First published in Nikkei Asia on 4 June 2024
As the imperative to decarbonize increases, demands on both nations and corporations are building. At the same time, there is a growing recognition that the sustainability agenda cannot come at the expense of innovation or growth. On the contrary, sustainability must actively support innovation and growth.
The demand for action comes as large nations, including China, are often criticized for failing to pull their weight in reducing emissions.
Looking at the broader picture, however, trends in China are encouraging. Since 2019, investment in emerging clean energy sectors has risen at an impressive compound average growth rate of 35%, reaching $676 billion in 2023. This has made the sector one of China's top drivers of economic growth.
China now leads the world in several green-oriented sectors. More than half of all new electric cars sold worldwide are Chinese made. Approximately three quarters of EV battery cell production takes place in China too.
My meetings last month with customers across China further convinced me of the country's importance to the clean energy future of the world.
After all, the path to net zero requires collaboration. Getting it right could unlock significant economic opportunities through investment in new industries and approaches, as China has strongly demonstrated in recent years.
The steel sector is under particular scrutiny. The World Economic Forum estimates that steel production alone contributes 8% of global energy-related greenhouse gas emissions.
Behind this truth is the fact that steel is one of the world's most important engineering and building materials. It remains vital for many high-growth new technology sectors while still playing an integral role in everything from cars to construction, refrigerators to washing machines, and cargo ships to surgical scalpels.
As the producer of more than half of the world's steel, China is critical both to global economic growth and the pathway to net zero.
Yet it is hard to reduce carbon emissions from steel production, owing to factors such as the long lifespan of blast furnaces and high asset replacement costs.
Encouragingly, though, Chinese steelmakers are pursuing several pathways that could eliminate most production-related carbon emissions. These include modifying their blast furnaces by trialing carbon capture, utilization and storage technologies, employing green hydrogen metallurgy and introducing electric furnaces.
This kind of innovation can only be achieved in a meaningful way through long-term partnerships. On my visit, BHP re-affirmed our support for Chinese steelmakers' long-range emission reduction programs.
Some of these are now successfully progressing into their fourth year, including BHP's collaborations with China Baowu Steel Group and HBIS Group, also known as Hebei Iron and Steel. The ongoing sharing of technology and joint development of low-carbon technologies, including carbon capture, is helping establish new pathways for steel sector emission reductions.
Through partnerships, we are also seeing encouraging developments through the growth of direct reduced iron production, which involves the injection of hydrogen-rich byproduct gas into blast furnaces to reduce carbon emissions.
It has been deeply encouraging and impressive to see the pace of progress, with developments in China including pilot-scale testing and the commercial application of medium- and longer-term solutions for reducing the release of carbon during steelmaking.
If we look more broadly at the delivery of steelmaking raw materials into China, it is clear that a collaborative spirit can be a driving force for reducing emissions.
This can be seen through projects such as the West Australia-East Asia Iron Ore Green Corridor Consortium. Under this Global Maritime Forum initiative, BHP is working with 14 partners from across the maritime value chain, including fuel producers, ship and cargo owners, ports and regulatory authorities, to explore the use of clean ammonia as a fuel for ships that could bring iron to customers in China and other Asian nations.
A shared sense of responsibility and urgency to decarbonize the full steel supply chain is ever increasing. At the same time, it is essential to ensure that the introduction of new technologies for the steel industry's green transition is feasible and adaptable.
The progress I have seen in China shows that evolving demand creates new opportunities. Our ability to capitalize on such opportunities will determine the greener future we all seek. Making this possible will involve working with partners, bringing new technologies to market, helping sustainably accelerate new market trends and driving new economic growth sectors.
China's commitment to work in collaboration with companies around the world, and the progress that is being made in the steelmaking value chain process is palpable. I encourage those in the business community to look for such opportunities so that together we can drive and deliver on the global decarbonization agenda.
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