Low Carbon Transition

Responses to Climate Change

Climate Governance Hierarchy

The framework of CSC's climate governance is directly supervised by the Board of Directors, the top climate governance unit; the Corporate Governance and Sustainability Committee is the management unit. The Sustainable Environment Development Team and Risk Management Team of the Corporate Governance and Sustainability Committee, composed of vice presidents of departments as conveners, are responsible for handling climate change issues faced by CSC and report their progress to the Corporate Governance and Sustainability Committee regularly based on the implementation results.

In response to carbon neutrality, the Task Force on Energy Saving & Carbon Reduction and Carbon Neutrality was established in February 2021 by CSC. The chairman of the Board is in charge of the oversight of climate change issues. The task force convenes quarterly and reports its progress to the Board of Directors regularly.

Results:

The chronicle of events of the Task Force on Energy Saving & Carbon Reduction and Carbon Neutrality

Dates Summaries of progress
2021.02.26
  • The Task Force on Energy Saving & Carbon Reduction and Carbon Neutrality, implementing CSC's response policies and strategic planning on carbon reduction and carbon neutrality, was established with the approval of the Board of Directors. The Chairman serves as the principal person in charge of the Task Force, and the President and the Executive Vice President serve as seconds-in-command.
2021.04.22
  • CSC set carbon reduction targets in phases. 2018 being the base year, CSC aimed to reduce emissions by 7% in the short term (2025) compared with that of the base year and 22% in the medium term (2030), and strived to reach the goal of carbon neutrality (2050).
  • The environmental, social, and governance (ESG) concept was incorporated into the carbon reduction plans. The management of carbon reduction was promoted; various carbon reduction programs, amounts of carbon reduction, promotion schedules, etc., were quantified to statistically analyze the potential and gaps of carbon reduction.
  • CCUS, referring to carbon capture, utilization, and storage technologies, is a key aspect of carbon reduction. CSC would cooperate with other industries in this regard.
2021.06.21
  • The direction and progress of CSC's current planning and promotion of R&D technology were clarified and benchmarked against those of international advanced steel mills.
  • The production processes in the existing blast furnaces and basic oxygen furnaces were improved, and smart modules were introduced, aiming to convert the blast furnaces into low-carbon ones.
2021.08.31
  • The tests of the ratios of added steel scrap in basic oxygen furnaces were planned and conducted, and related technology was developed.
  • CSC's entry into the field of innovative carbon reduction technologies, such as hydrogen metallurgy, co-production of steel and petrochemicals, etc., was confirmed and also consistent with the development trend of international steel mills.
2021.10.27
  • The promotion of the co-production of steel and petrochemicals was confirmed, the corresponding implementation organization was established, and R&D resources in technology development were invested.
  • To assist downstream customers to adapt to the trend of carbon neutrality, CSC, following the government's model of first working with major companies to lead the way for smaller companies, utilized the existing Industrial Service Corps to help the Taiwanese steel-consuming industry to enhance its capability to deal with the control of carbon emissions.
2022.01.04
  • To promote CSC Group's low-carbon strategies, educational training regarding carbon neutrality, greenhouse gas inventory, and product carbon footprints was held for first-echelon executives of the Group to enhance their competency on carbon neutrality.
  • In 2021, 251 annual carbon reduction action plans had been carried out with the amount of reduced carbon reaching 293,758 tons of CO2e/year (a reduction of 1.3%), which was higher than the carbon reduction target (1.0%).
2022.02.22
  • According to CSC's carbon reduction goals, all production units were assigned carbon reduction targets, which would be reached by management.
  • A complete carbon reduction roadmap would be thoroughly planned for the subsequent steel rolling processes, based on the roadmaps for iron making and steelmaking processes.
2022.04.18
  • Carbon reduction technology and strategy planning of carbon neutrality would be included as key exchange topics with other steel mills.
  • The test of co-injection of COG and PCI by a single blast furnace tuyere was planned in order to establish related techniques.
  • As carbon reduction is usually medium- and long-term operations, meetings of the Task Force on Energy Saving & Carbon Reduction and Carbon Neutrality would be adjusted to convene quarterly.
2022.07.20
  • Testing of applying metallic iron and HBI to blast furnaces was continued, technical specifications were systematically established, and the test results were integrated.
  • According to the 12 key strategies of the net-zero emission roadmap proposed by the National Development Council, it was confirmed that the measures taken by CSC were in line with the direction of the national policy.
2022.10.25
  • The pilot plant of “Co-production of Steel and Petrochemicals” was completed in September.
  • CSC will initiate the development of the hydrogen-rich gas injection technology in blast furnace using natural gas in 2024. Strategically position ourselves to build the necessary capabilities for future carbon reduction.
2023.01.12
  • CSC's carbon reduction performance was planned to link with the KPIs of the first-echelon executives to ensure the competitiveness of its carbon reduction.
  • The “Carbon Management Corps” was established to promote the low-carbon transformation of the steel industry chain in order to respond to the imposition of future national and international carbon taxes and fees.
2023.04.17
  • Being selected as a 1+N Carbon Management Demonstration Team by the Industrial Development Bureau, CSC was able to showcase its endeavor in leading the carbon reduction of the industry chain to the government.
  • In line with the National Development Council's revised target of a 24±1% carbon reduction by 2030, CSC also raised its medium-term (2030) carbon reduction target from the original 22% reduction to 25% compared with that of the base year.
2023.07.26
  • In consideration of the fairness of industrial competition, CSC has conducted a study on the imposition of carbon fees on international metallurgical coal and coke. The findings are provided as a reference for the Ministry of Economic Affairs and the Ministry of Environmental.
  • CSC has conducted an analysis of the Commission Implementing Regulation of CBAM, and will follow the rule to allocate the carbon intensity of our company's products.
2023.10.25
  • CSC is providing case guidance to downstream customers with intricate contract manufacturing processes, helping them to develop a CBAM declaration template tailored to the entire fastener industry.
  • CSC will initiate the development of the blast furnace hydrogen-enriched gas injection technology using natural gas in 2024. To build the necessary capabilities for future carbon reduction.
2024.01.30
  • The first phase of Co-production of Steel and Chemicals has achieved the set technical goals. Subsequently, efforts will continue to be devoted to reducing the costs of CO/CO2 and purification.
  • In 2024 CSC plans to assist 20 downstream customers in implementing carbon management.
2024.04.15
  • The pilot plant for flue gas carbon capture at China Steel Corporation is scheduled to complete construction in August 2024 with an expected annual carbon capture capacity of 500 metric tons.
  • CSC plans to establish two demonstration production lines of Co-production of Steel and Chemicals capable of capturing 350,000 tons of CO annually within the China Steel Corporation plant by 2029. The demonstration lines are expected to meet the demand of the chemical industry to produce 700,000 tons of acetic acid per year.
2024.07.04
  • CSC is continuously developing controlling technology for charging low-carbon iron sources into blast furnace to enhance carbon reduction benefits.
  • CSC has established reward rules for greenhouse gas reduction to encourage all employees to actively engage in carbon reduction efforts.
2024.10.16
  • CSC is developing hydrogen-based ironmaking process. At the early stage of the development, CSC uses natural gas as the hydrogen source in the blast furnace to replace part of the carbon, which reduces CO2 emissions in the ironmaking process.
  • CSC is developing a decarbonizing combustion process with hydrogen (or ammonia) blended fuel to reduce CO2 emissions resulted from reheating furnaces in the factory.
2024.01.16
  • CSC is developing a low-carbon iron sources ratio with optimal carbon reduction effect to reduce carbon emissions from blast furnaces.
  • CSC has completed the planning of the Self-determined Reduction Plans, and will submit the Plans in accordance with relevant regulations to strive for preferential carbon fee rate.
2025.04.01
  • CSC and ITRI (Industrial Technology Research Institute) are partnering on a study to identify and match opportunities for Co-production of Steel and Chemicals, in order to explore the end applications of CO captured from CSC's by-product gases.
  • CSC Building, complying with the government's ESCO (Energy Service Company) deep energy-saving initiative, plans to replace 2,400 lamps to achieve an annual electricity saving of 270,000 kWh.

Assessment of climate change risks and opportunities

CSC identifies the risks and opportunities brought by climate change to all business units, thereby CSC is able to effectively respond to a wide range of issues arising from climate change. We also integrated climate-related risks into the company's overall risk management framework, please refer to the "Risk Management" for more details.

Transition Risk Scenario Analysis

CSC continually monitors climate risks that may impact its operations, informed by its climate-related risk and opportunity assessment process, and stays informed of opportunities that could benefit climate change. For specific measures for each procedure, please refer to the following process:

  • Selection of risk assessment methods

    Analyze applicable reduction pathways for the international steel industry and set suitable scenarios.

  • Climate risk identification

    Screen for risk and opportunity issues across various operational aspects under climate change.

  • Climate risk assessment and materiality identification

    Identify climate-related risks, opportunities, and applications based on the professional experience of each department.

  • Risk response

    Establish risk management responses and track the progress through metrics and targets.

To effectively understand the impact of climate change on its strategies and business goals, CSC conducts quantitative analysis and discussions under multiple climate scenarios. CSC's core business encompasses the upstream and downstream value chain of the steel industry. To further assess resilience and develop response measures, the following are details of CSC's scenario analysis approach:

Coverage of the value chain Risk Category Scenario selected Time horizon Scope of analysis
Major raw material suppliers Transition risks-Market IEA APS 2025-2050 Global
Physical risks-Acute SSP2-4.5 Specific countries
SSP5-8.5
Government Transition risks-Policy and regulation IEA APS Taiwan
CSC Transition risks-Technology IEA NZE
Physical risks-Acute SSP2-4.5
Physical risks-Chronic SSP5-8.5
Customers Transition risks-Market IEA APS Global
  1. *The Net Zero Emissions (NZE) and Announced Pledges Scenarios (APS) assumptions of the International Energy Agency (IEA) are based on the World Energy Outlook 2023 (WEO) 2023.
  2. *The Intergovernmental Panel on Climate Change's (IPCC) Sixth Assessment Report (AR6 WG1) provides the basis for the extremely high emission (SSP5-8.5) and medium emission (SSP2-4.5) scenario assumptions. For some physical risk parameters, local scenario analysis parameters are used.

Physical Risk Scenario Analysis

CSC conducts scenario analysis of future occurrences of more frequent physical risks in the value chain, utilizing scenarios outlined by the Intergovernmental Panel on Climate Change (IPCC), specifically the high emissions scenario (SSP5-8.5) and the medium emissions scenario (SSP2-4.5). Leveraging the climate impact driver framework employed by the IPCC Working Group I, CSC identifies physical risks that the value chain may encounter. Based on climate scenario data and information on hazard risks, combined with assessment results from various locations, these values are consolidated into a climate risk matrix. CSC's analysis process of physical risks is as follows:

Climate-related Risks and Opportunities Matrix

Based on the TCFD scenario analysis framework, CSC has summarized 7 transition risks, 5 physical risks, and 6 opportunity issues. Assessed by each risk identification department, the results are based on factors such as the time of occurrence, likelihood of occurrence, and degree of impact, which are then mapped into the climate-related risks and opportunities matrix; issues that surpassed the materiality threshold will be managed by CSC. Time horizons are defined as follows:

Time horizon Timeline planning
Short-term (2025) Considering that climate change issues that are mostly linked to CSC's carbon reduction and ESG targets, the short-term interval is set at one year
Mid-term (2026-2030) Based on the government's and CSC's mid-term carbon reduction targets, the mid-term interval is set at 2-6 years
Long-term (2031-2050) Actively aligning CSC's long-term carbon emission reduction goal with the government's net zero emission path, by setting a long-term goal for 2050

Matrix of climate-related risks

Order of Priority Category Risk Factor
1 Market Transition of raw materials.
2 Policy & Regulation Implementation of carbon fee mechanism.
3 Policy & Regulation Planning of low-carbon energy policy.
4 Technology R&D of carbon neutral technology of the steel industry.
5 Market Changes in steel demand from downstream customers.
6 Policy & Regulation Implementation of the Carbon Border Adjustment Mechanism (CBAM).
7 Acute Extreme weather events, such as typhoons and floods (Raw materials).
8 Acute Extreme weather events, such as typhoons and floods (Operations).
9 Chronic Water shortages caused by changing climate patterns.
10 Reputation Investors/Financial institutions’ willingness to invest in and provide loans to CSC.
11 Acute Extreme heat/dry wildfire events(Raw materials).
12 Chronic Rising sea levels causes the flooding of low-lying areas.

The matrix of climate-related opportunities

Order of Priority Category Opportunity Factor
1 Market Entry to renewable energy/automotive related supply chains.
2 Products and Services Provision of high-strength steel to enhance climate resilience.
3 Resource Efficiency Reduction of crude steel energy consumption through smart manufacturing energy saving.
4 Products and Services Provision of low-carbon steel products to downstream industries.
5 Market Compliance with requirements of financial institutions to obtain low interest rates.
6 Energy Sources Expansion of energy storage-related facilities.
Mitigation of risks in low-carbon transition and seizing the corresponding opportunities Strategies for climate change adaptation

Greenhouse Gas Inventory (Scopes 1~3)

Every year, CSC entrusts a third-party agency certificated by the MOENV to verify CSC's annual GHGs emission inventory, and obtains statement documents. GHG information of 2024 is shown below.

GHG emissions（Unit: tCO2e） 2022 2023 2024
Direct GHG emissions
(Scope 1)		 18,248,901 16,809,455 17,587,087
Indirect GHG emissions from imported energy
(Location-based Scope 2)		 1,373,685 1,263,333 1,182,375(V)
Indirect GHG emissions from imported energy
(Market-based Scope 2)		 1,373,673 1,249,102 1,166,325(V)
Total emissions(I)(II) 19,622,574 18,058,557 18,753,412
Other Indirect Emissions
(Scope 3) 		11,216,225 11,317,609 11,036,798
（Unit: tCO2e） 2022 2023 2024
Other indirect GHG emissions in total(Scope 3) 11,216,225 11,317,609 11,036,798
Indirect GHG emissions from transportation Upstream transportation and distribution for goods(V) 482,727.62 423,018.44 427,123.33
Business travels 82.37 187.34 233.39
Employee commuting 5,005.56 4,984.61 4,944.37
Downstream transportation and distribution for goods 282,275.03 390,072.27 331,871.37
Indirect GHG emissions from products used by an organization Purchased goods and services 147,361.03 125,993.17 101,937.13
Capital goods 543.91 1,017.74 576.15
Fuel-and-energy-related activities (not included in Scopes 1 or 2) 1,118,068.66 1,012,053.87 1,043,501.15
Waste generated in operations 5,263.81 1,408.56 1,114.36
Upstream leased assets 165.39 187.45 163.89
Indirect GHG emissions associated with the use of products from the organization Processing of sold products 122,055.76 115,728.50 104,825.64
Use of sold products 0 227.06 0
End-of-life treatment of sold products 5,366.03 5,636.75 5,636.75
Downstream leased assets 614.32 1,705.03 1,611.02
Franchises 931.04 716.72 690.43
Investments 8,979,486.07 9,234,671.21 9,012,569.32

  1. The boundary of CSC's GHG emissions refers to the Operation Control Approach, including critical operating sites such as Head Office and China Steel Building. The emissions are calculated using Emission Factors Methodology, and the GHG considered include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and nitrogen trifluoride. After the completion of CSC China Steel Building in 2013, we adjusted our GHG inventory boundary in accordance with ISO 14064-1 and reset our base year to 2014. The GHG emissions of 2014 was 20,629,824 tCO2e, based on the GWP value from the IPCC's Fourth Assessment Report. The source of the coefficient includes the emission coefficient management table announced by the MOENV, the World Steel Association coefficient, and the estimated emission coefficient of the carbon content measured by the plant.
  2. Total emissions are calculated based on Scope 1 emissions and market-based Scope 2 emission data.
  3. Since 2021, CSC has conducted its GHG inventory in accordance with ISO 14064-1:2018. CSC's GHG report is verified by third party verification agency, DNV, with a reasonable level of assurance.
  4. The scope of the disclosed GHG information is CSC's individual company.
  5. During the 2024 verification process, DNV has confirmed that 33,860,993 kilowatt-hours of renewable energy were uesd.
    For market based(1,166,325), the renewable energy from solar and wind power emissions factor of 0 was calculated based on Greenhouse Gas Emissions Inventory published by the Taiwan Ministry of Environment.
    For location based(1,182,375), the renewable energy from solar and wind power emissions factor of 0.474 was calculated based on Taiwan National electricity emission factor.
Carbon Reduction Pathways

CSC has set short-term, mid-term, and long-term carbon reduction targets. With the long-term target of achieving carbon neutral by 2050, CSC has preliminarily formulated a number of strategies and mapped its pathway towards carbon neutral. In the short-term, we mainly plan to increase the use of renewable energy and step up efforts to improve energy efficiency. We completed 223 carbon reduction action plans in 2023 and reduced carbon emissions by 1.6% compared to the base year of 2018 or 358,000 tonnes/year (scope 1 + scope 2). We completed 173 carbon reduction action plans in 2024 and reduced carbon emissions by 0.46% compared to the base year or 101,600 tonnes/year (scope 1 + scope 2). Between 2018 and 2024, a total of 1,281 carbon reduction action plans were executed, achieving an accumulated annual reduction of 1.5157 million tonnes of CO2e,corresponding to a 6.86% decrease from the baseline year.

As for the mid-term and long-term pathway towards carbon neutral, CSC has adopted a phased approach of “low-carbon transition” followed by “net-zero transformation.” We will reach the target of reducing carbon emissions in 2030 by 25% compared to 2018 (scope 1 and 2) by "Charge low carbon ferrous burden into BF," "replacing coal injection with hydrogen," "coproduction between steel and petrochemical plants," and "increasing scrap use." There are 4 pathways towards carbon neutral after 2030, namely electrification, carbon-free fuels, CCUS, and hydrogen reduction process, with carbon reduction tasks in 10 aspects. CSC will achieve its carbon neutral target by 2050, demonstrating its commitment to environmental protection and sustainable development.

CSC Path Planning for Carbon Reduction and Carbon Neutral




Mid to-Long Term Two-Stage Carbon Neutral Path Planning

Climate-Related Management Incentives

CSC has established the “Greenhouse Gas Reduction Incentives program” to encourage employees from relevant departments (for example, the ironmaking, steelmaking, and engineering departments of CSC) to participate in carbon reduction activities.

  • 1. Employees can propose GHG reduction plans. Upon achievement, monetary award (cash bonus) will be given based on the actual reduction amount.
  • 2. Additionally, if relevant departments meet their targets, all employees within the department are entitled to receive a corresponding monetary award (in cash). Achieving the target consecutively for three years would be rewarded with an additional cash bonus.
Carbon Neutrality

To achieve carbon neutrality, CSC has established a two-phase medium- and long-term roadmap. As an integrated steel producer, CSC relies on coke as both a reducing agent and energy source, resulting in significantly higher carbon intensity compared to electric arc furnace operations. Economic and resource limitations, such as large equipment investments, high transition costs, and limited access to mature technology and green energy, constrain the widespread short-term application of hydrogen metallurgy and carbon capture technologies, despite their carbon reduction potential. In addition, raw material supply restrictions and market competition have compounded existing challenges. Therefore, similar to other steel mills worldwide, CSC currently encounters a number of problems in some of its strategies, such as a lack of mature technology and hydrogen resources and the need for equipment revamp, and will eventually face challenges in three areas-technology, resources, and capitals. Through active investment in R&D and ongoing cross-departmental collaboration, CSC will research, evaluate, and implement the most feasible carbon reduction strategies for the steel industry, with adjustments made on a rolling basis based on reviews.

Internal Carbon Pricing

CSC is committed to climate action and has implemented an Internal Carbon Pricing (ICP) mechanism as part of sustainable development. Adopting the shadow pricing method, CSC has set an ICP TWD 300 per tonne of CO2e emissions, in alignment with the Carbon Fee Collection Regulations issued by the Ministry of Environment. CSC also periodically reviews ICP and considers following factors:

  • Global standards and regulations
  • Price of carbon tax or carbon offset credits
  • The ICP of peers
  • Price of renewable energy
  • Sensitivity analysis in business decisions

The ICP serves as a corporate governance tool to drive carbon reduction efforts. The implementation scope covers GHG Scope 1 and Scope 2. Objectives for implementing ICP include as follows:

  • Drive energy efficiency and reduce energy consumption
  • Conduct cost-benefit analysis
  • Encourage lower-carbon production processes, technology development and investment
  • Comply with climate-related regulations
  • Influence strategy and financial planning
  • Achieve climate-related policies and targets
  • Conduce to climate investments decision making and risk analysis

The ICP is applied to make business decisions related to capital expenditure, production planning, procurement, product development and risk management by internalizing the cost of carbon emissions, so that CSC could evaluate the total cost and benefit of the climate-related projects. It also urges CSC to strengthen lower-carbon strategies and execute process improvement projects thanks to it benefits to cost reduction. All things considered, the implementation of ICP is conducive to enhancing internal carbon reduction performance, advancing a planned effort to execute carbon emissions control, and contributing to CSC's climate-related policies and targets of carbon emissions reduction and sustainable development.

Carbon Credits Management and GHG Offset Project

CSC has formulated the “Carbon Trading and Management Regulations” in accordance with MOENV's rules and regulations as well as international practices, with the relevant operations incorporated into ISO 14001 Environmental Management Systems. Meanwhile, applications for GHG offset credits are submitted by the Environmental Protection Department at CSC to the competent authority. As of the end of 2024, CSC has 4.4886 million tonnes of CO2e in GHG offset credit balance.

Carbon Footprints

In response to climate change, verifying and disclosing the carbon footprints of enterprises have gradually become major issues that stakeholders pay attention to. In order to update carbon footprint information and establish a more comprehensive carbon management mechanism, CSC has implemented and successfully completed the carbon footprint inventory of 23 major product categories, such as that of hot-rolled steel coils, with the joint efforts of all production units. It was granted an external verification opinion statement by BSI on November 23, 2022.

During the internal verification process, CSC was repeatedly faced with factors, such as the inconsistency of the sources of the supporting data. Therefore, it was necessary for CSC to establish an inventory management system that would link the existing information system to expedite the calculation of carbon footprints, reduce on-site workload of manpower, and then manage through the system, which was an important tool, by monitoring the statuses of carbon emissions in the production plants.

In response to the gradually emerging carbon tariffs and the trendy issue of carbon neutrality, various industrial companies with brand recognition have been competing to set carbon neutrality goals, and their supply chains have also responded by investing in establishing product carbon emission baselines and reducing carbon emissions. CSC, as a major international supplier of steel products, will continue to conduct carbon footprint verification to better understand the degree of carbon exposure. Furthermore, it will meet the expectations of the authorities, customers, and the supply chains, work collectively with the aforementioned parties in terms of sustainability and the reduction of carbon emissions, respond to inquiries from investors or customers, and understand carbon risk exposure.

Verification Opinion Statement

The carbon footprint of hot-rolled coils is 2.151 kgCO2e/kg.

Carbon Neutral Capital Expenditure
  • In 2024, the total capital expenditure related to carbon reduction will be approximately NT$2.817 billion.
  • According to the company's plan for 2025~2030, the four medium-term carbon reduction paths include charging reduced iron into the blast furnaces, injection of hydrogen-rich gas in the blast furnaces, co-production of steel and chemicals, and increasing the use of scrap. After CSC conducts initial inventory, we estimates a total capital expenditure of around NT$20.5 billion. The amount will be modified in accordance with future technological advancements and will submit to the boards based on progress of each project.