IESR: Iron and steel industry needs a comprehensive roadmap to decarbonise

Jakarta—The Institute for Essential Services Reform (IESR) encourages the government and iron and steel industry to draw a comprehensive roadmap to decarbonise. In 2022, the industry was responsible for 4.9 per cent of total industrial emissions, or 430 million tons of carbon dioxide annually.

The Coordinating Ministry for Economic Affairs noted that in 2022, national steel consumption reached an average of 15.62 million tons annually, exceeding the average production of around 12.46 million tons annually. Meanwhile, in terms of exports, the iron and steel industry experienced a significant increase from USD 7.9 billion in 2019 to USD 28.5 billion in 2022.

However, this growth is accompanied by increased greenhouse gas emissions, raising concerns about its environmental impact.

IESR Executive Director Fabby Tumiwa stated that efforts to decarbonise the iron and steel industry sector need to address the technological transfer of iron and steel production processes.

“Eighty per cent of iron and steel production in Indonesia is still produced with blast furnace technology. The fuel is still dominated by coal and coke,” he said during the Webinar Accelerating the Transformation of the Steel Industry in Indonesia and Southeast Asia, organised by IESR and Agora Industry on Thursday, March 21.

Global regulations related to low-emission products, setting export limits, and carbon trading also influence the urgency to decarbonise. At the national level, IESR senior analyst Farid Wijaya emphasised that decarbonising the iron and steel industry can boost Indonesia’s economic growth, protect the domestic supply chain, and improve export competitiveness for global markets increasingly aware of environmentally friendly practices.

“Efforts to decarbonise the industry need to be accompanied by building a green industrial ecosystem within the framework of regulations and standards, provision of green energy and low-carbon technology,” he said.

The IESR study highlighted several recommendations for encouraging industrial decarbonisation in Indonesia, including completing the industrial decarbonisation roadmap by the Ministry of Industry by the end of 2024 or sooner, as well as strengthening reporting and data collection on implementing relevant regulations. (Hartatik)

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