Carbon-Neutral Steel Production and Its Impact on the Economies of China, Japan, and Korea: A Simulation with E3ME-FTT:Steel

Pim Vercoulen, Soocheol Lee (), Xu Han, Wendan Zhang, Yongsung Cho and Jun Pang
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Pim Vercoulen: Cambridge Econometrics, Covent Garden, Cambridge CB1 2HT, UK
Soocheol Lee: Faculty of Economics, Meijo University, Nagoya 468-0073, Japan
Xu Han: Cambridge Econometrics, Covent Garden, Cambridge CB1 2HT, UK
Wendan Zhang: School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China
Yongsung Cho: Department of Food and Resource Economics, Korea University, Anam-dong, Seongbuk-gu, Seoul 02841, Republic of Korea
Jun Pang: School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China

Energies, 2023, vol. 16, issue 11, 1-24

Abstract: The iron and steel industry is a large emitter of CO 2 globally. This is especially true for the iron and steel industries in China, Japan, and Korea due to their production volumes and the prevalence of carbon-based steel production. With few low-carbon and commercially available alternatives, the iron and steel industry is truly a hard-to-abate sector. Each of the countries of interest have committed to a net-zero future involving the mitigation of emissions from steel production. However, few studies have investigated the means by which to achieve decarbonization beyond the inclusion of price signalling policies (e.g., carbon tax or emission trading schemes). Here, we use E3ME-FTT:Steel to simulate technology diffusion in the ISI under several policy environments and we investigate the likely impacts on the wider economy. The results show that penalizing carbon intensive processes can incentivize a transition towards scrap recycling, but it is relatively unsuccessful in aiding the uptake of low carbon primary steelmaking. A combination of support and penalizing policies can achieve deep decarbonisation (>80% emission reduction compared with the baseline). Mitigating the emissions in the iron and steel industry can lead to economic benefits in terms of GDP (China: +0.8%; Japan: +1.3%; Korea: +0.1%), and employment (Japan: +0.7%; Korea: +0.3%) with China, where job losses in the coal sector would negate job gains elsewhere, as the exception.

Keywords: energy transition; mitigation policies; decarbonization; technology diffusion; economic simulation; iron and steel industry (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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