Finance and state support for low-carbon steel

Sangeeth Selvaraju

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Decarbonising industry is a major 21st century challenge that requires international partnership, cooperation and corporate strategy. Historically ‘hard-to-abate’ sectors like steel are now central to this policy debate. Large emerging market and developing economies (EMDEs) like India, Indonesia, and Vietnam are rapidly industrialising and driving new steel demand. But while steelmakers in the EU are investing in decarbonisation, this is proving more challenging for EMDEs. A major obstacle is the high associated cost and techno-economic limitations of implementing new methods, such as hydrogen-based iron reduction. This report seeks to understand the use of direct state subsidies as a critical enabling factor in EMDEs’ transition to decarbonising steel. The core contribution is a novel dataset on state subsidies for low-carbon steel projects worldwide. This dataset provides a foundation for future research on resource allocation and green industrial policy, enabling deeper analysis of how public finance shapes technology adoption and competitiveness in the steel sector and what the optimal policy package could be, given natural resource endowments, fiscal space and other existing climate policies that can be used together in the context of state capital expenditure (CapEx) and operational expenditure (OpEx) subsidies.

Keywords: development finance; industry; global; India; policy (search for similar items in EconPapers)
JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2025-12-11
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