New research: Crunch time for decisions on blast furnaces

New ACCR research has found that within the next decade global steelmakers – particularly across Europe and Asia – face major capital expenditure decisions about the future of more than 60 coal-based blast furnaces, with an emissions impact equivalent to Vietnam or Spain’s annual emissions.

Steelmakers face crunch-time on coal: critical risks in blast furnace relining decisions reviews the blast furnace (BF) infrastructure of 13 major steelmakers, finding that 62 BFs are due for a relining decision by the end of 2035, with 70% of those decisions due between 2026 and 2035.

Each of these decisions has lasting implications for asset viability and emissions trajectories, highlighting the urgent need for investor engagement with steelmakers to help prevent emissions lock-in, reduce stranded asset risk and support a shift towards green production models.

Key Findings include:

• Based on the current average emissions intensity of the coal-based blast furnace basic oxygen furnace process (BF-BOF), the ongoing operation of the 62 furnaces, if relined, would lock in up to 310 MtCO2/year - equivalent to Spain or Vietnam’s annual emissions.
• The steel sector is responsible for 7-9% of global greenhouse gas (GHG) emissions. The use of the BF-BOF process in global steel production is responsible for just under 90% of the steel sector’s emissions.
• The emissions intensity of BFs directly challenges company-specific pathways towards global net zero by 2050, increases exposure to regulatory mechanisms like the EU’s Carbon Border Adjustment Mechanism, and raises stranded asset risk for companies and investors.
• Alternative pathways to BF relining vary in technological readiness, emissions reduction potential and compatibility with different iron ore grades. Processes involving green hydrogen and direct reduced iron, paired with electric arc furnaces, offer the most immediate combination of significant emissions reductions and commercial readiness.

Commenting on the research, Dr Fiona Deutsch, Company Strategist and Lead Analyst at ACCR, said:

“Steelmakers are at a fork in the road where they need to start making decisions on relining coal-based blast furnaces or pursuing coal-free technologies to make steel.

“A decision to invest in relining a coal-based blast furnaces is a decision to lock in the single biggest impediment to a decarbonised and future-fit steel industry – which is coal.

“Relining coal-based blast furnaces has lasting implications for the emissions trajectories of steelmakers and brings with it stranded asset and transition risk, so it is essential investors have better visibility of each decision taken to reline a furnace.

“With multiple relining decisions due within the decade, investors have a time critical window for engagement. Many companies do not provide transparent and detailed disclosures on the status or timing of blast furnace plans. Without transparency, it becomes difficult for investors to assess whether companies are making future-fit investment decisions or simply deferring transition risks.

“When investors receive transparent, detailed disclosure from companies on their blast furnace plans, they are better equipped to assess the financial and emissions risks highlighted in the report. This further supports informed advocacy for effective capital allocation decisions and risk mitigation against emissions-intensive asset lock-in.

“The next decade will be decisive for the steel sector and blast furnace investment. Investors have a critical role to play in ensuring capital is aligned with credible transition pathways.”