The 'Turkish Steel Sector: 2053 Net Zero Emission Road Map' report, prepared by Agora Industry, a think tank that develops strategies for the industry's transition to a climate-neutral structure, with the support of Istanbul Policy Center (IPC) and Sustainable Economy and Finance Research Association (SEFiA), was announced at the press conference held in Istanbul.
The meeting started with the opening speeches of Steel Exporters Association (ÇİB) Chairman Uğur Dalbeler and SEFiA Director Bengisu Özenç.
Then, Agora Industry Global Steel Transformation Program Coordinator Ysanne Choksey and Agora Industry Techno-Economic Analyst Emir Çolak introduced the report.
The report predicts that Turkey needs to invest approximately 1.5 billion euros every year for the next 20 years in order to transform the steel sector into low-emission production. With Turkey's implementation of its own Emission Trading System (National ETS) and Border Carbon Regulation Mechanism (National SKDM), an annual income of 0.5-1.5 billion euros can be generated and can be used in the decarbonization of the sector and the transition to green steel. This figure can cover a significant part of the investment of 1.5 billion euros per year for 20 years.
Türkiye can both create new jobs and strengthen its place in the global steel market by investing its carbon revenues in near-zero emission technologies and increasing the use of domestic scrap. If the carbon price remains low, Turkey's dependence on imports, which is currently the seventh largest steel producer in the world, may increase.
The study published before COP31 to be held in Antalya; He points out that Turkey must meet its demand for iron with near-zero emissions in a balanced manner between domestic production and imports. Increasing low-emission steel production capacity from ore can help keep added value in Turkey and reduce supply risks. Thus, Türkiye can produce more of the high-quality flat steel it imports today. Imports of low-emission steel in certain areas can increase the diversity of steel products that can be produced.
Ysanne Choksey, Agora Industry Global Steel Transformation Program Coordinator, said:
"Turkey has the most important requirements to be a pioneer in clean steel production, such as rich renewable energy resources, extensive experience in electric steel production, and strong commercial relations with Europe, the Middle East and Asia. Those who invest early will gain an advantage in terms of employment and competitiveness. COP31 to be held in Antalya offers an ideal opportunity to give the necessary messages and take the next steps in this field."
In the study, three scenarios extending to 2050 were examined. In the first scenario, where current policies continue, coal-based production remains dominant. Gradual and accelerated transformation scenarios envisage increased investments and policy support for near-zero emission technologies.
According to the report, when the ton price of carbon dioxide reaches approximately 100 euros, the cost of steel obtained from iron produced from ore using natural gas in Turkey becomes equal to coal-based steel. For green hydrogen-based steel, this threshold is around 140 euros per tonne. If the carbon price in Turkey follows the European Union (EU) ETS, which covers industry and electricity production, this level can be reached by the end of the 2030s.
This price level may encourage companies to invest in near-zero-emission iron production in Turkey. Companies that invest early can capture a share of the growing demand for low-emission steel and secure long-term supply contracts. It could also protect their exports from the effects of the EU's border carbon regulation.
It is anticipated that the impact of the additional cost resulting from the use of green steel on the end user will be limited. It was calculated that the price of an electric car using green steel could increase by approximately 270 euros (0.9 percent), the price of a washing machine by 8 euros (1.3 percent), and the price of a home air conditioner by 9 euros (0.8 percent). This limited impact on final product prices could stimulate demand for low-emission steel through mandatory green public procurement, minimum usage quotas and long-term offtake agreements.
If the carbon price remains low, it may cause a significant portion of the economic value that can be created in Turkey to shift abroad. In the gradual scenario, the carbon price does not exceed 50 euros per tonne of carbon dioxide until the early 2030s. After this point, natural gas-based iron imported from the Middle East and North Africa becomes cheaper than iron produced using coal in Turkey. Domestic natural gas and green hydrogen-based iron production only reaches the break-even point at the level of 100 and 140 euros. Without targeted policy support, Turkey's risk of dependence on imported iron increases.
In this scenario, coal is phased out again, but the deficit in production is largely covered by imports. This route, which is cheaper in the short term, increases Turkey's dependence on imports. In addition, a significant portion of the added value and employment that accelerated transformation can provide remains abroad.
Scrap is becoming increasingly scarce and expensive for Türkiye, the world's largest scrap importer. Nearly 50 countries, especially the EU, restrict scrap exports. In this case, for raw material security, domestic scrap collection may need to be increased from 10 million tons to 26 million tons by 2050 and supported by imported low-emission iron.
The report states that new job opportunities will be created for approximately 29 thousand people in value chains including solar and wind energy, electrolyzer production and green hydrogen-based iron production.
The steel sector is responsible for approximately 40 percent of Turkey's industrial emissions. Therefore, the transformation of the sector is of great importance for Turkey's 2053 climate neutrality target.
In an accelerated decarbonization scenario based on early investment and strong policy support, the sector's emissions could decrease by 92 percent from 2025 levels by 2050. This is the only scenario that achieves Turkey's 2053 net zero target.
According to the report, there are methods that can be used to reduce remaining emissions. These include using biochar in electric arc furnaces and supplying fully renewable electricity from the grid or through power purchase agreements. For the remaining emissions, high-quality carbon removal methods such as bioenergy used with carbon capture and storage or direct carbon capture from the air can be used.
The report points out that an effective ETS to be implemented in Turkey and a carbon pricing mechanism similar to SKDM to be implemented for imported products can form the basis of an effective transformation policy, thus carbon revenues can remain in Turkey.
According to the study, if the carbon price in Turkey is equal to the ETS price in the EU, approximately 1.5 billion euros of carbon revenue per year from steel exports can be utilized in Turkey instead of the EU. The resource can be used to finance measures to decarbonize the sector by transferring it to a green steel fund that will be established to support the transformation of the steel sector. According to the accelerated scenario, it could contribute to an investment of 1.5 billion euros per year for 20 years.
Carbon contracts for difference and affordable financing can also support carbon pricing by reducing investment risks and capital costs. Green public procurement, quotas and long-term purchasing agreements could create steady demand for near-zero-emission steel.
A panel was held at the meeting with the participation of industry experts. In the panel moderated by senior industry expert Muammer Bilgiç, Turkish Steel Transformation Network Coordinator Dursun Baş, SEFiA Director Bengisu Özenç, Turkish Steel Producers Association Technical Affairs Director Hasan Akbulut and Borçelik Management Systems Director Serkan Ürkmez evaluated the developments in the sector.
Turkish Steel Transformation Network (ÇEDA) Coordinator Dursun Baş said: "A strong carbon price gives a clear message that low-emission steel production will be economically profitable and rewards producers who produce cleaner products. The design of Turkey's emission trading system, which is currently in the pilot phase, also needs to be improved in this direction. Trade rules with the EU, Turkey's largest market in steel exports, will be equally decisive. In this context, updating the free trade agreement between the European Coal and Steel Community and Turkey is important. Electric arc "Thanks to its strong background in steel production with its furnaces, Türkiye is in a good position to seize the transformation opportunity. Thus, it can become one of the leading countries in clean steel and avoid dependence on fossil fuel technologies."
SEFiA Director Bengisu Özenç made the following assessment: "Carbon pricing is already implemented in many of Turkey's important export markets. More markets are expected to switch to this practice in the coming period. An effective national carbon price, compatible with the prices in these markets, is an important signal in terms of investment planning. It shows that clean iron and steel production will find economic response and rewards those who take early action. It is necessary to take into account that the investments to be made in the coming years will shape Turkey's steel production for decades. Taking action today is the country's goal for low-emission steel." “It can enable it to capture a share of the growing market and break its dependence on fossil fuel technologies.”
