Steel decarbonization in emerging economies: What case for international climate finance and support?

The report argues that decarbonizing the global steel sector requires a shift from project-based funding to systemic international cooperation that addresses both high capital and operational costs. It highlights a significant gap in green steel initiatives, which are currently clustered in the EU, while production growth is projected in emerging economies. The authors propose the international application of Carbon Contracts for Difference (CCfDs) to cover incremental costs of clean production and mitigate risks for private investors. Furthermore, the report emphasizes that successful transformation depends on fostering trust through non-hierarchical policy dialogues and peer review processes to avoid concerns over national sovereignty and 'carbon colonialism'.

• The steel sector is responsible for approximately 8% of global greenhouse gas emissions, and its decarbonization is a critical requirement for meeting the Paris Agreement's temperature goals.
• There is a stark geographic disparity in green steel development; approximately two-thirds of the 59 company projects tracked are in Europe, while only one-tenth are in developing countries such as China, Brazil, and Russia.
• Decarbonization in emerging economies is hindered by a lack of access to finance, technology, and skills, as well as weak government commitment to regulatory frameworks and supporting policies.
• Blended finance is identified as a promising tool to mitigate investment risks and attract private capital in developing economies, where political instability and exchange rate volatility often deter investors.
• The report proposes the use of international Carbon Contracts for Difference (CCfDs) to cover the incremental costs of clean production processes, thereby creating stable revenue streams that make green projects more 'bankable' for private investors.
• A 'dilemma' exists in international climate finance where donors require stable regulatory frameworks and good governance, but recipient countries often need the funding first to establish those very qualities.
• To overcome mistrust and concerns regarding national sovereignty or 'carbon colonialism', the report recommends non-hierarchical, inclusive, and transparent policy dialogues and peer review processes.
• Successful transformation requires moving beyond pure project-level interventions to address broader policy frameworks, public institutions, and country-specific needs.

APA

von Lüpke, H., Marchewitz, C., Aebischer, C., & Kröger, M. (2022). Steel decarbonization in emerging economies: What case for international climate finance and support? Climate Strategies. https://climatestrategies.org/wp-content/uploads/2022/09/220915_Report_EU.pdf

Chicago

von Lüpke, Heiner, Catherine Marchewitz, Charlotte Aebischer, and Mats Kröger. Steel decarbonization in emerging economies: What case for international climate finance and support? Climate Strategies, 2022. https://climatestrategies.org/wp-content/uploads/2022/09/220915_Report_EU.pdf.

Wikipedia

{{cite report |last1=von Lüpke |first1=Heiner |last2=Marchewitz |first2=Catherine |last3=Aebischer |first3=Charlotte |last4=Kröger |first4=Mats |title=Steel decarbonization in emerging economies: What case for international climate finance and support? |publisher=Climate Strategies |date=September 2022 |url=https://climatestrategies.org/wp-content/uploads/2022/09/220915_Report_EU.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vonlpke2022steel, author = {von Lüpke, Heiner and Marchewitz, Catherine and Aebischer, Charlotte and Kröger, Mats}, title = {{Steel decarbonization in emerging economies: What case for international climate finance and support?}}, institution = {Climate Strategies}, year = {2022}, month = sep, url = {https://climatestrategies.org/wp-content/uploads/2022/09/220915_Report_EU.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }