ING, Citi and Goldman Sachs team up for the Net Zero Steel initiative
Six global banks have joined together to find solutions that could unlock the large private sector investments needed to decarbonize the global steel industry and establish a path to net zero emissions for the steel industry over the next 30 years.
ING, Citi, Goldman Sachs, Société Générale, Standard Chartered and UniCredit have together formed a working group to explore how to tackle the climate impact of the steel sector, with a view to attracting more financial institutions to join the group in the stride. at the crucial COP26 summit in Glasgow later this year, the banks announced last week.
The steel sector is widely regarded as one of the most difficult industries to decarbonise on the path to net zero emissions. The sector is estimated to emit around 7% of global energy emissions and as the development of greener production processes using hydrogen or carbon capture technologies begins to gain traction, green steel projects are not. are in their infancy.
Scaling up the nascent green steel sector will require significant investments in emerging low-carbon solutions, but the six banks behind the new task force argued that financial institutions are currently lacking. practical tools to unlock the necessary capital.
As such, the Steel Climate-Aligned Finance task force, which includes senior representatives from each of the banks’ metallurgical and mining teams, said it aims to draft an aligned net zero financing agreement for the sector defining the emission pathways, methodologies and governance. structures that could be used to catalyze increased investment.
The goal is to define global best practices for financial institutions that facilitate steelmaking, he said.
“The challenge for the steel sector to decarbonise is significant, with alternative technological avenues that are unproven and not yet commercialized,” said Arnout van Heukelem, global head of metals, mining and fertilizers at ING. “By leading this working group, we signal our commitment to help define what the energy transition means for the sector and our customers. It will also help us to define our expectations for change and to define an ambitious but realistic trajectory to respond to these ambitions. “
The banks said the deal would be modeled on the principles of Poseiden, a climate-aligned finance deal aimed at decarbonizing the shipping sector, which since its launch in 2019 has attracted 24 bank signatories representing $ 175 billion worth of senior maritime debt.