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Technology Roadmap Formulated for Transition Finance toward Decarbonization in the Iron and Steel Sector

October 27, 2021

The Ministry of Economy, Trade and Industry (METI) formulates sector-specific technology roadmaps for the transition to decarbonization, with the aim of promoting climate transition finance. It has now formulated one for the iron and steel sector.

1. Background

In order to become carbon neutral by 2050, funding for transitions toward steady decarbonization (such as energy conservation and energy transition) will also be essential in addition to renewable energy and similar projects that are already at the decarbonization level.

METI worked together with the Ministry of the Environment (MOE) and the Financial Services Agency (FSA) to formulate the "Basic Guidelines on Climate Transition Finance" (hereinafter referred to as the Basic Guidelines) in May 2021. The Basic Guidelines were presented to businesses, financial institutions, and other relevant parties in order to provide funds for companies to transition toward decarbonization under the name "Transition Bonds/Loans."

METI holds the meetings of the Taskforce for Formulating Roadmaps for Promoting Transition Finance in the Economy and Industry (chaired by Akimoto Keigo, Group Leader of Systems Analysis Group and Chief Researcher, Research Institute of Innovative Technology for the Earth [RITE]) to provide a concrete direction toward transition so that industries with large CO2 emissions will be carbon neutral by 2050. As its first deliverable, it has formulated a technology roadmap for transition finance in the iron and steel sector.

Roadmaps are also planned for six other sectors: chemical, power, oil, gas, paper/pulp, and cement.

2. Outline

The technology roadmap shows the technologies that are expected to be necessary in order to make the iron and steel sector carbon neutral by 2050, basing its choices on scientific grounds. These technologies include future innovative technologies as well as tried-and-true low-carbon technologies that are currently available (such as energy conservation and energy transition). The roadmap refers to domestic policies and international scenarios and presents the technologies along with their backgrounds and timeframes.

This technology roadmap should be referred to by companies when considering climate measures that use transition finance. It will also help financial and similar institutions decide whether a company's strategies and efforts toward decarbonization are eligible for transition finance when they are approached for funding.

Transition finance can be provided not only when a company intends to invest in becoming low-carbonization/decarbonization with in itself, but also for a wide range of other initiatives necessary for decarbonization, such as those that contribute to other sectors' transitions, or for dismantling and removing existing facilities. This roadmap deals primarily with technologies targeting low-carbonization/decarbonization in the iron and steel sector.

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