TOKYO -- Japan's JFE Steel will spend over 100 billion yen ($955 million) during the next decade to install equipment at the company's mills nationwide, looking to reduce their output of carbon dioxide by at least 20% within that period.
JFE will replace basic oxygen furnaces, critical equipment in the refining process, with updated versions that are more energy efficient. This will let mills use more ferrous scrap as raw material.
The change will reduce the ratio of steel made from iron ore, a process that consumes coal and releases carbon dioxide. JFE also will adopt technology that makes use of catalysts to dissolve iron.
The company's steel business emitted 58.1 million tons of carbon in the fiscal year ended March 2014. That volume would drop 20% or more by fiscal 2030.
Steelmaking generates the most carbon emissions within Japan's manufacturing industry. The global rise of environmental, social and corporate governance investing, known as ESG, is pushing steel producers to shrink their carbon footprint.
Nippon Steel, Japan's leading steelmaker, will release its first-ever carbon-cutting plan later this fiscal year. The company intends to expand the number of overseas mills with electric arc furnaces, which use only iron scraps as raw material. Electric arc furnaces emit just one-quarter the amount of carbon as conventional blast furnaces.
European steelmaker ArcelorMittal emitted 188 million tons of carbon in the 2018 fiscal year, according to index provider MSCI, or roughly double that of Nippon Steel's 97 million tons. ArcelorMittal's steel output also was roughly twice that of its Japanese counterpart.
Both the European Union and Japan aim to achieve net-zero emissions of greenhouse gases by mid-century. Steelmaking processes that use hydrogen are being developed to that end.
In China, officials are encouraging steelmakers to replace blast furnaces with electric arc counterparts as environmental regulations grow stronger. But the steel industry appears to need further technological innovation to approach carbon reduction goals.