Steel is essential to energy and other critical infrastructure, but coal is no longer essential to steelmaking. To support Indonesia’s green transition, International Finance Corp. issued a $60 million loan to steel manufacturer PT Gunung Raja Paksi, or GRP, to expand low-carbon steel production using electric arc furnace technology.
EAF, which uses electricity rather than coal as an energy source, can reduce the carbon intensity of steel production by up to 80% or 90%, depending on the source of the electricity.
GRP is looking to halve the carbon intensity of its steel production and increase its metal recycling capacity.
Steel decarbonisation
Coal-dependent Indonesia’s demand for steel is growing at a time when efforts to decarbonize its power sector under an international Just Energy Transition Partnership have stalled.
“The steel industry is critical to the prosperity of Asia and the wider world, but the science is clear, we must rapidly decarbonize as a sector to withhold and grow this prosperity for future generations,” said GRP’s Kimin Tanoto. “If steel companies are not willing to embrace the green transition, their assets are at risk of becoming stranded.”
