | JISF has supported the increased use of EAFs, while emphasizing concerns such as high electricity prices. | JISF actively advocates for hydrogen infrastructure and government funding to support the development of hydrogen-reduction steelmaking, while often remaining ambiguous on decarbonizing hydrogen production, and emphasizing technical and cost difficulties. On the other hand, it has expressed some support for the use of carbon-free hydrogen, and has advocated for the government to create a CCUS roadmap to support hydrogen-reduction ironmaking using blast furnaces. | JISF appears to have limited engagement on scrap recycling policy, but has supported the expanded use of scrap. | JISF actively advocates for an increased role for nuclear power, often appearing to support it over renewable energy due to cost and stability concerns for the latter. It has also supported a continued role for thermal power in 2030, as well as the increased use of ammonia and hydrogen without conditions for CCS. |
| POSCO | POSCO appears partially aligned with IPCC guidelines in its support for the increased electrification of steel production. However, it shows misalignment in its occasional ambiguity around the need to decarbonize hydrogen production, and its support for thermal power such as LNG. It also appears to support ammonia and coal co-firing without clear conditions for phasing out coal in line with IPCC timelines. | POSCO has supported decarbonizing the steel industry through hydrogen-reduction steelmaking and other technology development, as well as government support for R&D. | POSCO has supported the introduction of LNG heavy duty vehicles when transporting steel products as a way to reduce carbon emissions in the steel production process. The company has also supported hydrogen as fuel material for carbon-intensive industries, including steel, however, it is unclear about decarbonizing hydrogen production. | POSCO has supported the increasing electrification of the steel industry using EAFs. | POSCO has supported hydrogen-reduction in steel without specifying a position on the decarbonization of hydrogen. | No position detected by InfluenceMap | POSCO has supported a long-term role for LNG in the energy mix without clear conditions for CCS. It has also advocated for ammonia and coal co-firing power plants without specifying a clear timeline on phasing down the proportion of coal in line with IPCC guidance. |
| Hyundai Steel | Hyundai Steel appears partially aligned with IPCC guidelines in its support for electrification and CCUS, and the increased use of offshore wind. Its position on phasing out fossil fuels from steel production was unclear. | Hyundai Steel has supported decarbonizing the steel industry through technology development, including electric arc furnaces and CCUS. | Hyundai Steel has stated support for the increased use of by-product gas from the blast furnace, but its position on the overall phaseout of coking coal or fossil fuels in the steel production was unclear. | Hyundai Steel has supported the electrification of the steel industry via the increased use of EAFs and CCUS. | No position detected by InfluenceMap | No position detected by InfluenceMap | Hyundai Steel has called for policy measures to increase the use of offshore wind power in South Korea. |
| Korea Iron and Steel Association (KOSA) | KOSA appears partially aligned with IPCC guidelines in its support for electrification, while it appears to be misaligned in its potential lack of support for renewable energy and scrap steel use, and ambiguity around decarbonizing hydrogen. | KOSA has called for government-level attention and financial support for decarbonizing the steel industry, including steel decarbonization core technology development facilities. | KOSA stated that providing hydrogen and renewable energy to operate steelmaking facilities would be costly in terms of infrastructure building and operation. | KOSA has supported EAFs and the electrification of the steel industry. | KOSA has supported hydrogen-reduction steelmaking technology and government support for hydrogen infrastructure with no clarity on decarbonizing hydrogen production. | KOSA has stressed technical feasibility of using scrap steel in EAFs, with no clear position on potential policy solutions. | No position detected by InfluenceMap |
| Tata Steel | Tata Steel appears partially aligned with IPCC guidelines in its support for electrification and for policy measures to decarbonize the steel sector including increasing the use of scrap recycling. On the other hand, potential misalignments exist in its support for coking coal and fossil gas in steel production, as well as advocacy for tax cuts on petrol. | Tata Steel appears to support policy measures to decarbonize the steel sector, and has stressed the risks of job losses and carbon leakage without government policy support. | Tata Steel has supported transitioning the low-carbon technologies for steel production, but also advocates for measures to prolong the role of coking coal and fossil gas. | Tata Steel takes supportive positions on the electrification of the steel sector, including supporting EAFs. | Tata Steel supports the use of hydrogen to decarbonize steel production, however does not provide a clear indication if this is specific to green hydrogen. It also stressed the limited opportunities in the short-term for developing green hydrogen to achieve emission reductions in the steel sector. | Tata Steel supports policies to increase scrap steel recycling in India, including the Steel Scrap Recycling Policy and Vehicle Scrappage Policy. | Tata Steel has taken mixed positions on transitioning the power mix. The company supported the removal of fossil fuel subsidies, but contrastingly advocated for tax cuts for petrol and diesel. |
| JSW Steel | JSW appears partially aligned with IPCC guidelines in its support to decarbonize electricity production, and to develop green hydrogen and renewable energy. It appears to support recycling scrap steel, but provided limited information on its position on policies regarding this. It appears misaligned in its support for a continued role for fossil fuels in steel production. | JSW appears to support the decarbonization of the steel sector, while advocating for government funding to tackle economic and technological feasibility. The company has also called for national decarbonization roadmaps to help accelerate the decarbonization of hard-to-abate sectors in line with achieving net-zero by 2050. | JSW Steel has advocated for a continued role for fossil fuels in steel production. | No position detected by InfluenceMap | JSW Steel supports green hydrogen production and advocates for policy support to be scaled up, but stresses this will be in the long-term. The company also highlights the need for clean hydrogen technologies until green steel production is market-ready. | The company seems to be supportive of recycling scrap steel, but provides limited information on its position on policy measures for this. | JSW Steel supports measures to decarbonize the electricity mix, including a phase out of fossil fuels and reform of fossil fuel subsidies. The company has also advocated for measures to develop renewable energies, specifically solar power. |
| Indian Steel Association (ISA) | The Indian Steel Association appears partially aligned with IPCC guidelines in its support for various policies to decarbonize steel and its advocacy for renewable energy, electrification, scrap recycling, and green hydrogen. It appears misaligned in its support for continued roles for coking coal, blast furnaces, and fossil fuels such as petrol and diesel. | The Indian Steel Association appears to support a range of policies to decarbonize the steel sector, including incentives and subsidies for green steel production. | The Indian Steel Association appears to support measures to continue the use of coking coal for steel production, and supports the long-term role of blast furnace steel production, stating that zero-emission options are not market-ready. The association also appears to support the use of fossil gas in steel production. | Indian Steel Association advocates for a greater role of renewable energy and use of scrap-based EAF. | The association supports India's National Hydrogen Mission and Green Hydrogen Policy to develop green hydrogen production for the decarbonization of the steel sector, however it has emphasized that green steel will not be market competitive in the short-term. | The association appears to support steel recycling policies, including India's vehicle scrapping policy to enable the recycling of scrap steel. | The Indian Steel Association appears to support measures to continue the use of fossil fuels, including the removal of the coal cess and duties on petrol and diesel. |
| Baowu Steel Group | Baowu appears partially aligned with IPCC guidelines in its support for renewable energy and green hydrogen. It is misaligned with the IPCC in its support for natural gas and coking coal in steel production, as well as the continued use of blast furnace production over a transition to electric arc furnaces. | No position detected by InfluenceMap | Baowu supported transition from fossil fuels to renewables and green hydrogen. However, it also supported the use of natural gas in steel production and called for policy support for coking coal. | Baowu appears mostly unsupportive of transitioning from the blast furnace method to EAFs, citing economic concerns, and instead supports technological improvements to blast furnace for emissions reduction. | Baowu has supported using green hydrogen as the reducing agent in steelmaking. | No position detected by InfluenceMap | Baowu supported an expanded role for green hydrogen, whilst also referring to natural gas as a low-carbon energy source desirable in the new energy system. |
| HBIS Group | HBIS appears misaligned with IPCC guidelines due to its support for the use of natural gas as well as hydrogen produced with coal, without specifying a position on their decarbonization. | No position detected by InfluenceMap | HBIS supported using natural gas and hydrogen in steelmaking, without specifying the need to deploy CCS and decarbonize hydrogen production. | No position detected by InfluenceMap | HBIS supported using hydrogen as a reducing agent in steelmaking, however, it appears to support hydrogen produced from coal. | No position detected by InfluenceMap | HBIS supported an increased role for hydrogen and natural gas in the energy mix, without stating the need to decarbonize hydrogen production and deploy methane abatement measures. |
| Beijing Shougang Corporation | While Shougang appears partially aligned with IPCC guidelines in its support for hydrogen reduced steel and recognition of electric arc furnaces, it has stressed concerns on technical development of hydrogen and has not specified the need to decarbonize hydrogen. | No position detected by InfluenceMap | No position detected by InfluenceMap | Shougang stated Basic Oxygen steelmaking process will remain the dominant method, though at the same time predicts an increased role for EAFs in the future. | Shougang supported transitioning towards hydrogen-reduced steel as a means to carbon neutrality, whilst citing concerns over technological difficulties. | No position detected by InfluenceMap | No position detected by InfluenceMap |
| China Iron and Steel Association | CISA's support for renewable energy and policy support for electric arc furnaces appears to be aligned with IPCC guidelines, however there appears to be potential misalignment in its ambiguity around the decarbonization of hydrogen. | No position detected by InfluenceMap | The association supported renewables and hydrogen for steelmaking, but has not communicated an explicit position on the need to decarbonize hydrogen production. | The association supported investment and policy support for EAF technology, but at the same time is supportive of technological improvement to blast furnaces as a means to reduce emissions. | The association is generally supportive of hydrogen as a reducing agent in steelmaking, without communication on the need to decarbonize hydrogen. | No position detected by InfluenceMap | No position detected by InfluenceMap |
Asian steel companies generally support government investments and incentives towards R&D for steel sector decarbonization. Japanese steelmakers have supported green public procurement policies. However, the steelmakers in the region also appeared critical of the low-carbon transition in the sector by stressing concerns related to high costs, technical feasibility of low carbon options, and labor issues.
None of the Asian steelmakers were clearly supportive of phasing out fossil fuels from steel production processes. All but the Korean steelmakers have called for government support to prolong the use of coking coal in steel production.
Indian, Japanese and Korean steelmakers are supportive of increased use of electric arc furnaces (EAFs), while Chinese steel companies appear to support improvement in blast furnace efficiency over electrification.
All steelmakers support the development of hydrogen-reduced steel production for the sector, however with little clarity on the need to decarbonize hydrogen production. Tata Steel, JSW Steel and the Indian Steel Association support long-term policy for green hydrogen, but have stressed technological and financial limitations in the short term. Baowu Steel has specified a need for green hydrogen in steel production, and recent announcements by Nippon Steel and JFE Steel indicate emerging support for green hydrogen as well.
Indian companies appear to be engaging most actively with material efficiency and scrap recycling in the steel sector, with Tata Steel supporting the Indian government’s Steel Scrap Recycling Policy.
The Asian steel companies have taken mixed positions on the decarbonization of the power generation mix, with Nippon Steel, Tata Steel, Baowu and POSCO advocating for the continued use of coal and gas power generation. JSW Steel is the only company to consistently support transitioning the power generation mix towards renewable energies.
