Steel in a circular economy: Global implications of a green shift in China

Victor Nechifor, Alvaro Calzadilla, Raimund Bleischwitz, Matthew Winning, Xu Tian and Arkaitz Usubiaga

World Development, 2020, vol. 127, issue C

Abstract: China is increasingly known for its ambitions towards an ‘ecological civilisation’ and a circular economy. Our article assesses the implications of an accelerated shift towards steel recycling in China. Given the relevance of steel for development worldwide as well as its environmental intensity, any such shift is likely to have implications for competitiveness in China and beyond. Recent findings suggest that China could take advantage of an increasing availability of obsolete steel scrap in the coming decades, moving towards more circular, and potentially greener, steel production. We assess such industrial restructuring from an economic perspective and address the competitiveness of China relative to other developing and industrialised regions. The analysis uses a novel global economy-wide modelling framework (ENGAGE-materials) to assess the aggregate and sector-level impacts of different scrap use options in China in the 2019–2030 time frame. The results show moderate GDP gains for China of cumulated USD 589 billion in GDP gains by 2030 despite a replacement of primary steel capacity. A more comprehensive industrial policy mix aimed at improved recycling practices and more adaptive downstream sectors could increase gains to USD 819 billion. The international implications are mixed, with losses for iron ore producers (Australia, Brazil and India) and gains for most developing countries benefiting from lower steel prices. Another result is an increasing demand for coal in electricity production if such a shift wouldn’t be aligned with an accelerated energy transition towards low carbon pathways. We discuss policy implications of such alignment, potential co-benefits, and a need for green international partnerships.

Keywords: Circular economy; CGE modelling; Steel recycling; Environmental impacts; China; International trade (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:127:y:2020:i:c:s0305750x19304243

DOI: 10.1016/j.worlddev.2019.104775

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