Posted on 06 Nov 2023
The iron and steel making industry is facing an uphill task to significantly reduce its greenhouse gas emissions and move towards carbon neutrality, says Malaysian Iron and Steel Industry Federation (Misif) president Datuk Lim Hong Thye.
This is because the industry, which is power intensive in nature, does not appear to have viable alternative renewable power sources at costs that are commercially viable, according to Lim.
Most companies operating in this space are small and medium enterprises competing with international players and many of such plants are still fired up by using coal energy.
Lim said the costs of adopting cleaner technologies remained a major concern and industry players in the country are unable to fund plant upgrades by using their internal funds alone.
“Due to environmental, social and governance (ESG) concerns in the industry, the banks are clamping down and putting more restrictions on us when we ask for more funding.
“We can work on the social and governance front but on the area of environment, it is a very tough and expensive affair,” Lim told StarBiz on the sidelines of the Misif Trade Forum here yesterday.
He said it would not be commercially viable to pass all of the cost increases to customers as iron and steel are also used in many intermediary industries such as the property and construction sectors.
He pointed out that the industry’s customers could easily source for cheaper alternatives from neighbouring countries, which may not be ESG-compliant and therefore, have lower cost structures.
“The only clean energy alternative is to use hydrogen but the cost of hydrogen is too high.
“I estimate the cost of hydrogen sold to industries would need to drop by at least 80% or more for this clean energy source to be commercially viable to industry players now,” Lim said.
Any tax incentives from the government alone will not be enough to lift the industry out of this situation.
“It is seriously an uphill task for carbon neutrality by 2050 and a 45% reduction (in carbon) by 2030. We need a more conducive environment to make this move,” he said.
“Even with tax incentives, we still need to find funding and need to be able to make money. Banking support must also be there.
“I hope we can work together with stakeholders such as the government to come up with practical solutions,” he added.
Meanwhile, Deputy Investment, Trade and Industry Minister Liew Chin Tong said the ministry would form an independent committee to look at future funding for the zero-carbon iron and steel industry.
He said the committee would be headed by HSBC Bank Malaysia chief executive officer Datuk Omar Siddiq Amin Noer Rashid.
Liew also said the government is prepared to provide incentives to the industry to lower its carbon emissions.
“The government can work with the industry and see how it can give incentives for the green transition,” he said.
Source:The Star
