In the first half of 2026, China’s steel industry delivered strong results in energy conservation and carbon reduction amid the deepening implementation of the national “dual-carbon” strategy and the nationwide expansion of the carbon market. Through three key approaches — production-based carbon control, energy-saving technological upgrades, and structural carbon reduction — the industry achieved significant progress in both efficiency improvement and emissions reduction.
According to the latest data released by the China Iron and Steel Industry Association (CISA), in June, the total energy consumption of key member steel enterprises decreased by 3.21% year-on-year, while comprehensive energy consumption per ton of steel dropped by 0.70%. The proportion of self-generated power reached 64.26%, an increase of 1.44 percentage points year-on-year. Clean energy generation within steel plants increased by 5.37%, and the recycling rate of industrial water remained stable at 98.40%.Energy conservation and carbon reduction have gradually evolved from a policy-driven requirement into an internal strategy for steel enterprises to reduce costs, improve efficiency, and enhance competitiveness.
As one of the three major transformation projects promoted by CISA during the 14th Five-Year Plan period, the Ultra-High Energy Efficiency Project for the Steel Industry was launched in 2022 and successfully concluded by the end of 2025.A total of 143 pilot enterprises, representing approximately 750 million tonnes of crude steel capacity, were included in the benchmark demonstration program, accounting for more than 70% of China’s total steel production capacity.
Over the three-year implementation period, 57 key enterprises invested a combined RMB 40.9 billion in energy-efficiency upgrades. The average investment reached RMB 95 per tonne of steel, while the upgraded facilities reduced energy costs by approximately RMB 29 per tonne of steel, with an average payback period of only 3.27 years.These results demonstrate that energy conservation is no longer simply an additional investment but has become an economically measurable efficiency improvement strategy.
The achievements are substantial. The participating enterprises have collectively saved more than 24 million tonnes of standard coal equivalent and reduced approximately 60 million tonnes of carbon dioxide emissions, exceeding national targets for steel industry energy conservation and carbon reduction during the 14th Five-Year Plan period.Among major processes, energy consumption in blast furnace and converter operations decreased by 2.45% and 12.22% respectively compared with 2023.
Jiang Wei, Secretary of the Party Committee and Vice Chairman of CISA, noted that the ultra-high energy efficiency initiative has accelerated the transition from “individual energy-saving measures” toward cross-process and system-wide energy optimization, laying a foundation in data management and technological innovation for deeper low-carbon transformation during the 15th Five-Year Plan period.
At Donghai Island in Zhanjiang, Guangdong Province, Baosteel Zhanjiang Iron & Steel’s garden-style industrial site features a landmark hydrogen-based vertical furnace — China’s first million-ton-scale hydrogen metallurgy facility.Combined with an electric arc furnace, the project has established a low-carbon metallurgical route based on a “hydrogen-based direct reduction + electric furnace short process” model.Instead of using coke as a reducing agent, the facility utilizes hydrogen-rich gas, with water vapor as the only by-product. Supported by renewable electricity, the project is capable of reducing carbon emissions by approximately 3.14 million tonnes annually, cutting emissions by more than 50% compared with traditional long-process steelmaking.
The near-zero carbon production line was fully connected in December 2025. In June 2026, the first batch of mass-produced near-zero carbon automotive steel was successfully delivered. In July, China’s first electric furnace-produced GA galvanized automotive steel coil entered commercial application, marking the transition of green steel from technological demonstration to large-scale supply.
The plant integrates multiple clean energy sources, including floating solar power, a 20 MW onshore wind power project, and a planned 400 MW offshore wind farm. After full operation, more than 1.2 billion kWh of renewable electricity annually will support green manufacturing across the facility.The combination of hydrogen metallurgy, short-process production, and renewable electricity is becoming a key pathway for leading steel producers to address the EU Carbon Border Adjustment Mechanism (CBAM) and meet the requirements of green automotive supply chains.
Steel producers in inland regions are also exploring alternative low-carbon pathways.Shanxi Jinnan Iron and Steel Group has developed a closed-loop model by extracting hydrogen and liquefied natural gas from coke oven gas generated during the coking process.Part of the hydrogen is used to power hydrogen vehicles within the plant, while another portion is injected into an 1,860 m³ blast furnace.
For every one million tonnes of molten iron produced, the system can save approximately 12,000 tonnes of coke and reduce 37,000 tonnes of carbon dioxide emissions.Meanwhile, distributed photovoltaic systems and more than 200 MW of energy storage capacity provide an average of 1.3–1.4 million kWh of renewable electricity per day, directly replacing electricity generated from fossil fuels.
This “steel–coking–chemical–hydrogen + renewable energy” closed-loop system transforms previously wasted gases into valuable reducing agents and converts unused spaces such as rooftops and water surfaces into clean energy sources.Without large-scale reconstruction, traditional long-process steel plants can achieve meaningful carbon reductions while gaining advantages in energy costs and operational efficiency.
Despite these achievements, new constraints are emerging.Since 2025, the steel industry has officially entered China’s national carbon market, transforming carbon emissions from an indirect environmental requirement into a measurable production cost factor.
Indicators such as renewable electricity consumption ratios and carbon intensity reductions are increasingly incorporated into industry and regional assessments. China is also shifting from traditional energy consumption control toward comprehensive carbon emissions control.At the 2026 Qingdao conference, CISA announced that the ultra-high energy efficiency initiative would be upgraded into an “Energy-Carbon Efficiency Improvement Program”, promoting coordinated management of both energy performance and carbon performance across the industry.
Meanwhile, China’s national energy-saving and carbon-reduction campaign is advancing across nine major energy-intensive industries, including steel, cement, and electrolytic aluminum. The program is expected to conclude by the end of 2028, with targets including eliminating inefficient production capacity, saving 100 million tonnes of standard coal equivalent, and reducing 200 million tonnes of carbon dioxide emissions.
For steel enterprises, future competition will no longer focus only on “who reduces emissions the most,” but rather on who can achieve carbon reduction at lower costs and who can create higher value through green steel products.The impressive achievements of the first half of 2026 reflect a comprehensive transformation involving 143 benchmark enterprises and 750 million tonnes of production capacity, the successful operation of hydrogen-based vertical furnaces in Zhanjiang, and hydrogen injection practices at Jinnan Steel.
When a reduction of RMB 29 in energy costs per tonne of steel and a carbon reduction of 60 million tonnes of CO₂ appear on the same performance report, China’s steel industry has clearly moved beyond the stage of “being required to reduce emissions” and entered an era of actively pursuing low-carbon development.This transformation provides a solid foundation for deeper decarbonization during the 15th Five-Year Plan period and strengthens the competitiveness of Chinese steel products under evolving global green trade standards.
