A new report suggests that steel producers could be forced to abandon tens of billions of dollars’ worth of equipment in coming decades as the world transitions away from coal.
Global Energy Monitor, a San Francisco energy policy think tank, says that as many nations work to phase out coal as an energy source in order to meet global climate goals, steel plants continue to rely on blast furnaces, which use a coal derivative known as coke to turn iron ore into pig iron, and ultimately, into steel.
The GEM report, according to Reuters, suggests that as coal production winds down, those coal-powered blast furnaces could be idled, and the steel sector worldwide could be forced to write down those “stranded assets,” which the report estimates as worth $47 billion to $70 billion.
GEM analysts projected those events could take place as soon as 2030 to 2040 — or sooner, if stricter carbon regulations are imposed.
Steel accounts for about 7% of global greenhouse gas emissions, Reuters notes, and many steel companies recognize the impending problems and are pushing for the industry to overhaul how it operates.
The GEM report, however, also said that new steel plants are under construction despite a glut of production capacity in many areas. And in some countries — primarily China — new blast furnaces are still being built even as the end of the coal era looms.