By LI Yong, Director General of the United Nations Industrial Development Organization (UNIDO)
Steel and cement factories stranded in Europe and India, monster blackouts slowing factories in China, deadly floods in Germany, drought in Madagascar – If 2020 was the year of an unexpected pandemic, 2021 will be the year of two unprecedented but expected crises. The energy and climate crises, two sides of the same coin. It is time to stop the dangerous growth in greenhouse gas emissions, by decoupling industrial development from the consumption of climate polluting energy. And we have the levers to do it. Now we need governments to step up, starting with steel and concrete.
Steel and concrete are the fabric of our modern societies. They make up our homes, cars, roads, hospitals, schools and appliances. Their use is also booming as urbanization and industrialization accelerate in the countries of the South. The world is expected to build the equivalent of another New York City every month for the next 40 years. We are already adding the entire built up area of Japan every year. Steel and concrete are responsible for 14-16% of global energy-related CO2 emissions. And changing the way we make the building blocks of our societies will require revolutionizing the fundamental processes of those industries. This colossal task must be accomplished if our global community is to achieve the climate security goals agreed to in 2015. It is that simple.
The good news is that we can decarbonize the production of steel and concrete affordably by the middle of the century, if we start now. Industry leaders have already started. They know that the risk of climate-related assets getting stranded is too high and costly. To preserve their future prosperity, cement and steelmakers, such as Holcim, thyssenkrupp and HeidelbergCement, have committed to net zero production targets and are looking for promising technologies, such as replacing fossil fuels with hydrogen. The financial sector is also taking important steps. Earlier this year, six global banks agreed to develop a climate-aligned financing deal to support the decarbonization of the steel sector.
Governments must act now to make greener steel and concrete commercially viable. Accelerating the transformation of these industries is also a clear way to better rebuild after the COVID pandemic. A group of countries, in collaboration with the United Nations Industrial Development Organization, are taking the lead through the Industrial Deep Decarbonization Initiative (IDDI). UK, India, Germany, Canada, UAE as well as industry and non-government partners are setting standards for green building products and ways to track their embodied carbon. This is an essential first step.
IDDI partners also want to use green public procurement to create markets for low carbon steel and concrete. Governments buy 40 percent of the cement and 25 percent of the steel sold in their domestic markets. By committing to buy significant amounts of low-carbon steel and concrete now, governments can send industries a clear message that “if you succeed, we’ll buy it,” sparking the investment needed to scale up. the production.
We need more governments to take the lead in making commitments in 2030 for greener steel and concrete, so that these products become the norm by mid-century. At the G20 Summit and the crucial UN climate change conference COP26 in Glasgow, governments have a unique chance to show leadership and accelerate the transformation towards green steel and concrete, securing a future safe and prosperous for all.