Trailblazing iron and steel technologies are going to be the future of the steel industry. Low-carbon steel manufacturing projects involve large capital investments – a challenge for businesses. The market is exploring many channels, including final investment decisions (FIDs), to support the steelmaking industry. FIDs are not direct investments in a project; rather they are a means of gaining sufficient funds from investors interested in breakthrough technologies for producing low-carbon steel and iron. These investments are the result of promising outcomes the trailblazing technologies have produced in the last few years.
Regions including the United States and Europe have proper infrastructure, consisting of robust government policies, availability of renewable energy resources, affordable low-carbon electricity and an effective value chain. These factors help these geographies in developing iron and steel manufacturing projects, enabling them to attract more FIDs. Multiple factors, such as capitalised value of investment, cost of manufacturing and amortisation period of an investment, are considered before the final approval of an FID. Investors evaluate a project based on all possible scenarios, together with the investment needed to initiate the project and the economic benefits. Following a thorough evaluation, they decide on whether or not to proceed with the investment.
Energy Transition Commission (ETC) – an organisation consisting of a group of individuals who are pioneers in their industries – has analysed the current condition of the iron and steel manufacturing industry in various regions across the globe to further identify approaches through which low-emission-intensive projects can get more FIDs in their favour. ETC has considered four regions in this analysis.
ETC has introduced an instrument that helps simulate the cost-effectiveness of ground breaking investments. It is designed such that it reflects the accurate profitability of a project in a specific geographical area. There are many trailblazing technology prototypes that improve the steelmaking process and are in the race for attracting FIDs. These prototypes were created to minimise disagreements over specific investments and establish a base for discussions on the basic requirements of investments.
