Q&A with Solutions For Our Climate (SFOC) on steel decarbonisation in Korea

Anna Song is the Steel Team Lead* at Solutions for Our Climate (SFOC), a Korea-based international climate advocacy organization founded in 2016 dedicated to aligning emissions trajectories with the goals of the Paris Agreement.

*Since this interview, Anna has transitioned to a new role on the Methane Team within SFOC

How do you see the state of play on steel decarbonisation in Korea?

To touch on the global state of play in the sector, I think one of the key challenges of this heavy industry sector is that it is facing a projected global growth, yet the climate agenda means they have to consider what this means for meeting their publicly committed net zero and other decarbonisation goals. The opportunity, however, is that it is a sector that has not disrupted its technology or practices in a really long time. So, it is ripe for innovation. Additionally, the spotlight on steel since roughly 2020, with the International Energy Agency (IEA) report, has meant that the consumer products like motor vehicles and EVs, along with some of the bigger sectors like construction and shipping, are now aware that decarbonisation of steel is critical for their prosperity or even the survival of their business. So, there are both challenges and opportunities there.

If we want to look at the state of play in South Korea in particular, I would say that South Korea is an export-orientated economic market, and the steel sector is no different. Many companies in the steelmaking and other fabrication sectors have heavily relied on the export market overseas. That means that mechanisms like CBAM as an example do send a signal that is highly felt in the Korean market for them to be motivated to decarbonise.

What do you see as the key challenges to decarbonising the sector?

I think the steel sector’s use of coal and coal-powered energy is a big challenge structurally. We should also keep in mind that the business of making steel is categorised as a heavy industry. It requires high heat and the refining of raw materials. It’s not a gentle, pretty industry. When we think of the nature of the business and also the scale of the steel sector, not only in each domestic market but in the global economy – shifting and expecting the shift to happen quickly, I think that is a challenge.

And what do you see as the opportunities for steel decarbonisation?

I think the opportunity for decarbonising steel in Korea specifically is that Korean businesses are quite resilient to changing market conditions. They have a track record of adapting to meet market demands. Also, there are some R&D developments in Korea, for example, POSCO’s HyREX technology. So there are those opportunities, but they should not be thought of in a vacuum but within the context of that just transition issues as well.

What actions are needed from the government and private sector to ensure steel decarbonisation?

The Korean Government has announced its national plan to reach net zero by 2050, to be aligned with its interim NDC target of 40 per cent emissions reduction on 2018 levels by 2030. Regretfully, during the NDC update in March 2023, the industry percentage, or allocation of emissions, increased from 222.6 million tons of CO2e to 230.7 million tons of CO2e while maintaining the overall 2030 interim reduction goal of 40%. It is important for government action to be consistent, taking short, medium and longer-term views and sending a clear and consistent message and signalling to businesses and markets to enable them to make decisions on investment and to realise their goodwill to decarbonise into their operations.