Bringing the iron and steel industry to net zero by 2050 requires $1.4 trillion of investment, $250 billion of which is for carbon credits, according to Wood Mackenzie.

Currently, iron and steel production together release a total of 3.4 billion tonnes of carbon each year. This represents 7% of total global emissions.

To meet the global demand for steel by 2050, the industry must produce 2.2 billion tonnes of steel.

The industry emits a lot of carbon and is one of the most difficult one to decarbonize.

Wood Mackenzie analyzed in its latest report, “Pedal to the Metal: Iron and steel’s $1.4 trillion shot at decarbonisation”, the what, when, and how of reaching net zero pathway.

“Decarbonising the steel industry is a big task. To meet Wood Mackenzie’s 1.5°C accelerated energy transition scenario by 2050, steel emissions must reduce by 90% from current levels. There is an urgent need to act now to decarbonise the iron and steel sectors. Business as usual is no longer sustainable.”

The 1.5°C pathway requires 2050 steel emissions to decline by over 90% from current levels. But the analysis assumes only a 33% decline in steel emissions from current levels.

The report shows the urgency to act now to bring the industry to net zero emissions. It also presents an investment opportunity for the operators as the sector decarbonizes.

The largest factor for the industry to be successful in its climate goal is to switch to Electric Arc Furnaces (EAFs).

But that’s only one part of the $1.4 trillion investment opportunity for industry players.

Mining companies will have to cut their operational emissions and invest in new green steel technologies. These include high-grade mines and DR pellet capacities.

Decarbonizing the industry also calls for shifting to clean energy use. This is equal to about 2,000 GW of renewable energy generation capacity (that’s ⅔ of current global capacity).