A new analysis by the Centre for Research on Energy and Clean Air indicates that China’s steel industry could reduce emissions by nearly 37% from peak levels by 2035 through an accelerated shift to greener production methods.
The report highlights the need to prioritize electric arc furnace (EAF) technology over traditional blast furnace–basic oxygen furnace (BF-BOF) production, which still dominates the sector.
Despite recent emission declines, analysts note that these reductions were driven primarily by falling demand and lower output, rather than structural decarbonization. In 2025, China’s steel production dropped below 1 billion tons for the first time since 2020, declining 4.4% year-on-year.
This reduction contributed to a cut of approximately 150 million tons of CO₂ emissions, exceeding the impact of current policy measures.
However, CREA warns that China has not met its 2025 green targets, and existing policies have reinforced reliance on carbon-intensive production methods.
The report suggests that increasing the EAF share to 15–20% by 2030 could reduce blast furnace output by 80–120 million tons, while also delivering economic benefits. If EAF reaches 20% market share, industry profits could rise by up to 220 billion yuan, and the debt-to-asset ratio could fall to 60–62%.
Rising exports further complicate the landscape. China’s steel exports surged from 54 million tons in 2020 to 134 million tons in 2025, increasing its share of global trade from 13.3% to 29.2%.
CREA notes that green steel could become a critical competitive advantage, particularly as carbon regulations tighten globally, including mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM).
VietnamSteel by Hoa Sen Group
