processes

Article
Analysis and Prediction of Energy, Environmental and
Economic Potentials in the Iron and Steel Industry of China
Yueqing Gu , Wenjie Liu , Bowen Wang, Borui Tian, Xinyue Yang and Chongchao Pan *

School of Energy and Environmental Engineering, University of Science and Technology Beijing,
Haidian, Beijing 100083, China; [email protected] (Y.G.); [email protected] (W.L.);
[email protected] (B.W.); [email protected] (B.T.); [email protected] (X.Y.)
* Correspondence: [email protected]

Abstract: The green and low-carbon transformation of the iron and steel industry stands as a pivotal
cornerstone in the development of China. It is an inevitable trajectory guiding the future of industry.
This study examined the energy consumption and carbon emission trends in the iron and steel
industry. Variations under different scenarios were analyzed while emphasizing production control,
changes in production structure and energy efficiency improvement. The analysis integrated the
extreme energy efficiency model. This study proposed methods to enhance energy efficiency in the
iron and steel industry. The costs of energy efficiency improvement and production structure changes
were assessed using marginal energy saving and abatement cost curves. The findings showed that the
carbon emission reduction contribution of crude steel production decline is the highest, while energy
efficiency improvement technology offers the smallest, whose contribution, however, is substantial
and cannot be overlooked by 2030. Energy efficiency improvement in the Chinese iron and steel
industry results in an average unit energy saving and abatement cost of 27.0 yuan. It results in a total
abatement cost of 21.02 billion yuan and a potential abatement of 780 Mt. Considering abatement
potential, altering production structure offers significantly higher cumulative abatement compared to
energy efficiency improvement technology. This is because the per unit abatement cost of production
structure change is 702.7 yuan. However, this high cost poses a challenge to widespread adoption.
The integration of the iron and steel industry into the carbon trading system necessitates reinforcing
Citation: Gu, Y.; Liu, W.; Wang, B.; market constraints and expediting process adjustments. These steps are crucial to achieving the green
Tian, B.; Yang, X.; Pan, C. Analysis and low-carbon transformation of the industry.
and Prediction of Energy,
Environmental and Economic Keywords: extreme energy efficiency; energy-saving potential; carbon emission reduction; marginal
Potentials in the Iron and Steel
carbon abatement cost; iron and steel industry
Industry of China. Processes 2023, 11,
3258. https://doi.org/10.3390/
pr11123258

Academic Editor: Dominic C. Y. Foo 1. Introduction

Received: 23 October 2023 The iron and steel industry is a key driver of the national economy of China, si-
Revised: 7 November 2023 multaneously serving as one of the primary contributors to the energy consumption and
Accepted: 13 November 2023 carbon emissions of the country. In 2020, the crude steel production of China reached
Published: 21 November 2023 1.065 billion tons, representing 57% of global production. CO2 emissions from the iron
and steel industry comprise 15–18% of the overall carbon emissions of China [1]. As the
aerospace, automobile manufacturing, and biomedical industries further enhance their
demands for steel strength and quality, steel products must not only fulfill the new per-
Copyright: © 2023 by the authors.
formance criteria but also adhere to regulations governing energy consumption limits
Licensee MDPI, Basel, Switzerland.
for products. This underscores the pressing demand within downstream sectors for envi-
This article is an open access article
ronmentally friendly, low-carbon iron and steel products, compelling the iron and steel
distributed under the terms and
industry to initiate a transition towards sustainability [2–4]. The production energy struc-
conditions of the Creative Commons
Attribution (CC BY) license (https://
ture, changes in processes, raw material imports, and technological adjustments are some
creativecommons.org/licenses/by/
of the issues that must be addressed for the iron and steel industry of China to achieve low
4.0/).
carbon emissions. On the other hand, low-carbon smelting requires energy conservation,

Processes 2023, 11, 3258. https://doi.org/10.3390/pr11123258 https://www.mdpi.com/journal/processes

Processes 2023, 11, 3258 2 of 22

process optimization, and the implementation of breakthrough low-carbon technologies [5].

During the carbon peak stage, energy conservation and consumption reduction in the
smelting process remain pivotal for carbon emissions reduction. The Capacity Replacement
and Ultra-low Emissions initiatives as well as the Extreme Energy Efficiency transformation
project could intensify energy efficiency requirements, leading to further reductions in
solid fuel consumption [6]. Hence, a comprehensive understanding of the mechanisms
driving alterations in carbon emissions and a detailed prediction of the trends of the iron
and steel industry of China bear both theoretical and practical significance. Designing
effective carbon emission policies, methodologies, and pathways, along with adopting
pertinent energy-saving and emission-reduction technologies, are essential steps toward
achieving the goals of carbon peak and neutrality (dual carbon).
In recent years, numerous models have been developed to understand the dual-
carbon pathway of the iron and steel industry. Based on the modeling principles, they
can be classified into three categories: Top-down models, bottom-up models, and hybrid
models. The top-down models are dominated by computable general equilibrium (CGE).
Zhu et al. [7] employed a CGE model to evaluate the economic and environmental impacts
of energy-intensive sectors, including cement, iron, steel, and construction. They scrutinized
how these impacts influenced the implied carbon emissions of the construction industry.
Zhang et al. [8] used a dynamic CGE model to simulate the peak time of carbon emissions
in China under two scenarios: Single policy and hybrid policy. It has been found that
the hybrid policy has a better emission reduction effect than the single policy, so policy
makers should scientifically adjust the carbon tax and carbon trading system to fully
utilize the synergistic effect of economy and environment. However, these models mainly
analyze energy changes from an economic perspective and cannot start from the technical
level, which underestimates the technical potential. The long-range energy alternatives
planning system (LEAP) model, on the other hand, as a common bottom-up model, has
a detailed portrayal of technologies, ignores a certain degree of sectoral linkages, and
analyzes changes in the energy environment in more detail. Duan et al. [9] integrated
life-cycle theory into the LEAP model and predicted carbon emissions in the iron and steel
industry of Jilin Province. Their study included the energy and ore mining stage to the steel
end-of-life recycling stage. The findings revealed that the steel production stage accounted
for over 80% of total carbon emissions, with the ironmaking system being the highest
emitter within this stage. Ates et al. [10] explored energy efficiency and emission reduction
potentials in the Turkish iron and steel industry using the LEAP model. Results indicated
significant reductions in energy consumption and GHG emissions through the adoption
of energy-saving technologies and enhanced energy system management. The NEMS
model developed by the U.S. Department of Energy and the hybrid IIASA-WECE3 model
developed by Austria in conjunction with the World Energy Council are complex models
that are difficult to manipulate, although they can provide an exhaustive picture of changes
in the national energy sector [11]. To assess the economic advantages of diverse energy-
saving and emission-reduction measures, Zhang et al. [12] evaluated 35 technologies within
the iron and steel industry and constructed energy-saving supply curves. Dong et al. [13]
introduced a logarithmic form of marginal emission reduction cost function to analyze
the emission reduction costs and potentials of various technologies while fostering the
low-carbon transformation of the iron and steel industry.
Numerous theoretical studies and empirical analyses on carbon emissions in the iron
and steel industry focusing on energy, environmental, and economic aspects could be found.
This study examined the current status of low-carbon transformation in the iron and steel
industry. A comprehensive carbon neutrality and carbon peak model for the iron and steel
industry of China was established using the LEAP model, which is based on the choice of
the technology and scenario analysis while considering the emission history, driving factors,
and policy analyses. The research period was from 2020 to 2060. Special attention was
given to analyzing the impacts and advantages of production structure adjustments and
Processes 2023, 11, 3258 3 of 22

energy efficiency technologies in emission reduction. This analysis offers valuable insights for
policymakers aiming to facilitate the green and low-carbon transition of the industry.

2. Overview of Low-Carbon Transition in the Iron and Steel Industry of China

2.1. Current Status of Dual-Carbon Policies in the Domestic and International Iron
and Steel Industry
Considering the efforts for energy conservation and emission reduction in the iron and
steel industry of China, the evolution of the industry can be divided into three key stages:
The formative years from 1949 to 1999, the period of rapid growth spanning 2000 to 2014,
and the current phase of maturity and stability since 2015 [14] (Figure 1). Until 2020, the
industry had managed to annually reduce comprehensive energy consumption per ton
of steel to 545 kgce and carbon emission intensity per ton to 1.79 t [15]. Despite these
achievements, the increase in crude steel production posed challenges in reducing the
overall carbon emissions growth rate within the industry. As the economy continued to
grow, policy directives in the iron and steel sector shifted from guidance and support
to stringent measures such as controlling total output, reducing excess capacity, phasing
out outdated production facilities, and prioritizing high-quality development within the
industry since 2020. China set forth the ambitious dual-carbon goal while introducing
more stringent policies that prioritize scientific and technological innovation, coordinated
development, intelligent manufacturing, green and low-carbon practices, quality control,
and the research and development of high-precision products within the industry [16].
These policies have been incorporated into the overarching framework for achieving carbon
peak and carbon neutrality while forming the foundational 1 + N policy system for the
dual-carbon efforts of the industry [17]. Figure 2 illustrates the release dates and principal
contents of significant policies in the steel industry post-2000.

Figure 1. Evolution of crude steel production, carbon emissions, and energy consumption per ton of
crude steel in the iron and steel industry of China [14,15].
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Iron and steel industry

policy development

National Environmental Protection "15th Five-Year Plan"

1. Prohibit small coke and small steel enterprises.
2. Phase out blast furnaces and outdated equipment.
3. Promote comprehensive utilization of surplus energy, pressure, Steel Industry Development Policy
heat, as well as waste gases, wastewater, and slag. 1. Enhance the comprehensive competitiveness of the steel industry to
4. By 2005, comprehensive energy consumption per ton of steel in reach the world's advanced level.
December 2001
large and medium-sized enterprises should decrease to below 0.8 tons 2. Restructure the product portfolio.
of standard coal, and fresh water consumption per ton of steel should 3. Increase industrial concentration.
reduce to below 16 cubic meters. 4. Enhance environmental protection and comprehensive resource
July 2005 utilization, striving for "zero emissions".
Outline of the Eleventh Five-Year Plan for National Economic
and Social Development
Outline of the Twelfth Five-Year Plan for National Economic and
1. Emphasize domestic demand as the key driver. 2006
2. Address overcapacity issues, strictly control the addition of steel Social Development
production capacity. 1. Optimize industrial layout.
3. Enhance the quality and grades of steel products. 2. Facilitate enterprise mergers and reorganizations.
2011
Guiding Opinions of the State Council on Resolving the
Policy Adjustments in the Steel Industry (Revised in 2015) (Draft
Contradiction of Severe Overcapacity
for Comments)
1. Eliminate outdated production capacity, increase law enforcement
October 2013 1. Large and medium-sized steel enterprises to achieve international
penalties. In 2015, 15 million tons of iron smelting capacity and 15
standards in product quality. 2. Achieve a capacity utilization rate of
million tons of steelmaking capacity were phased out.
over 80% by 2017.
2. Guide the orderly withdrawal of production capacity, improve
3. Accelerate mergers and restructuring; by 2025, the crude steel
incentive and constraint policies. May 2015
production of the top ten steel enterprises should account for no less
Steel Industry Adjustment and Upgrade Plan (2016-2020) than 60% of the national total.
Main Objectives: 4. Continuous improvement of the technological innovation system,
1. Reduce crude steel production capacity by 100-150 million tons. optimizing spatial layouts, and steady increase in research and
October 2016 development funding.
2. Increase capacity utilization by 10%.
3. Enhance industry concentration by over 25%. 5. By 2025, ensure that energy consumption and pollutant emissions
4. Decrease total energy consumption by over 10%. of enterprises fully comply with national and local regulations.
5. Reduce comprehensive energy consumption by over 12 kilograms 6. Positive progress in the construction of supply channels and trading
of standard coal per ton of steel. platforms for iron ore by 2025.
6. Decrease fresh water consumption by over 0.05 cubic meters per
December 2017 Implementation Measures for Capacity Replacement in the Steel
ton of steel.
7. Decrease total pollutant emissions by over 15%. Industry
1. Promote capacity replacement in different regions and development
Outline of the Fourteenth Five-Year Plan and Vision 2035 for contexts, with emphasis on key areas such as Beijing-Tianjin-Hebei,
December 2017
National Economic and Social Development Yangtze River Delta, and Pearl River Delta.
1. Promote the green transformation of industries, including steel.
2. Drive optimization of industrial layout and structural adjustments.
April 2021 Implementation Measures for Capacity Replacement in the Iron
and Steel Industry (Revised Version)
Action Plan for Carbon Peaking Before 2030
1. In key areas for preventing air pollution, any increase in the total
1. Deepen the supply-side structural reform in the steel industry and
steel production capacity is strictly prohibited.
strictly control new production capacity. April 2021
2. Continue to reduce steel production capacity in the Beijing-Tianjin-
Hebei region and its surrounding areas.
Fourteenth Five-Year Plan for Green Industrial Development
3. Promote demonstrations of non-blast furnace ironmaking
December 2021 1. By 2025, a reduction of 18% in carbon dioxide emissions per unit
technologies vigorously.
of industrial value added, achieving significant interim results in
Guidelines for Promoting the High-Quality Development of the controlling the total carbon emissions.
Steel Industry 2. Significant improvement in clean production levels, with a 10%
1. Strive for the steel industry to achieve a high-quality development January 2022
reduction in the intensity of major pollutant emissions.
pattern by 2025, characterized by rational layout, stable resource
supply, advanced technological equipment, outstanding product
quality, high level of intelligence, strong global competitiveness, and
sustainable green, low-carbon practices.
2. Establish a resource recycling system that fosters inter-industrial
development coupling.
3. Ensure the peaking of carbon emissions before 2030.

Figure 2. Major policies and contents of the iron and steel industry of China in the 21st century [18–
22]. 2. Major policies and contents of the iron and steel industry of China in the 21st century [18–22].
Figure

The
TheCarbon
CarbonBorder
Border Adjustment Mechanism(CBAM),
Adjustment Mechanism (CBAM),approved
approvedbyby
thethe Council
Council of the
of the
European
European Union (EU) on 23 April 2023, and scheduled for launch on 1 October during thethe
Union (EU) on 23 April 2023, and scheduled for launch on 1 October during
transition phase, is designed to prevent carbon leakage and decrease emissions by levying
a surtax on imports with high carbon emissions, such as steel products [23]. The gradual
reduction of free quotas under CBAM, coupled with the carbon border tax, compensates for
Processes 2023, 11, 3258 5 of 22

the implied carbon emissions in the EU and the carbon disparity between importing nations.
A comparative analysis of carbon trading market prices in China and Europe, along with
the carbon emissions intensity per ton of steel, indicates that the domestic steel industry
will confront substantial emission reduction costs and transformational challenges [24].

2.2. Current Research Status on Dual-Carbon Pathways in the Iron and Steel Industry
In response to the domestic dual-carbon objectives and international carbon tariff
policies of China, the iron and steel industry is proactively advancing three pivotal ini-
tiatives: Capacity replacement, ultra-low emissions, and extreme energy efficiency [25].
These efforts drive the industry towards greener low-carbon practices. Table 1 presents
the dual-carbon roadmaps unveiled by key entities such as Baosteel and Shougang, as
well as the China Iron and Steel Association (CISA). These roadmaps outline the imple-
mentation phases for the iron and steel industry of China, which include proactive carbon
peaking by 2030, deep decarbonization spanning from 2030–2040, intense carbon reduction
from 2040–2050, and striving for carbon neutrality by 2050–2060 [26]. The implementa-
tion strategies of the iron and steel industry revolve around two core approaches: Source
reduction and sink enhancement. Key factors include crude steel production, process struc-
ture, energy intensity and composition, utilization of green hydrogen, and carbon capture,
utilization, and storage (CCUS). The scale factor was found to be the primary driver for
the rising carbon emissions of the industry, as indicated by the decomposition analysis
utilizing the two-phase log-averaged Diophantine index method. Additionally, energy
intensity emerged as the most significant inhibitory factor [27]. To adapt to the growing
worldwide challenges and align with evolving development requirements, the focus of
energy conservation and carbon reduction efforts within the iron and steel industry must
shift. This shift involves transitioning emphasis from total quantity to intensity control
and progressively moving from dual-energy consumption control to dual carbon emission
control. In this context, enhancing energy efficiency will be essential for achieving energy
savings and emission reductions before reaching their peak.

Table 1. Peak carbon neutral routes and implementation paths for major steel companies/industry
in China.

Major Steel
Dual-Carbon Route Planning Implementation Pathway
Companies/Industry

(1) Low Carbon Metallurgy Roadmap Released in 2021 (1) Fine-tuning energy management, enhancing
(2) Strive to achieve carbon peaking by 2023 overall system efficiency
(3) Process technology capability for 30% carbon reduction (2) Recycling metallurgical resources,
Baowu Group by 2025 collaborative carbon reduction across
(4) Strive for 30% carbon reduction by 2035 multiple industries
(5) Strive to achieve carbon neutrality by 2050 (3) Process optimization, promoting low-carbon
smelting technologies
(4) Breakthroughs in near-zero smelting
(1) Publishing a “dual-carbon” work program in 2022
technologies, green hydrogen and electricity
(2) Strive to achieve carbon peak by 2025
facilitate “zero-carbon” smelting
(3) Strive to reduce carbon emissions by 30% from the
Shougang Group (5) Upgrading green and low-carbon products,
peak by 2035
achieving carbon reduction throughout the
(4) Become the first tier of large-scale iron and steel
entire lifecycle
enterprises to achieve carbon neutrality by 2050–2060.
(6) Carbon capture, storage, and utilization for
energy-carbon decoupling, ensuring carbon
(1) Low Carbon Metallurgy Roadmap Released by the End neutrality in the steel industry
of 2021
(2) Achieve carbon peaking by 2025
(3) Large-scale application of deep carbon reduction
Ansteel Group processes by 2030
(4) Reduce total carbon emissions by 30% from the peak in
2035
(5) First batch of carbon neutral enterprises in the iron and
steel industry by 2050
Processes 2023, 11, 3258 6 of 22

Table 1. Cont.

Major Steel
Dual-Carbon Route Planning Implementation Pathway
Companies/Industry

(1) Publishing a roadmap for green development of the

iron and steel sector in 2022
(2) Peak total carbon emissions in 2025
Jianlong Group (3) Reduce total carbon emissions by 20% from the peak in
2033, and reduce carbon emission intensity by 25%
from the 2020 level
(4) Achieve carbon neutrality by 2060

(1) Ensure carbon peaking in 2030 and reduce total carbon

emissions by 15% compared with 2020
(2) Reduce the total carbon emissions of the industry by
40% in 2040 compared with that in 2020
CISA (3) Reduce total industry carbon emissions by 85% in 2050
compared with 2020
(4) Achieve carbon neutrality by 2060 and reduce total
industry carbon emissions by 95% compared with 2020

Numerous scholars use energy efficiency and carbon emission intensity as important
indicators to reveal the energy conversion and carbon emissions in the production process
of the iron and steel industry. The former is mainly established based on the first and
second laws of thermodynamics, including thermal efficiency and hydronic efficiency,
which are widely used nowadays, and the carbon emission intensity indicator is the carbon
emission per unit of product or service [28,29]. Energy efficiency in the iron and steel
industry is directed towards reducing the consumption of the first and second energy
carriers and recovering secondary energy wherever possible [30]. Table 2 summarizes the
assessment methods for energy efficiency and carbon emissions in the steel industry. The
research focus on energy efficiency and carbon emission reduction in the iron and steel
industry has gradually shifted from the initial stage of energy saving in single equipment
and processes to system energy saving and coupled energy-material flow optimization,
aiming at exploring the relationship between material, energy, and carbon emissions in the
iron and steel production process in a transparent, systematic, and integrated way.

Table 2. Methodology for assessing energy efficiency and carbon emissions in the iron and steel
industry.

Names Research Methodology Characteristic Level

Costa et al. [31] Taking a single unit as the research object Facility level
Exergy analysis method Comprehensive assessment of the steel industry
Wu et al. [32] network and its impact on power generation, Facility/process level
energy, and CO2 emissions
Evaluating GHG efficiency at the industrial level
Sun et al. [33] Stochastic Frontier Analysis in China and revealing the potential for industry Industry level
to reduce emissions
Considers not only energy consumption and
Methodology for evaluating
energy recovery, but also includes energy
Na et al. [34] energy efficiency in the process Facility/process/system level
utilization for the entire process (e.g., heat of
industry
reaction, heat of phase change, etc.)
Propose an integrated material-energy-carbon
Carbon flow analysis in material
Zhang et al. [35] center for transparent carbon flow tracking and Facility/process/system level
and energy flows
carbon accounting in the iron and steel industry

2.2.1. Extreme Energy Efficiency Model

The Extreme Energy Efficiency Project is not merely a cost reduction initiative; rather, it
constitutes a comprehensive industry-wide endeavor. This involves the rapid adoption of
mature technologies, collaborative research and development to address shared techno-
logical challenges, and the implementation of various policies, regulations, and standards.
Processes 2023, 11, 3258 7 of 22

These efforts leverage national governance capabilities as well as the self-regulatory ca-
pacities of the industry to optimize steel production efficiency significantly. This strategic
approach aims to bolster the low-carbon competitiveness of the iron and steel industry.
And this project aims to enhance the overall process energy efficiency, representing the
primary focus for carbon reduction in the iron and steel sector. Figure 1 illustrates a 67.6%
reduction in comprehensive energy consumption per ton of steel and a 15–20% decrease in
energy intensity in the steel industry over the last 40 years [34]. Therefore, crucial strategies
involve focusing on innovating and applying waste heat and energy recovery methods,
enhancing interfacial energy efficiency, optimizing process operations, utilizing optimal
technologies, and integrating emerging advanced technologies. Limiting thermodynamic
energy consumption levels under theoretical conditions represents a fundamental step
towards achieving carbon peak and carbon neutrality in the iron and steel industry.
The extreme energy efficiency model is established based on the energy–mass balance
relationship (Figure 3), and the specific relationships are presented in Equations (1) and (2).

Hin + Ein = Hout + Eout (1)

Hmaterial + Hauxiliary + Eenergy = H product + Hbyproduct + Erecovery + Eloss (2)

where, Hmaterial is the energy carried by the input raw materials of the process, kJ/tproduct ;
Hauxiliary is the energy carried by the input auxiliary materials of the process, kJ/tproduct ;
Eenergy is the energy contained in the input energy medium of the process, including energy
mediums such as coal, gas, and diesel, as well as energy-consuming substances such as
electricity, steam, heat, compressed air, and water, kJ/tproduct ; Hproduct and Hbyproduct are the
energies carried by the products and by-products of the process, respectively, kJ/tproduct ;
Erecovery is the energy recovered from the process; and Eloss is the loss of energy from the
various implementations within the process, including facility losses and environmental
heat dissipation, kJ/tproduct .

Figure 3. Extreme energy efficiency model.

Consequently, the actual energy consumption of the production process equals the
disparity between the energy contained in the utilized energy medium and the recovered
energy. The second expression can be deduced from the energy–mass balance relationship
of the process (Equation (2)), as demonstrated in Equation (3).

Eactual = Eenergy − Erecovery

(3)
= H product + Hbyproduct + Eloss − Hauxiliary − Hmaterial

where, Eactual is the energy consumption during the actual production process, kJ/tproduct .
Equation (4) illustrates the extreme energy consumption of the production process.
The enthalpy difference between the raw and auxiliary materials and the product sig-
nifies the essential energy requirement for product manufacturing, primarily dictated
by material production characteristics. Simultaneously, the enthalpy of the product and
Processes 2023, 11, 3258 8 of 22

by-products directly influences the high energy consumption of the process. Meticulous
recovery of residual energy from products and by-products, along with minimizing envi-
ronmental losses in process facilities, emerges as the principal strategies to curtail extreme
energy consumption.
Eextreme = H product − Hauxiliary − Hmaterial (4)

where, Eextreme is the limit of energy consumption.

2.2.2. Energy Efficiency Improvement

The appellate model underscores the essence of the energy efficiency improvement
pathway in steel production, emphasizing the reduction in enthalpy in Hbyproduct , Eloss , and
raw and auxiliary materials from upstream to downstream. Consequently, pathways to
achieve extreme energy efficiency in the steel industry can be classified into three primary
groups, as illustrated in Figure 4.

Figure 4. Optimization of low carbon steel production system by multi-energy complementary

coupling and energy efficiency improvement pathway.

(1) Maximizing waste heat utilization and energy recycling

Harnessing the potential of waste heat and energy: Enhancing in-depth recovery and
utilization of medium- and low-temperature waste heat resources. Currently, only 30–50%
of the energy consumption of iron and steel production processes can be effectively utilized.
Specifically, waste heat recovery in the ironmaking process stands at only 10%, with a
primary focus on high-temperature waste heat [36]. Therefore, conducting a meticulous
analysis of the metallurgical process is imperative, with a focus on medium- and high-
temperature energy sources as catalysts. This approach facilitates the optimal reintegration
of waste energy into the original process or peripheral energy systems while enhancing
the energy grade. Consequently, regional energy self-balance could be achieved while
substituting external energy inputs and curbing overall process energy consumption.
(2) Optimization of primary equipment and processes
The iron and steel industry needs to encourage capacity replacement, optimize the
iron and steel process structure, and initiate modifications in the primary processes. The
Processes 2023, 11, 3258 9 of 22

efficiency of the primary process requires a minimum energy consumption threshold.

The transformation and upgrade of outdated equipment is characterized by low energy
efficiency, inadequate cleanliness, and high emission intensity into advanced, efficient
equipment. Interface technology has to be developed to achieve the compactness and conti-
nuity of metallurgical production while minimizing avoidable losses during the process.
Concurrently, the industry needs to expedite the development of near-zero metallurgical
technologies, including hydrogen-rich blast furnaces and hydrogen-based shaft furnaces,
aiming to achieve the low-carbon transformation of the iron and steel industry at the
fundamental process level.
(3) Integrated energy systems optimization and management for the iron and steel pro-
duction process
This study optimized and controlled the integrated energy system while significantly
enhancing the overall energy efficiency of the process. The study focuses on synergistic
mechanisms of material flow, energy flow, and information flow in the iron and steel
industry. The analysis of key energy mediums (gas, steam, and electricity) is crucial while
considering the dual role of the iron and steel industry as a significant energy consumer
and producer, diverse energy sources, and enhancing optimal scheduling. Furthermore,
developing the ability for multi-energy complementarity with emerging sources such
as wind and photovoltaic energy is essential for energy conservation. Optimizing the
interconnection of material flow, energy flow, and information flow could enable the active
involvement of flexible loads within the steel industry in system regulation and result in a
comprehensive enhancement in the energy efficiency of the entire steel system.
In summary, the iron and steel industry primarily emphasizes strategies related to total
volume, energy utilization, and structural adjustments within production processes. These
measures aim to achieve significant reductions in unit energy consumption and carbon
emission intensity in the industry. Existing research and policies comprehensively indicate
that achieving peak carbon neutrality in the iron and steel industry at the present stage
hinges on three main factors: Changes in overall production volume, optimization of the
production structure, and enhancement of energy efficiency. Consequently, the subsequent
section delves into these three facets and analyzes the trajectory and developmental trends
toward carbon neutrality in the iron and steel industry of China. This analysis considered
the viewpoints of energy consumption, carbon emissions, and economic costs.

3. Research Design
3.1. Crude Steel Production Forecast in the Iron and Steel Industry
The rise in iron and steel consumption is closely linked to societal development, popu-
lation growth, and economic prosperity. The close connection between steel production,
gross domestic product (GDP), and population has been documented, which is often
represented by an inverted U-shaped curve [37]. Jia et al. [38] indicated that the steel
consumption elasticity coefficient of China had a robust positive correlation with the GDP
growth rate before 2008. Following the financial crisis and the implementation of capacity
replacement methods, this correlation turned negative, leading to an annual average reduc-
tion in steel consumption intensity of 4.4% after 2010. Current policies and development
plans in the iron and steel industry of China have acknowledged that crude steel production
has reached its peak on the arc while considering the substantial GDP growth of China.
Moreover, the intensity of crude steel per unit GDP is projected to decline. Consequently,
production is expected to gradually rise before reaching its peak and subsequently decline.
The decline rate of crude steel intensity per unit of GDP during each period of the national
five-year development plan has been determined by Xue et al. [39]. The GDP projections for
the next 40 years are based on the findings of Liu et al. [40]. Table 3 represents specific data,
including the projected crude steel output at the end of each five-year planning period.
Processes 2023, 11, 3258 10 of 22

Table 3. Forecast parameters and crude steel production at the end of the five-year plan [39,40].

Crude Steel Intensity Forecast of Crude Steel

Year GDP Growth Rate/%
per GDP/% Production/108 t
2021–2025 5.5% −5.0% 10.77
2026–2030 4.5% −6.0% 9.85
2031–2035 3.8% −7.0% 8.48
2036–2040 3.4% −5.2% 7.67
2041–2045 3.2% −4.0% 7.33
2046–2050 2.8% −4.0% 6.86
2051–2055 2.8% −3.2% 6.69
2056–2060 2.5% −2.6% 6.63

3.2. Production Structure of the Iron and Steel Industry

In pursuit of carbon neutrality, the iron and steel industry must undergo a profound
production structure transformation. Promoting the adoption of the short process for
scrap steel and increasing the utilization of pelletized ore represent effective strategies
for carbon reduction. The recyclability of steel resources facilitates resource recycling and
sustainable development through the processing of scrap steel for re-smelting. Utilizing
scrap steel for the production of 1 t of crude steel could conserve 1.65 t of iron ore, lower
energy consumption by approximately 350 kgce, reduce CO2 emissions by about 1.4 t,
and minimize solid waste by about 3 t [14]. The significant disparity in short-process
smelting ratio of China compared to developed nations is closely tied to the evolution of its
iron and steel industry. The iron and steel stockpile of China had surpassed 500 million
tons by 2002, predominantly comprising new stockpiles, with end-of-life recycling being a
future consideration [41]. Simultaneously, China holds a prominent position in the global
long-process production route. The energy intensity of this process is only 5% lower than
Germany, 9% lower than the United States, and 13% lower than South Korea. Key Chinese
steel enterprises, including Baowu and Shougang, have achieved advanced technological
proficiency across multiple operational facets [42]. The theoretical limit for CO2 emissions
from producing a ton of crude steel is 1.37 t after considering all energy losses [43]. The
development of short-process smelting takes center stage in the double control of energy
consumption and the double control of carbon emissions initiatives of China.
Apart from emission reductions in the steelmaking process, adjustments in the pro-
portion of ore production within the furnace require attention. Furnace-generated ore is
typically classified as sintered or pelleted. Sintered ore production suffers from process and
equipment defects, leading to a high leakage rate and low energy efficiency. Conversely,
pellet ore production units are well-sealed, boasting low leakage rates and enabling com-
prehensive waste heat utilization, ensuring high energy efficiency. Pellet mines exhibit
approximately half the process energy consumption and carbon emissions of sinter mines.
The measured data from Hesteel reveal that sinter mine units emit 0.2824 t of carbon, while
pellet mine units emit only 0.1412 t [44,45]. Currently, sintered ore constitutes around 80%
of the blast furnace charge of China, with pelletized ore comprising approximately 15%. In
contrast, the United States and the EU utilize over 90% pelletized material in their blast
furnace charges. The Swedish Steel AB plant in Sweden exclusively employs pelletized ore
with a ratio of 100%. Elevating the proportion of pelletized ore in the furnace not only cur-
tails carbon emissions in the iron pre-process but also furnishes raw materials for direct iron
reduction. A dedicated effort to boost pelletized ore production could foster high-quality
producers and hold immense significance for future hydrometallurgical advancements.
Transforming the production process and enhancing the proportion of short processes is
crucial for efficient resource utilization and mitigating the security risks associated with
the heavy reliance on foreign iron ore of China. The production structure change scenario
primarily focuses on steelmaking processes and artificial ore production structures. The
detailed parameters are presented in Table 4.
Processes 2023, 11, 3258 11 of 22

Table 4. Parameters of production structure change scenarios [46].

Scenario Proportion of EF Steel Production Proportion of Pellet Production

Baseline scenario 2030: 15%, 2040: 25%, 2060: 40% 2030: 20%, 2040: 28%, 2060: 50%
Production structure change scenario 2030: 20%, 2040: 35%, 2060: 75% 2030: 24%, 2050: 50%, 2060: 70%

3.3. Energy Efficiency Improvement in the Iron and Steel Industry

Enhancing energy efficiency is the primary technical approach to curbing carbon
emissions in existing production conditions. This study systematically categorized energy
efficiency improvement technologies within the steel industry based on their sequential
processes. These methods decrease energy consumption by enhancing production condi-
tions, productivity, and energy utilization. Additionally, they elevate energy efficiency by
harnessing waste heat and energy reuse. Technical parameters and market penetration
data were obtained from the Guide to Advanced and Applicable Technologies for Energy
Conservation and Emission Reduction in the Iron and Steel Industry (First Batch) as well
as relevant research [15,47–50]. A comprehensive screening process identified 31 distinct
technologies, as listed in Table 5. Under the current baseline scenario, the penetration rate
of energy efficiency improvement technologies is expected to increase gradually. However,
when the industry confronts stringent environmental constraints, this rate will dramati-
cally increase. Figure 5a,b illustrates the penetration rates of these technologies under the
respective scenarios.

Table 5. Energy savings and market share of energy efficiency upgradation technologies [15,47–50].

No. Process Technology Energy Saving/kgce Penetration Rate/%

T1 High-temperature and high-pressure dry coke quenching 7.19 14
T2 Coking Coal moisture control 6.07 9
T3 Coke oven waste gas sensible heat recovery 11.97 15
T4 Low temperature sintering 2.50 60
T5 Thick layer sintering technology 24.89 80
T6 Sintering Reduced sintering air leakage rate technology 2.00 70
T7 Small ball sintering technology 5.50 70
T8 Sintering flue gas waste heat recovery technology 7.14 20
T9 Pelletizing Pellet ore sensible heat recovery technology 8.00 70
T10 High-efficiency coal injection for blast furnace 9.04 40
T11 Blast furnace dehumidification blast technology 10.80 5
T12 Dual preheating technology for hot blast furnace flue gas 8.55 5
T13 BF Blast furnace top gas dry residual pressure power generation 5.16 83
T14 Blast furnace gas recovery technology 3.92 94
T15 Blast furnace slag heat recovery 12.50 0
T16 Continuous High-efficiency continuous casting technology 14.01 75
T17 casting Integrated continuous casting and rolling technology for strip steel 13.43 20
T18 Converter gas sensible heat recovery technology 18.53 40
T19 Converter dry de-dusting technology 11.10 20
BOF
T20 Converter flue gas efficient utilization technology 7.40 15
T21 Converter slag heat recovery 5.33 5
T22 Scrap preheating technology 7.49 10
T23 EAF Optimized power supply technology for electric furnaces 2.46 15
T24 Electric furnace flue gas waste heat recovery technology 5.53 10
T25 Low temperature rolling technology 7.51 10
T26 Regenerative combustion technology for heating furnaces 17.88 40
T27 Process control technology for hot rolling mills 9.85 80
T28 Rolling Continuous casting billet hot loading and hot delivery technology 12.88 80
T29 In-line heat treatment technology 11.76 55
T30 Automatic monitoring and identification system 9.25 55
T31 Preventive maintenance technology 18.91 40
Processes 2023, 11, 3258 12 of 22

Figure 5. Technology penetration rate under the baseline and energy efficiency improvement scenario.

3.4. Abatement Costs in the Iron and Steel Industry

The Marginal Abatement Cost Curve (MACC) stands as the predominant method
for evaluating the costs associated with diverse measures within intricate systems. Con-
sidering the iron and steel industry, this approach extensively assesses the potential for
energy savings and emission reductions. This could be accomplished by neglecting the
investment cost, energy replacement, and emission reduction benefits of each technology
to its yearly service life [50]. This methodology has been adopted widely for evaluating
various technologies in the iron and steel industry (Equations (5)–(8)).

ACC + ∆O&M − EAB − ERB

CESER = (5)
ER
d
ACC = CC × (6)
(1 − (1 + d ) − n )
ERB = ER × PC (7)

EAB = EA × PE (8)
where, CESER is the marginal energy saving and emission reduction cost of the technology,
yuan/t(CO2 ). ACC is the annualized cost of investment, yuan/t. ∆O&M is the annualized
operation and maintenance cost, yuan/t. CC is the fixed investment cost, yuan/t. d is
the discount rate, which is considered to be 15% in this paper. n is the payback period,
which is uniformly assumed to be 20 years. EAB and ERB are the energy-saving benefit
and emission-reduction benefit, respectively. EA and ER are the energy savings and carbon
emission reductions, kgce and t(CO2 ). The PE and PC are the energy replacement price and
carbon price, which are considered to be 0.91 yuan/kgce [50] and 60 yuan/t, respectively.
By utilizing the integrated database of the LEAP platform and incorporating the afore-
mentioned marginal abatement cost analysis, a model for analyzing the energy demand and
environmental impact of the iron and steel industry of China was established, in which for
the environmental impact analysis, this paper only discusses the impact of CO2 emissions.
The primary calculation methods are presented in Equations (9)–(13).
Processes 2023, 11, 3258 13 of 22

1. Sectoral production
P= ∑i Pi (9)
where, P is the total output of the iron and steel industry, t; and Pi is the output of the ith
process, t.
2. Energy demand
E= ∑i ∑ j ∑n en,j,i × Pj,i (10)

where, E is the total energy demand of the iron and steel industry, tce. en,j,i is the total
amount of energy of type n consumed for the production of equipment j in process i, tce.
3. Environmental impact
C= ∑i ∑ j ∑n e f n,j,i × en,j,i × Pj,i (11)

where, C is the total carbon emissions of the iron and steel industry, t and efn,j,i is the CO2
emission factor, which is the carbon emissions of the n-type unit of energy consumed by
the production of equipment j in process i, tCO2 /tce.
4. Energy saving and emission reduction potential

E0 − Ea
ESP = (12)
E0

C0 − Ca
CMP = (13)
C0
where, ESP is the energy-saving potential, %; Ea is the energy consumption of scenario
a, tce; E0 is the energy consumption of the baseline scenario, tce; CMP is the emission
reduction potential, %; Ca is the carbon emissions of scenario a, t; and C0 is the carbon
emissions in the baseline scenario, t.
Based on the preceding scenario analysis, this study categorizes the future into three
sub-scenarios (the baseline scenario, the production structure change scenario, and the
energy efficiency improvement scenario) and two composite scenarios (the baseline sce-
nario and the energy-saving and emission-reduction scenario). In the baseline scenario,
the current developmental trajectory continues without imposing stringent greenhouse
gas control measures. With the reduction in crude steel output, technologies are upgraded
in line with current policy requirements, and the proportion of electric furnace steel is
adjusted accordingly. This scenario alters production methods and energy consumption
structures while focusing on a limited set of factors influencing carbon emissions. The
production structure change scenarios delve deeper into energy-saving and carbon re-
duction potentials, emphasizing the increase in short processes and pellet ore usage. The
energy efficiency improvement scenario concentrates on scaling up the adoption of mature
energy-saving technologies prevalent in the industry and hastening their widespread ap-
plication. A comprehensive energy-saving and emission-reduction scenario merges these
three influential factors cohesively.
Therefore, this paper combines the actual situation and the results of the previous
study. The model construction process is shown in Figure 6, which is mainly divided into
the following steps:
(1) Determine the object of analysis as the iron and steel industry of China, and analyze
energy consumption, carbon emissions, and marginal abatement costs, with a time
horizon of 2021–2060.
(2) Determine the main influencing factors, including production, technological progress,
and policy measures.
(3) Establishing a bottom-up steel production model based on the LEAP model according
to the actual production of the iron and steel industry of China.
(4) Establishing different scenarios based on the industry’s development status, the 14th
Five-Year Plan, the Outline of Vision 2035, and other relevant policy documents.
Processes 2023, 11, 3258 14 of 22

(5) Compare and analyze the trend of energy consumption and carbon dioxide emissions
under different scenarios, and combine them with the marginal abatement cost curve
to find the implementation path of low-carbon development in the industry.

Figure 6. Flowchart of carbon emission modeling of the iron and steel industry of China based on the
LEAP model.

4. Discussion
4.1. Total and Structural Energy Consumption
Figure 7 illustrates the energy consumption trend in the iron and steel industry of
China from 2020 to 2060. In 2020, the energy consumption of the industry stood at 570 Mtce.
Both energy consumption and crude steel production exhibit a consistent decline. Under
the baseline scenario, crude steel production will experience gradual growth until 2025.
However, due to the increased adoption of electric furnace steelmaking and the implemen-
tation of energy-efficiency improvement technologies, the industry achieved peak energy
consumption in 2020. The consumption will slowly decrease to 564.69 Mtce in 2025 and
to 271.09 Mtce in 2060. The energy-saving and emission-reduction scenario, driven by the
accelerated promotion of production processes and energy-efficiency improvement tech-
nologies, results in more significant declines in energy consumption, reaching 271.09 Mtce
in 2060. By 2025, energy consumption will reduce significantly, totaling 193.93 Mtce in 2060,
marking a 28.5% decrease from the baseline scenario. In 2060, energy consumption per
ton of steel will be 408.9 kgce and 292.5 kgce, respectively. It is crucial to note that crude
steel output significantly influences energy consumption fluctuations. Assuming a crude
steel output of 1.09 billion tons in 2025, total energy consumption in the iron and steel
industry will continue an upward trend even in the baseline scenario. Therefore, curbing
the disorderly growth of crude steel production is of priority.
The primary energy inputs for the steel industry include coal, coke, natural gas,
electricity, hydrogen, gasoline, and diesel. A simplification is conducted to neglect the
conversion of hydrogen, gasoline, and diesel to standard coal since their ratio in the primary
energy inputs is small. As these values exhibit minimal changes across different scenarios,
they are excluded from the sub-category of energy consumption. Figure 8 illustrates the
alterations in the main energy sources from 2020 to 2060. The findings reveal coal and the
predominant share of coke, constituting approximately 90% of total energy consumption
in the baseline year. The shift in energy source distribution in the baseline scenario is
marginal, which will stay at 87%, 85%, 85%, and 86% from 2030 to 2060, respectively.
The share of coal could diminish slightly, reaching 87.4%, 85.8%, 84.2%, and 81.7% from
Processes 2023, 11, 3258 15 of 22

2030 to 2060. Under the energy-saving and emission reduction scenario, coal-based energy
could significantly decrease, comprising 86.7%, 84.3%, 80.3%, and 72.9% from 2030 to
2060. This decline could result from a higher proportion of short-process steelmaking,
leading to a significant rise in electricity consumption from 8.9% in 2020 to 19.1% in 2060.
The future environmentally friendly and low-carbon progression of the iron and steel
industry of China hinges on steel electrification levels and the degree of decarbonization
of the electrical industry. These approaches fundamentally curtail reliance on coal-based
energy, either through the development of all-scrap short processes or direct iron reduction
through water.

Figure 7. Total energy consumption in the iron and steel industry of China from 2020 to 2060.

Figure 8. Changes in the structure of energy consumption by category under different scenarios.

4.2. Total Carbon Emissions and Intensity

The iron and steel industry will transition from dual-control of energy consumption
to dual-control of carbon emissions in the future. The total carbon emissions of the in-
dustry will shift from relative constraints to absolute constraints. This shift is crucial for
decision-makers, providing an intuitive basis for judgment when compared to total energy
Processes 2023, 11, 3258 16 of 22

consumption. The iron and steel industry of China emitted 1786 Mt of carbon in the base
year. Figure 9 illustrates total carbon emissions and the change in carbon emissions per ton
of steel across comprehensive scenarios. Carbon emissions exhibit a downward trend in
both scenarios, peaking in 2020. Under the baseline scenario, the industry will emit 863 Mt
of carbon in 2060, a 51.7% decrease from the baseline year. However, the decline in carbon
emissions tends to plateau over time. Despite existing emission reduction measures and
technological advancements, the carbon emissions of the industry will remain high during
the Carbon Neutral Year. Therefore, more stringent carbon emission control policies are
required. The low-carbon scenario reduces emissions by 27.2% compared to the baseline
scenario, reaching 629 Mt. This is accomplished by optimizing production structures and
by the adoption of energy-efficiency technologies. Under the carbon-neutral scenario, new
technologies in the energy structure could result in 120 Mt emissions in 2060, an 86.1% de-
crease from the baseline scenario. However, achieving net-zero emissions is unattainable for
the steel industry under all these scenarios. Even the most efficient carbon-neutral scenario
still emits 100 million tons of carbon. Therefore, the industry must adopt options such as
purchasing carbon emission rights to attain carbon neutrality. Figure 9b illustrates carbon
emissions per unit of crude steel produced under the three scenarios: 1301.1 kgCO2 /t of
steel in 2060 for the baseline scenario, 947.5 kgCO2 /t of steel for the low-carbon scenario,
and 254.7 kgCO2 /t of steel for the carbon-neutral scenario.

Figure 9. Changes in (a) total carbon emission and (b) carbon emission per ton of steel from 2020 to 2060.

The trend of carbon emission changes in the iron and steel industry of China under
each sub-scenario is illustrated in Figure 10. Considering only the natural change in crude
steel output due to economic development, the iron and steel industry in China is projected
to reach the carbon emission peak in 2025 while emitting 1803 Mt. This peak in carbon
emissions aligns with the peak of output, occurring simultaneously. By 2060, carbon
emissions are expected to decrease to 1089 Mt, with a 60.8% contribution from the reduction
in output. This finding is consistent with previous studies, emphasizing the substantial
impact of output changes on carbon emissions. The production structure change scenario
further reduces carbon emissions by 36.9% based on the decline in production, reaching
666 Mt in 2060. However, the contribution of energy efficiency and emission reduction
technologies in the iron and steel industry remains relatively low (2.3%). This is primarily
because the energy efficiency improvement technologies considered in this paper are highly
mature and easily promotable. Some of them had significant applications by 2020 and are
anticipated to reach their promotion limits by 2040. Additionally, the decline in production
and changes in production structure diminish the emission reduction potential of energy
efficiency improvement technologies.
Processes 2023, 11, 3258 17 of 22

Figure 10. Carbon emissions and emission reduction contributions from the iron and steel industry
of China.

4.3. Abatement Costs in the Iron and Steel Industry

Figure 11 illustrates the cumulative emission reductions resulting from 31 energy
efficiency improvement technologies, which have a total emission reduction potential of
780 Mt under the energy efficiency improvement scenario. The coking process yields the
smallest cumulative emission reductions. This is primarily due to the limited consideration
of coke-making plants within the iron and steel enterprises of the model, resulting in a
lower activity level compared to other processes. Technologies in the blast furnace process
offer slightly higher cumulative emission reductions than other processes. High-efficiency
coal injection in the blast furnace, dehumidification blast technology, and double preheat-
ing of flue gas in the hot blast furnace all contribute to cumulative emission reductions of
over 50 Mt. Market penetration significantly influences cumulative emission reductions.
For instance, technologies such as dry residual pressure power generation from the blast
furnace roof gas and gas recovery from the blast furnace for T13 and T14 exhibit lower cu-
mulative emission reductions. Other technologies demonstrate varied cumulative emission
reductions based on their penetration rate, inherent energy saving, and emission reduc-
tion potential. Energy efficiency improvement technologies applied to converters, electric
furnaces, and rolling processes also offer substantial opportunities for emission reductions.
As depicted in Figure 12, the marginal abatement cost of each technology can be
calculated using Equation (5) while utilizing the accumulated emission reduction data.
Within the energy efficiency improvement scenario, the iron and steel industry of China
exhibits an average unit energy saving and emission reduction cost of 27.0 yuan, amounting
to a total carbon emission reduction cost of 21.02 billion yuan. Scrap preheating technol-
ogy significantly enhances scrap recycling efficiency by elevating scrap temperature and,
thereby, could reduce carbon dioxide emissions at the source, equating to an energy-saving
and emission-reduction benefit of 885.2 yuan/t. Additionally, alterations in pellet mine
and short-flow production structure could contribute to a substantial 36.9% reduction
in emissions by 2060. However, due to the cost implications associated with these pro-
duction structure changes, the unit energy-saving and emission reduction cost related to
these structural modifications is 702.7 yuan [13]. This cost considerably surpasses the unit
energy-saving and emission reduction cost associated with energy efficiency enhancement,
posing a significant challenge to the large-scale transition of the iron and steel industry
to short-flow steelmaking. The financial challenge serves as a major impediment to the
shift of the industry to short-process steelmaking. Therefore, the iron and steel sector must
Processes 2023, 11, 3258 18 of 22

be formally integrated into the carbon trading market. The anticipated future increase in
carbon trading prices is expected to reduce the abatement cost associated with production
structure changes. The iron and steel industry should seize this opportunity and focus on
energy efficiency improvement as the core technology for abatement. Gradual promotion
of the transition to short-process steelmaking is recommended while aiming at reducing
the overall carbon intensity of the iron and steel industry and facilitating the green and
low-carbon transformation.

Figure 11. Cumulative emission reduction from 31 energy efficiency enhancement technologies.

Figure 12. Carbon emission reduction potential and abatement costs of energy efficiency improve-
ments in the iron and steel industry.

5. Conclusions
This study employed the LEAP model to project the future trajectory of the iron and
steel industry of China. The analysis integrated data on energy consumption, carbon
emissions, and marginal abatement costs across diverse scenarios. The findings provided
essential policy recommendations to facilitate the transition of the iron and steel industry
towards carbon peak and carbon neutrality.
1. It is imperative to curtail the unregulated surge in crude steel output and phase out
outdated production capacities. Crude steel production stands as the primary driver
of carbon emissions. Over the last two decades, the unprecedented rise of the industry
Processes 2023, 11, 3258 19 of 22

in carbon emissions has indicated a sharp increase in crude steel production. With
the economic growth of China, the focus of the iron and steel industry should shift
towards the production of high-quality and multi-purpose steel. The iron and steel
industry has already achieved carbon peaking at the current production level with
the assumption that crude steel production does not exceed 1070 Mt.
2. The green and low-carbon transformation of the iron and steel industry can be
achieved by controlling the production of crude steel and employing energy efficiency
improvement technologies in all processes of the iron and steel industry. Under the
comprehensive scenario, the future total energy consumption and carbon emissions
of the industry exhibit a consistent downward trajectory. The baseline scenario repre-
sents the most gradual decline, whereas the energy-saving and emission-reduction
scenario accelerates the adoption of advanced production processes and technologies,
resulting in significantly reduced carbon emissions of 947.5 kg per ton of steel, as
opposed to 1301.1 kg. Once the influence of crude steel production is mitigated,
structural changes in production are poised to be pivotal in emission reduction in the
long term. Although energy efficiency improvement technology plays a relatively
minor role, its potential for emission reduction by 2030 should not be underestimated.
3. Stringent external regulations must be implemented to foster the growth of envi-
ronmentally conscious enterprises. At this stage, the average unit energy saving
and emission reduction cost of energy efficiency improvement in the iron and steel
industry of China is 27.0 yuan, and the total emission reduction cost is 21.02 billion
yuan. The unit abatement cost of production structure change due to the price of scrap
and pellet ore is 702.7 yuan. The abatement cost limitation has become an obstacle
to promotion at this stage. The iron and steel industry must be integrated into the
carbon trading market system while leveraging market constraints to enhance the
industry-wide reduction of carbon emission intensity. Tailored incentives must be
offered to enterprises employing cutting-edge technologies while compensating for
the augmented production costs incurred due to green and low-carbon practices.
Furthermore, widespread industry investment in research and development must
be encouraged.

Author Contributions: Conceptualization, Y.G.; data curation, B.T.; formal analysis, B.T. and C.P.;
investigation, W.L. and B.W.; methodology, Y.G. and C.P.; resources, B.W. and X.Y.; software, B.W.;
validation, B.W. and X.Y.; visualization, B.T.; writing—original draft, Y.G. and C.P.; writing—review
and editing, Y.G., W.L., X.Y. and C.P. All authors have read and agreed to the published version of
the manuscript.
Funding: This research was funded by the Ministry of Industry and Information Technology Public
Service Platform Project for Industrial Technology Foundation in 2021, grant number 2021-H029-1-1.
Data Availability Statement: Data will be made available on request.
Conflicts of Interest: The authors declare that they have no known competing financial interest or
personal relationship that could have appeared to influence the work reported in this paper.

Glossary

LEAP Long-range energy alternatives planning system

GHG Greenhouse gas
CBAM Carbon border adjustment mechanism
EU European Union
CCUS Carbon capture, utilization, and storage
CISA China Iron and Steel Association
GDP Gross domestic product
BF Blast furnace
Processes 2023, 11, 3258 20 of 22

BOF Basic oxygen furnace

EAF Electric arc furnace
MACC Marginal abatement cost curve
Hi The energy carried by material
Ei The energy contained in the energy medium
CESER Marginal energy saving and emission reduction cost of the technology
ACC Annualized investment cost
∆O&M Annualized operation and maintenance cos
CC Fixed investment cost
ER Carbon emission reductions
EA Energy savings
EAB Energy-saving benefit
ERB Carbon emission reduction benefit
PE Energy replacement price
PC Carbon price
d Discount rate
n Payback period
P Output of the iron and steel industry
Pi Output of the ith process
E Energy demand of the iron and steel industry
en,j,i Amount of energy of type n consumed for the production of equipment j in process i
e f n,j,i CO2 emission factor
ESP Energy saving potential
CMP Emission reduction potential
C Carbon emissions

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