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The State Council Announces the "2024-25 Latest Action Plan for Energy Saving and Carbon Reduction"
The State Council, China, has announced its "2024-25 Latest Action Plan for Energy Saving and Carbon Reduction," aiming to reduce energy consumption and carbon emissions. This plan is expected to reinforce production cuts in steel and non-ferrous metals industries.
Amid the prolonged downturn in the real estate market and increased operating rates of blast furnace and electric arc furnace steelmakers, China's government is implementing strong measures to curb production. This move has garnered significant attention from the global steel industry.
On May 29 (local time), the State Council announced the latest action plan to achieve carbon peak and neutrality goals.
Through this plan, the State Council stated, "To actively and stably achieve China's carbon peak and carbon neutrality goals and to promote the comprehensive green transformation of economic and social development, we aim to reduce energy consumption per unit of GDP and carbon dioxide emissions by approximately 2.5% and 3.9%, respectively, this year."
The plan also mentioned that the energy consumption per unit of value-added output for industrial enterprises above the designated size in China will decrease by about 3.5%, with the share of non-fossil energy consumption reaching approximately 18.9% in 2024 and 20% in 2025.
Specifically, the plan outlines saving 50 million tons of standard coal for energy saving and carbon reduction in major sectors and industries and reducing carbon emissions by about 130 million tons in 2024 and 2025.
The State Council emphasized, "To achieve these goals, we must strictly and reasonably control coal consumption, optimize the structure of oil and gas consumption to reduce and replace fossil energy consumption, upgrade non-fossil energy consumption, and implement measures to save energy and reduce carbon emissions in the steel, petrochemical, non-ferrous metals, and building materials industries."
The State Council plans to strengthen both capacity and production regulations for the steel industry.
Specifically, the Chinese government will strictly prohibit the expansion of new steel production capacity under the pretext of machinery processing, casting, and ferro-alloy production and will strictly regulate the reoperation of low-quality bar and wire rod production facilities.
Simultaneously, new steel mills under construction must achieve 'A' grade in both energy efficiency standards and environmental performance levels. Regions that fail to meet energy-saving and carbon reduction targets during the first three years of the "14th Five-Year Plan Period (2021-2025)" will be prohibited from expanding new steel production capacity in the remaining two years.
Regarding these measures, a representative from the China Iron and Steel Association (CISA) stated, "Steel companies will need to adopt more efficient and environmentally friendly production methods as the government's policies are implemented."
A steel mill official mentioned, "Although these government measures may have a short-term impact on China's steel industry, they will be beneficial for the long-term development of eco-friendly technology and industrial restructuring."
China's steel trade industry anticipates that the government's steel production control policies could lead to a sharp rise in steel prices, which could also impact the global steel market. Countries relying on steel imports are expected to be significantly affected by these policies.
Meanwhile, if these measures are concretely implemented, the reduction in domestic production in China could lead to higher steel prices and a decrease in the export of low-priced products, which is expected to have a positive effect on the Asian steel market.
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