CRUsteav: A value for emissions abatement on the road to green steel
CRU has launched its Steel Emissions Abatement Value (CRUsteav), a calculation of the value of CO2 emissions reduction. CRUsteav can act as an input for decisions on determining how much to pay for low emission steel, how viable investments are, or what future production technologies and commercial strategies to pursue. Industry discussions run hot on green premia, though there are wide divergences in definitions, and there is currently no genuine ongoing trade in green steel. CRUsteav provides a foundation for near-term price discussions through a transparent definition, particularly a consistent and easily understood system boundary within which emissions are included.
Significant work remains to achieve a decarbonised steel industry
European flat-rolled mills are generally low-emitting on the global scale relative to others using the same technology but are not necessarily low-emitting in absolute terms. Buying options for low-emissions steel are limited today. Without a market actively pricing green premia, CRUsteav offers a way to value lower-emissions steel with a consistent system boundary and underlying driver, the EU ETS carbon price.
Read our full insight to learn more.
Mining Indaba 2024 – Top 5 Takeaways
Explore the key takeaways from the Mining Indaba conference that was held in early February 2024 in Cape Town, South Africa, where CRU analysts and consultants had conversations with major industry stakeholders. Key themes discussed include Africa’s important role in the green energy transition, exploration project development, de-risk strategies to unfold growth opportunities, and logistical constraints.
EU climate policy locks in 2.0-2.5°C temperature pathway
CRU’s long-term carbon price forecast quarterly update, published last week, shows a 2% downward revision in 2050 to $204 /tCO2 (real 2023). This is primarily due to lower renewable energy costs resulting from expected reduced storage needs in the optimal EU energy mix. However, the emission reduction target recommended by the incumbent European Commission (EC) – a 90% reduction on 1990 levels by 2040 – not only represents an upside risk, but also has implications for keeping heating below the 1.5°C Paris target. This target will serve as setting intermediate goals between the goal of net-zero at 2050 and the 55% reduction on 1990 levels agreed by the Fit for 55 legislation.
CRU models both the emissions reduction pathway of the Nationally Determined Contributions (NDCs) under the Paris Agreement and a pathway for carbon neutrality by 2050. When compared to either pathway, this new emission reduction target requires greater emissions abatement by 2040 than both.
Furthermore, the rationale for setting this goal is to frontload emission reduction efforts. This new policy shifts the greatest decadal change in emissions from 2020–2030 to 2030–2040, but also lowers the shift required after 2040, when compared to the net-zero pathway. So, while this does frontload emissions efforts before 2040, it also shifts the timeframe for key mitigation efforts from immediately to the 2030s.
The implications of this are two-fold. On one hand, should this proposal be approved by the next EC, to be elected in June, it signals that European efforts to meet net-zero by 2050 will be strengthened and the new goal does significantly frontload abatement efforts into the 2030s. However, based on CRU analysis of global emission trends, given high emissions since the signing of the Paris Agreement in 2015, the 2040 goal will only lock in a 2.0–2.5°C transition at best. That is, while EU policy is more advanced than in most countries, even here, policy is falling behind requirements to keep temperatures within a 1.5°C rise over pre-industrial levels, which suggests significant carbon removal will ultimately be required.
These and other economic developments that impact commodity markets are discussed with CRU subscribers regularly. To enquire about CRU services or to discuss this topic in detail, get in touch with us.
CRU experts discussed the impact of the war in Ukraine on commodity markets in a recent webinar. Experts from all major commodity areas joined CRU’s Head of Economics and an energy specialist to discuss markets one month on from the invasion of Ukraine. The webinar is available to watch on-demand here.
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7 个月Thanks for sharing