The announcement of a climate change deal between the world’s two largest greenhouse gas emitters, the USA and China, is unlikely to be a game-changer for the steel industry. It does confirm however China’s refocussing of its priorities, Kallanish notes. Regulation and financial costs will increase for polluting industries but opportunities will be created for suppliers to the energy industry.

China has committed for the first time to reducing its carbon dioxide emissions, with a peak seen in 2030 at the latest. This is an important diplomatic move meant to bolster hopes of an international climate change treaty to be negotiated next year but the actual impact on domestic policy is not as significant as it sounds.

The centrepiece of the announcement from the Chinese side is a commitment to supply 20% of its energy from renewable sources by 2030. Taken alone this provides a massive opportunity to suppliers of steel for high pressure boilers and pipes for nuclear power plants and suppliers of steel for other renewable energy sectors such and wind power.

The White House said in a statement that this meant an additional 800-1,000 gigawatts of power from the nuclear, wind solar and other renewable energy sources would have to be installed. This is more than all of China’s existing coal-fired power plants and almost equal to the entire power generating capacity of the USA.

A closer look however, shows that China has already committed to achieving 15% power supply from renewable sources by 2020 and 11.4% by next year. In other words it only needs to up this percentage by 5% over ten years and can probably do this by maintaining its existing focus on moving investment towards renewables.

After a year of increasingly strict controls on polluting industries, China’s commitment to reduce greenhouse gas emissions by 2030 will likely not mean too much additional pressure on the country’s steelmakers. Controls implemented so far have included capacity removals, temporary shut downs and a new environmental law that gives vastly extended powers to the Ministry of Environmental Protection. The conclusion of a possible global treaty next year however may add pressure on steelmakers in areas which have not yet taken steps to clean up their industries.