JFE Steel will invest $ 1 billion to reduce carbon footprint by 20% over a decade

Japan's JFE Steel will spend more than 100 billion yen ($ 955 million) over the next decade installing equipment at its factories across the country, aiming to reduce carbon dioxide production by at least 20% during that period.

JFE will replace the main oxygen furnaces, critical equipment in the refining process, with upgraded versions that are more energy efficient. This will allow the mills to use more ferrous scrap as raw materials.

This change will reduce the proportion of steel produced from iron ore, a process that consumes coal and releases carbon dioxide. JFE will also introduce technology using catalysts to dissolve iron.

The company's steel business produced 58.1 million tonnes of carbon in the fiscal year ended March 2014. By fiscal 2030, that volume will decline by 20% or more.

The steel industry is the largest source of carbon emissions in Japan's manufacturing industry. The global increase in investment in environmental, social and corporate governance, known as ESG, is driving steel producers to reduce their carbon footprint.

Nippon Steel, Japan's leading steelmaker, will release its first plan to cut carbon emissions later this fiscal year. The company intends to expand the number of overseas electric arc furnace plants that use only scrap iron as raw materials. Electric arc furnaces emit only a quarter of the carbon compared to conventional blast furnaces.

According to the MSCI Index, European steelmaker ArcelorMittal emitted 188 million tonnes of carbon in fiscal 2018, roughly double Nippon Steel's 97 million tonnes. ArcelorMittal's steel production was also roughly double that of Japan.

Both the European Union and Japan are aiming for zero greenhouse gas emissions by mid-century. For this purpose, steelmaking processes using hydrogen are being developed.

In China, officials are encouraging steelmakers to replace blast furnaces with electric arc counterparts as environmental regulations tighten. But the steel industry appears to need further technological innovation to meet its carbon reduction goals.