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\fancyhead[L]{University of Udine}
\fancyhead[R]{MIFUS - Jiangsu Steel Decarbonization}
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    {\Huge\bfseries Steel Decarbonization in Jiangsu Province, China:\par}
    \vspace{0.5cm}
    {\LARGE EAF Transformation Leader and Coastal Innovation Hub\par}
    \vspace{2cm}
    
    {\Large MIFUS: A Global Journey Through Steel Decarbonization\par}
    \vspace{1cm}
    
    {\large Prof. Fabio Miani\par}
    {\large University of Udine, Italy\par}
    {\large fabio.miani@uniud.it\par}
    \vspace{1cm}
    
    {\large MIFUS Project - \url{https://www.gotrawama.eu/estep25udine/pdf/}\par}
    \vspace{1cm}
    
    {\large November 2025\par}
    
    \vfill
    
    \begin{abstract}
    \noindent
    Jiangsu Province, China's second-largest steel producer with 119-121 million tonnes annual capacity (11-12\% of national total), represents a distinctive model for steel sector decarbonization centered on Electric Arc Furnace (EAF) technology and circular economy principles. Unlike the blast furnace-dominated landscape of neighboring Hebei Province, Jiangsu's coastal location, advanced manufacturing ecosystem, and superior grid infrastructure position it as China's EAF transformation leader. This paper analyzes Jiangsu's decarbonization pathway within the MIFUS framework, examining the province's flagship producer Jiangsu Shagang Group (41.45 Mt capacity, China's largest privately-owned steelmaker), the implementation of China's 1.5:1 capacity replacement policy, and the ambitious target to achieve 40-50\% EAF share by 2030 (from current 18\%). The analysis contextualizes Jiangsu's strategic advantages---abundant scrap availability, access to renewable electricity, established international trade infrastructure, and lower steel dependency in provincial GDP---against implementation challenges including the need for 40 Mt new EAF capacity requiring RMB 100-150 billion investment and the displacement of 65 Mt conventional blast furnace capacity. Jiangsu's transformation offers critical insights for other industrialized regions pursuing steel decarbonization through scrap-based circular economy models rather than hydrogen-intensive primary production routes.
    \end{abstract}
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\section{Introduction: Jiangsu's Position in China's Steel Transformation}

\subsection{The MIFUS Framework and Provincial Analysis}

This paper is part of the MIFUS initiative (A Global Journey Through Steel Decarbonization), examining steel decarbonization strategies across major producing nations and regions. The analysis draws upon:

\begin{itemize}
    \item Global overview documents (A\_Global.pdf, B\_GlobalAppendix.pdf)
    \item China's transformative October 2024 policies (C\_ChinaSteelPolicyDeep01.pdf)
    \item Chinese provincial distribution analysis (ZF\_ChinaSteelDecarb)
    \item European Union framework for comparative context (J\_EuropeanUnion.pdf)
    \item Germany's hydrogen-focused strategy (H\_Germany.pdf) as contrasting model
\end{itemize}

\subsection{Jiangsu Province: Strategic Context}

Jiangsu Province occupies a unique strategic position in China's steel industry:

\begin{itemize}
    \item \textbf{Production Scale}: 119-121 Mt annually (2024) = 11-12\% of China's total
    \item \textbf{National Ranking}: Second-largest steel-producing province (after Hebei)
    \item \textbf{Economic Context}: Located in Yangtze River Delta, China's most economically developed region
    \item \textbf{Technology Mix}: Current 18\% EAF share, projected to reach 40-50\% by 2030
    \item \textbf{Flagship Producer}: Jiangsu Shagang Group - China's largest private steelmaker
    \item \textbf{Competitive Advantage}: Ranks 6th nationally in Levelised Cost of Steel (LCOS) for green production
\end{itemize}

\subsection{The Jiangsu Decarbonization Model}

Jiangsu's transformation represents a fundamentally different pathway compared to blast furnace-dominated regions:

\textbf{Contrasting Approaches:}

\begin{table}[h]
\centering
\small
\begin{tabular}{p{3cm}p{5cm}p{5cm}}
\toprule
\textbf{Factor} & \textbf{Hebei Province Model} & \textbf{Jiangsu Province Model} \\
\midrule
Primary Technology & Hydrogen DRI-EAF (60\%) & Scrap-based EAF (70\%) \\
& CCUS on BF (30\%) & Hydrogen DRI (20\%) \\
& EAF scrap (10\%) & CCUS minimal (10\%) \\
\midrule
Capital Intensity & Very High & Moderate \\
& (\$800-1,200/tonne) & (\$300-500/tonne EAF) \\
\midrule
Key Infrastructure & Green hydrogen & Scrap collection \\
& Renewable electricity & Grid capacity \\
& Pipeline networks & Port facilities \\
\midrule
Critical Challenge & Hydrogen cost & Scrap quality \\
& \& availability & \& quantity \\
\midrule
GDP Dependency & 15-20\% from steel & 5-8\% from steel \\
& High political resistance & Lower resistance \\
\midrule
Emissions Intensity & 2.0-2.2 t CO$_2$/t steel & 1.4-1.6 t CO$_2$/t steel \\
Target 2030 & (current BF-dominated) & (mixed BF-EAF) \\
& 1.2-1.4 t CO$_2$/t steel & 0.8-1.0 t CO$_2$/t steel \\
\bottomrule
\end{tabular}
\caption{Comparative Decarbonization Models: Hebei vs Jiangsu}
\end{table}

\subsection{Why Jiangsu Matters for Global Steel Decarbonization}

\begin{enumerate}
    \item \textbf{Scale Demonstration}: At 120 Mt capacity, Jiangsu's transformation equals Germany's entire steel industry (37 Mt), proving EAF pathways viable at massive scale
    
    \item \textbf{Cost Competitiveness}: EAF-based decarbonization requires 60-70\% less capital investment than hydrogen routes (\$300-500/t vs \$800-1,200/t)
    
    \item \textbf{Circular Economy Leadership}: Demonstrates integration of advanced manufacturing with steel recycling at unprecedented scale (target 50-60 Mt scrap processing by 2030)
    
    \item \textbf{Alternative to Hydrogen Dependency}: While Germany and Hebei bet on expensive green hydrogen infrastructure, Jiangsu proves scrap-electricity pathway can achieve deep decarbonization
    
    \item \textbf{Replicability}: Jiangsu's model applicable to other coastal, industrialized regions globally (North Italy, South Korea coastal areas, US Great Lakes, etc.)
    
    \item \textbf{CBAM Competitiveness}: Low-carbon EAF steel positions Jiangsu producers favorably for EU Carbon Border Adjustment Mechanism compliance
\end{enumerate}

\newpage
\section{Production Landscape and Current Technology Mix}

\subsection{Provincial Production Profile (2024)}

\begin{table}[h]
\centering
\begin{tabular}{lrrr}
\toprule
\textbf{Metric} & \textbf{Volume (Mt)} & \textbf{Share (\%)} & \textbf{National Rank} \\
\midrule
Total Crude Steel Production & 119-121 & 11-12\% & \#2 \\
BF-BOF Production & 98-101 & 82\% & -- \\
EAF Production & 18-22 & 18\% & \#2 (after Guangdong) \\
Installed Capacity & 125-130 & -- & \#2 \\
Capacity Utilization & 92-95\% & -- & Above national avg (88-92\%) \\
\bottomrule
\end{tabular}
\caption{Jiangsu Province Steel Production Statistics 2024}
\end{table}

\textbf{Key Characteristics:}
\begin{itemize}
    \item More stable production patterns than Hebei (less policy-driven volatility)
    \item Higher capacity utilization reflects better demand fundamentals
    \item Coastal location enables efficient iron ore imports through Shanghai, Nanjing, Zhangjiagang ports
    \item Proximity to end-use markets (automotive, appliances, construction in Yangtze River Delta)
\end{itemize}

\subsection{Major Steel Producers in Jiangsu}

\subsubsection{Jiangsu Shagang Group - Provincial Champion}

\textbf{Company Profile:}
\begin{itemize}
    \item Headquarters: Zhangjiagang, Jiangsu Province
    \item 2024 Production: 41.45 million tonnes
    \item Global Rank: \#6 worldwide
    \item Ownership: China's largest privately-owned steelmaker
    \item Five production facilities nationwide (concentrated in Jiangsu)
\end{itemize}

\textbf{Strategic Positioning:}
\begin{itemize}
    \item Known for cost efficiency and operational flexibility
    \item Private ownership enables faster decision-making vs state-owned enterprises
    \item Environmental Product Declaration (EPD) leadership - issued multiple reports
    \item Target: 70\% EAF share by 2030 (from current 20\%)
    \item Active preparation for CBAM compliance and green steel premium markets
\end{itemize}

\textbf{Decarbonization Approach:}
\begin{itemize}
    \item Focus on scrap-based EAF expansion rather than hydrogen DRI
    \item Partnerships with automotive and appliance sectors for closed-loop recycling
    \item Investments in advanced scrap processing and sorting technology
    \item Long-term renewable electricity Power Purchase Agreements (PPAs)
    \item Minimal public disclosure of net-zero commitments but aggressive EPD certification
\end{itemize}

\subsubsection{Other Provincial Producers}

While Shagang dominates (35\% of provincial production), other significant producers include:

\begin{itemize}
    \item \textbf{China Baowu subsidiaries}: Expanded presence through acquisitions
    \item \textbf{Provincial state-owned enterprises}: Medium-scale integrated mills
    \item \textbf{Specialty steel producers}: Stainless steel and high-grade products
    \item \textbf{EAF-focused mills}: Emerging players in scrap-based production
\end{itemize}

Combined, these producers account for approximately 80 Mt capacity, providing diversity in technology mix and market focus.

\subsection{Current Technology Mix and Evolution}

\textbf{Technology Distribution 2024:}

\begin{table}[h]
\centering
\begin{tabular}{lrr}
\toprule
\textbf{Production Route} & \textbf{Capacity (Mt)} & \textbf{Share (\%)} \\
\midrule
Blast Furnace - Basic Oxygen Furnace (BF-BOF) & 103-106 & 82\% \\
Electric Arc Furnace (EAF) - Scrap & 18-22 & 18\% \\
Hydrogen DRI & 0 & 0\% \\
CCUS-equipped BF & 0 & 0\% \\
\midrule
\textbf{Total} & 125-130 & 100\% \\
\bottomrule
\end{tabular}
\caption{Jiangsu Technology Mix - Current State}
\end{table}

\textbf{Projected Technology Mix 2030:}

\begin{table}[h]
\centering
\begin{tabular}{lrr}
\toprule
\textbf{Production Route} & \textbf{Capacity (Mt)} & \textbf{Share (\%)} \\
\midrule
BF-BOF (conventional) & 38-42 & 40-45\% \\
EAF - Scrap-based & 50-58 & 55-60\% \\
Hydrogen DRI-EAF & 3-5 & 3-5\% \\
CCUS-equipped BF & 0-2 & 0-2\% \\
\midrule
\textbf{Total} & 95-100 & 100\% \\
\bottomrule
\end{tabular}
\caption{Jiangsu Technology Mix - 2030 Target}
\end{table}

\textbf{Key Transformation Indicators:}
\begin{itemize}
    \item Net capacity reduction: 25-30 Mt (20-24\% from 2024 baseline)
    \item BF-BOF retirement: 65 Mt capacity to be eliminated
    \item New EAF capacity: 40 Mt to be commissioned
    \item EAF share transformation: 18\% $\rightarrow$ 55-60\% (threefold increase)
    \item Technology investment: RMB 100-150 billion over 5-6 years
\end{itemize}

\newpage
\section{The 1.5:1 Capacity Replacement Policy in Jiangsu Context}

\subsection{National Policy Framework}

China's October 2025 draft capacity replacement policy mandates:

\begin{itemize}
    \item \textbf{Standard Ratio}: 1.5 tonnes old capacity retired per 1 tonne new capacity
    \item \textbf{M\&A Exception}: 1.25:1 for mergers completed after June 2021
    \item \textbf{Equal-Capacity Swaps (1:1)}: Three qualifying categories:
    \begin{enumerate}
        \item On-site equipment upgrades and modernization
        \item High-end specialty steel using advanced smelting processes
        \item Projects in Qinghai Province and Xizang Autonomous Region
    \end{enumerate}
    \item \textbf{Priority Technologies}: Electric arc furnace expansion, hydrogen metallurgy, low-carbon retrofits
\end{itemize}

\subsection{Jiangsu-Specific Implementation Strategy}

\subsubsection{Favorable Policy Positioning}

Jiangsu benefits from several advantages in 1.5:1 policy implementation:

\begin{enumerate}
    \item \textbf{Lower GDP Dependency}:
    \begin{itemize}
        \item Steel contributes 5-8\% of provincial GDP (vs 15-20\% in Hebei)
        \item Diversified economy reduces political resistance to capacity cuts
        \item Coastal provinces "find it easier to cut supply given lower reliance on steel and lower contribution to GDP" (policy analysis)
    \end{itemize}
    
    \item \textbf{EAF Expansion Pathway}:
    \begin{itemize}
        \item Focus on BF-BOF to EAF conversion rather than absolute reduction
        \item EAF technology mature, proven, lower risk than hydrogen DRI
        \item Leverages existing scrap availability and grid infrastructure
    \end{itemize}
    
    \item \textbf{Economic Capacity}:
    \begin{itemize}
        \item Strong provincial financial position enables capital investment
        \item Private sector leadership (Shagang) provides flexibility
        \item Access to green finance and international capital markets
    \end{itemize}
\end{enumerate}

\subsubsection{Implementation Roadmap 2025-2030}

\textbf{Phase 1: Foundation (2025-2027)}

\textit{Capacity Actions:}
\begin{itemize}
    \item Retire 25 Mt oldest, least efficient BF-BOF capacity
    \item Commission 10-12 Mt new EAF capacity
    \item Net reduction: 13-15 Mt (10-12\% of provincial total)
\end{itemize}

\textit{Technology Development:}
\begin{itemize}
    \item Establish integrated scrap collection network targeting 30-35 Mt/year
    \item Secure renewable electricity PPAs for 40-50 TWh annually
    \item Develop advanced scrap sorting and processing facilities
    \item Pilot hydrogen DRI at 0.5-1 Mt demonstration scale
\end{itemize}

\textit{Market Development:}
\begin{itemize}
    \item EPD certification for all major product lines (Shagang leadership)
    \item Closed-loop partnerships with automotive OEMs (local manufacturing)
    \item Green steel offtake agreements with construction and appliance sectors
\end{itemize}

\textbf{Phase 2: Acceleration (2027-2030)}

\textit{Capacity Actions:}
\begin{itemize}
    \item Retire additional 40 Mt BF-BOF capacity
    \item Commission 30 Mt new EAF capacity
    \item Cumulative net reduction: 25-30 Mt (20-24\% of 2024 baseline)
\end{itemize}

\textit{Technology Deployment:}
\begin{itemize}
    \item Scrap processing capacity: 50-60 Mt annually
    \item Renewable electricity: 80-100 TWh dedicated to steel sector
    \item Hybrid DRI-scrap EAF: 3-5 Mt capacity (60\% DRI + 40\% scrap)
    \item Total EAF capacity: 50-58 Mt (55-60\% of provincial production)
\end{itemize}

\textit{Market Position:}
\begin{itemize}
    \item Green steel production: 40-50 Mt low-carbon certified
    \item CBAM-compliant exports: All EU-bound steel meets requirements
    \item Premium pricing capture: \$50-80 per tonne on certified products
    \item Leadership position as China's EAF transformation model
\end{itemize}

\subsection{Expected Policy Impact: Quantitative Analysis}

\subsubsection{Capacity and Emissions Reduction}

\begin{table}[h]
\centering
\small
\begin{tabular}{lrrr}
\toprule
\textbf{Metric} & \textbf{2024 Baseline} & \textbf{2030 Target} & \textbf{Change (\%)} \\
\midrule
Total Capacity (Mt) & 125-130 & 95-100 & -20 to -24\% \\
BF-BOF Capacity (Mt) & 103-106 & 38-42 & -61 to -64\% \\
EAF Capacity (Mt) & 18-22 & 50-58 & +164 to +227\% \\
Annual Emissions (Mt CO$_2$) & 240-260 & 165-185 & -28 to -31\% \\
Emissions Intensity (t CO$_2$/t) & 2.0-2.15 & 1.65-1.85 & -17 to -23\% \\
\bottomrule
\end{tabular}
\caption{Jiangsu Decarbonization Impact 2024-2030}
\end{table}

\subsubsection{Technology-Specific Emissions Reduction}

\textbf{Calculation Methodology:}

Emissions reduction from BF-BOF to EAF conversion:
\begin{itemize}
    \item BF-BOF intensity: 2.2 t CO$_2$ per tonne steel
    \item EAF (grid average) intensity: 0.4 t CO$_2$ per tonne steel
    \item EAF (renewable electricity) intensity: 0.1 t CO$_2$ per tonne steel
\end{itemize}

\textbf{Jiangsu-Specific Calculation (2030 Target):}

\textit{Current State (2024):}
\begin{align*}
\text{BF-BOF:} \quad & 104 \text{ Mt} \times 2.2 = 228.8 \text{ Mt CO}_2 \\
\text{EAF:} \quad & 20 \text{ Mt} \times 0.4 = 8.0 \text{ Mt CO}_2 \\
\text{Total:} \quad & 236.8 \text{ Mt CO}_2
\end{align*}

\textit{Target State (2030):}
\begin{align*}
\text{BF-BOF:} \quad & 40 \text{ Mt} \times 2.2 = 88.0 \text{ Mt CO}_2 \\
\text{EAF (grid mix):} \quad & 40 \text{ Mt} \times 0.4 = 16.0 \text{ Mt CO}_2 \\
\text{EAF (renewable):} \quad & 15 \text{ Mt} \times 0.1 = 1.5 \text{ Mt CO}_2 \\
\text{H2-DRI-EAF:} \quad & 3 \text{ Mt} \times 0.6 = 1.8 \text{ Mt CO}_2 \\
\text{Total:} \quad & 107.3 \text{ Mt CO}_2
\end{align*}

\textbf{Net Emissions Reduction}: 236.8 - 107.3 = \textbf{129.5 Mt CO$_2$ annually} (55\% reduction)

\textbf{Percentage Reduction}: $(236.8 - 107.3) / 236.8 \times 100 = $ \textbf{54.7\%}

This exceeds the national target of 18-22\% emissions reduction, positioning Jiangsu as a provincial leader.

\newpage
\section{Infrastructure Requirements and Enabling Factors}

\subsection{Scrap Steel Infrastructure - The Critical Foundation}

Unlike hydrogen-dependent pathways, Jiangsu's EAF strategy depends primarily on scrap availability and quality. This represents both an advantage (mature technology, lower cost) and a constraint (scrap supply growth required).

\subsubsection{Current Scrap Generation and Availability}

\textbf{Jiangsu Provincial Scrap Profile (2024):}

\begin{table}[h]
\centering
\begin{tabular}{lrr}
\toprule
\textbf{Scrap Source} & \textbf{Volume (Mt/year)} & \textbf{Share (\%)} \\
\midrule
Manufacturing scrap (prompt scrap) & 12-15 & 40-50\% \\
End-of-life vehicles & 4-6 & 13-20\% \\
Construction and demolition & 5-7 & 17-23\% \\
Consumer goods and appliances & 3-4 & 10-13\% \\
Imports (Shanghai, Nanjing ports) & 4-6 & 13-20\% \\
\midrule
\textbf{Total Available Scrap} & 28-38 & 100\% \\
\textbf{Current EAF Consumption} & 18-22 & -- \\
\textbf{Surplus/Deficit} & +6 to +20 & -- \\
\bottomrule
\end{tabular}
\caption{Jiangsu Scrap Steel Availability 2024}
\end{table}

\textbf{Key Observations:}
\begin{itemize}
    \item Current scrap availability (28-38 Mt) \textit{exceeds} current EAF consumption (18-22 Mt)
    \item Surplus scrap currently exported or underutilized
    \item Manufacturing scrap from automotive, appliances, machinery provides high-quality feedstock
    \item Coastal location enables scrap imports (Southeast Asia, Japan recycling)
\end{itemize}

\subsubsection{2030 Scrap Requirements and Development Strategy}

\textbf{Target EAF Capacity:} 50-58 Mt requires approximately 55-65 Mt scrap feedstock (allowing for hybrid DRI-scrap operations)

\textbf{Scrap Mobilization Plan:}

\begin{enumerate}
    \item \textbf{Enhanced Collection Infrastructure} (Target: +15 Mt):
    \begin{itemize}
        \item Establish 20-30 regional scrap collection and processing centers
        \item Investment: RMB 10-15 billion
        \item Advanced sorting technology for automotive and electronics scrap
        \item GPS-tracked collection networks in major cities (Nanjing, Suzhou, Wuxi, Changzhou)
    \end{itemize}
    
    \item \textbf{End-of-Life Vehicle Dismantling} (Target: +8 Mt):
    \begin{itemize}
        \item Accelerate ELV processing from current 4-6 Mt to 12-14 Mt by 2030
        \item China's auto parc in Jiangsu: 15+ million vehicles (largest provincial fleet)
        \item Aging vehicle population (12-15 year old vehicles reaching retirement)
        \item Professional dismantling facilities: 50 $\rightarrow$ 150 certified centers
    \end{itemize}
    
    \item \textbf{Construction and Demolition Steel} (Target: +5 Mt):
    \begin{itemize}
        \item Urban renewal and building demolition scrap recovery
        \item Infrastructure upgrades (bridges, railways) generating high-quality structural steel scrap
        \item Improved building deconstruction vs demolition practices
    \end{itemize}
    
    \item \textbf{Closed-Loop Manufacturing Partnerships} (Target: +8 Mt):
    \begin{itemize}
        \item Automotive OEMs: Formal agreements for steel take-back
        \item Appliance manufacturers: Recycling programs for Haier, Midea, Gree products
        \item Machinery and equipment: Industrial scrap direct-to-mill arrangements
    \end{itemize}
    
    \item \textbf{Import Expansion} (Target: +8 Mt):
    \begin{itemize}
        \item Leverage Shanghai, Nanjing, Zhangjiagang port infrastructure
        \item Southeast Asian scrap imports (growing manufacturing economies)
        \item Japanese high-quality automotive scrap imports
        \item Total imports: 4-6 Mt (2024) $\rightarrow$ 12-14 Mt (2030)
    \end{itemize}
\end{enumerate}

\textbf{Projected 2030 Scrap Availability:}

\begin{table}[h]
\centering
\begin{tabular}{lrrr}
\toprule
\textbf{Source} & \textbf{2024 (Mt)} & \textbf{2030 (Mt)} & \textbf{Growth (Mt)} \\
\midrule
Manufacturing & 12-15 & 20-23 & +8 \\
End-of-Life Vehicles & 4-6 & 12-14 & +8 \\
Construction/Demo & 5-7 & 10-12 & +5 \\
Consumer Goods & 3-4 & 6-8 & +3 \\
Imports & 4-6 & 12-14 & +8 \\
\midrule
\textbf{Total} & 28-38 & 60-71 & +32-33 \\
\textbf{EAF Requirement} & 18-22 & 55-65 & -- \\
\textbf{Balance} & +10 to +20 & -5 to +16 & -- \\
\bottomrule
\end{tabular}
\caption{Jiangsu Scrap Availability Projection 2024-2030}
\end{table}

\textbf{Critical Success Factor}: Achieving 60-70 Mt scrap availability is feasible but requires:
\begin{itemize}
    \item Sustained investment in collection infrastructure (RMB 10-15 billion)
    \item Regulatory support for ELV processing acceleration
    \item Trade policy enabling scrap imports without excessive restrictions
    \item Quality control systems ensuring automotive-grade scrap standards
\end{itemize}

\subsection{Electricity Infrastructure and Renewable Energy Access}

\subsubsection{Current Grid Capacity and Characteristics}

Jiangsu's power infrastructure represents a significant competitive advantage:

\begin{itemize}
    \item \textbf{Installed Capacity}: 150+ GW (2024), one of China's largest provincial grids
    \item \textbf{Grid Stability}: Among China's most reliable grids (99.9\% uptime)
    \item \textbf{Transmission Infrastructure}: Multiple 500kV and 1000kV ultra-high voltage connections
    \item \textbf{Renewable Integration}: Offshore wind (12 GW), solar (20 GW), plus imports from Western China
    \item \textbf{Industrial Power Pricing}: Competitive rates for large consumers (0.50-0.60 RMB/kWh)
\end{itemize}

\subsubsection{Electricity Demand for EAF Expansion}

\textbf{Power Requirements Calculation:}

\begin{itemize}
    \item Current EAF capacity (20 Mt): 10-12 TWh annually
    \item Target EAF capacity (55 Mt): 28-33 TWh annually
    \item Additional requirement: 18-21 TWh
    \item Ultra-high power EAF (larger furnaces): 550-600 kWh per tonne (vs conventional 500 kWh)
\end{itemize}

\textbf{Renewable Electricity Strategy:}

\begin{enumerate}
    \item \textbf{Offshore Wind Power Purchase Agreements}:
    \begin{itemize}
        \item Jiangsu coastline: 950 km, excellent wind resources
        \item Current offshore wind: 12 GW (2024), target: 25 GW (2030)
        \item Dedicated PPAs for steel sector: 15-20 TWh annually
        \item Competitive pricing: 0.35-0.45 RMB/kWh (vs grid average 0.55 RMB/kWh)
    \end{itemize}
    
    \item \textbf{Solar Power Integration}:
    \begin{itemize}
        \item Distributed solar on steel plant rooftops and available land
        \item Target: 2-3 GW dedicated solar capacity
        \item Generation: 2-3 TWh annually (8-10\% of EAF requirement)
    \end{itemize}
    
    \item \textbf{Western China Renewable Imports}:
    \begin{itemize}
        \item Ultra-high voltage transmission from Gansu, Xinjiang, Qinghai
        \item Wind and solar power at 0.25-0.35 RMB/kWh
        \item Dedicated capacity: 5-8 TWh for steel sector
    \end{itemize}
    
    \item \textbf{Grid Modernization and Storage}:
    \begin{itemize}
        \item Battery storage for load balancing (EAF operations are intermittent)
        \item Smart grid technology for demand response
        \item Investment requirement: RMB 5-8 billion for steel-specific infrastructure
    \end{itemize}
\end{enumerate}

\subsection{Port and Logistics Infrastructure}

Jiangsu's coastal location provides critical advantages for both scrap imports and finished steel exports:

\begin{itemize}
    \item \textbf{Major Ports}: Shanghai (world's largest), Nanjing (largest inland port), Zhangjiagang, Lianyungang
    \item \textbf{Scrap Import Capacity}: Current 4-6 Mt, expandable to 12-14 Mt with minimal investment
    \item \textbf{Iron Ore Import Efficiency}: Lower transportation costs than inland provinces (Hebei, Shanxi)
    \item \textbf{Export Infrastructure}: Direct access to global markets for premium green steel products
    \item \textbf{Domestic Distribution}: Yangtze River shipping network reaching Central China markets
\end{itemize}

\newpage
\section{Comparative Analysis: Jiangsu vs. Global Steel Regions}

\subsection{Technology Pathway Comparison}

\begin{table}[h]
\centering
\small
\begin{tabular}{p{2.5cm}p{3cm}p{3cm}p{3cm}p{3cm}}
\toprule
\textbf{Region} & \textbf{Primary Technology} & \textbf{Capital Intensity} & \textbf{Key Advantage} & \textbf{Major Challenge} \\
\midrule
\textbf{Jiangsu, China} & Scrap-EAF (70\%) & \$300-500/t & Scrap availability & Scrap quality control \\
& H2-DRI (20\%) & & Coastal location & Investment scale \\
& CCUS (10\%) & & Grid infrastructure & \\
\midrule
\textbf{Hebei, China} & H2-DRI (60\%) & \$800-1,200/t & Policy support & Hydrogen cost \\
& CCUS-BF (30\%) & & Industrial clustering & Infrastructure build-out \\
& Scrap-EAF (10\%) & & & \\
\midrule
\textbf{Germany/EU} & H2-DRI (70\%) & \$900-1,300/t & Technology leadership & Energy import dependency \\
& Scrap-EAF (25\%) & & Green premium markets & High labor costs \\
& CCUS (5\%) & & & \\
\midrule
\textbf{United States} & Scrap-EAF (70\%) & \$350-550/t & Cheap natural gas & Aging infrastructure \\
& Natural Gas DRI (20\%) & & Established scrap markets & Policy uncertainty \\
& BF-BOF (10\%) & & & \\
\midrule
\textbf{India} & Coal-based DRI (40\%) & \$400-600/t & Low labor costs & Coal dependency \\
& Scrap-EAF (35\%) & & Growing domestic market & Scrap import reliance \\
& BF-BOF (25\%) & & & \\
\bottomrule
\end{tabular}
\caption{Global Steel Decarbonization Pathway Comparison}
\end{table}

\subsection{Cost Competitiveness Analysis}

\textbf{Levelised Cost of Steel (LCOS) Comparison 2030 Projection:}

\begin{table}[h]
\centering
\small
\begin{tabular}{lrrrr}
\toprule
\textbf{Region/Technology} & \textbf{Capital Cost} & \textbf{Operating Cost} & \textbf{LCOS} & \textbf{Emissions} \\
 & \textbf{(\$/t)} & \textbf{(\$/t)} & \textbf{(\$/t)} & \textbf{(t CO$_2$/t)} \\
\midrule
\textbf{Jiangsu - EAF} & 350 & 380 & 730 & 0.4 \\
\textbf{Jiangsu - EAF (renewable)} & 380 & 400 & 780 & 0.1 \\
\textbf{Jiangsu - H2-DRI} & 950 & 450 & 1,400 & 0.6 \\
\textbf{Hebei - H2-DRI} & 1,100 & 480 & 1,580 & 0.6 \\
\textbf{Germany - H2-DRI} & 1,200 & 520 & 1,720 & 0.6 \\
\textbf{US - EAF (NG)} & 320 & 350 & 670 & 0.8 \\
\textbf{India - Coal DRI} & 280 & 320 & 600 & 1.8 \\
\bottomrule
\end{tabular}
\caption{Comparative Levelised Cost of Steel Analysis (2030 Projection)}
\end{table}

\textbf{Key Insights:}
\begin{itemize}
    \item Jiangsu's EAF route offers competitive LCOS with low emissions
    \item Hydrogen routes remain 70-120\% more expensive than scrap-EAF
    \item Renewable-powered EAF achieves lowest emissions at reasonable cost premium
    \item Jiangsu positioned favorably for CBAM compliance and green steel premiums
\end{itemize}

\subsection{Policy and Implementation Framework Comparison}

\begin{table}[h]
\centering
\small
\begin{tabular}{p{2.5cm}p{3cm}p{3cm}p{3cm}p{3cm}}
\toprule
\textbf{Region} & \textbf{Policy Driver} & \textbf{Implementation Mechanism} & \textbf{Financing Model} & \textbf{Timeframe} \\
\midrule
\textbf{Jiangsu} & 1.5:1 capacity replacement & Provincial implementation & Private investment + green bonds & 2025-2030 \\
 & EAF technology mandate & with central oversight & & \\
\midrule
\textbf{Hebei} & National emissions target & Central government directive & State-owned enterprise led & 2025-2035 \\
 & Hydrogen valley initiative & Top-down planning & & \\
\midrule
\textbf{Germany/EU} & EU ETS carbon pricing & Company-level strategies & Corporate investment + subsidies & 2020-2045 \\
 & Green steel demand & & & \\
\midrule
\textbf{United States} & Market economics & Voluntary corporate action & Private investment & 2025-2050 \\
 & Section 45V tax credits & & & \\
\bottomrule
\end{tabular}
\caption{Policy and Implementation Framework Comparison}
\end{table}

\newpage
\section{Implementation Challenges and Risk Assessment}

\subsection{Technical and Operational Challenges}

\subsubsection{Scrap Quality and Consistency}

\textbf{Primary Concern}: Maintaining steel quality with high scrap proportions

\textbf{Specific Challenges:}
\begin{itemize}
    \item \textbf{Residual Elements}: Copper, tin, and other tramp elements accumulate in recycled steel
    \item \textbf{Quality Degradation}: Each recycling cycle introduces impurities affecting mechanical properties
    \item \textbf{Automotive Grade Requirements}: High-strength steel requires careful scrap selection and processing
    \item \textbf{Sorting Technology}: Advanced sensing and sorting systems required (X-ray, laser, infrared)
\end{itemize}

\textbf{Mitigation Strategies:}
\begin{itemize}
    \item Invest in advanced scrap sorting facilities (RMB 3-5 billion)
    \item Develop closed-loop systems with automotive and appliance manufacturers
    \item Implement rigorous quality control and scrap certification programs
    \item Blend high-quality virgin iron (DRI) with scrap (20-30\% blend ratio)
\end{itemize}

\subsubsection{Grid Integration and Power Quality}

\textbf{Primary Concern}: Intermittent EAF operations causing grid instability

\textbf{Specific Challenges:}
\begin{itemize}
    \item \textbf{Power Fluctuations}: EAF operations cause voltage flicker and harmonic distortion
    \item \textbf{Peak Demand}: Ultra-high power furnaces require 100-200 MW each
    \item \textbf{Renewable Integration}: Matching intermittent renewables with steel production schedules
    \item \textbf{Grid Upgrades}: Required investments in transmission and distribution
\end{itemize}

\textbf{Mitigation Strategies:}
\begin{itemize}
    \item Install static VAR compensators and active filters
    \item Develop energy storage systems (batteries, flywheels) for load smoothing
    \item Implement demand response programs with grid operators
    \item Coordinate multiple EAF operations to minimize simultaneous peak loads
\end{itemize}

\subsection{Economic and Financial Challenges}

\subsubsection{Capital Investment Requirements}

\textbf{Total Investment Need 2025-2030}: RMB 100-150 billion (\$14-21 billion)

\textbf{Breakdown:}
\begin{itemize}
    \item \textbf{EAF Capacity}: RMB 60-80 billion (40 Mt new capacity @ \$150-200/t)
    \item \textbf{Scrap Infrastructure}: RMB 10-15 billion (collection, sorting, processing)
    \item \textbf{Grid Upgrades}: RMB 5-8 billion (substations, transmission lines)
    \item \textbf{Renewable Energy}: RMB 20-30 billion (offshore wind, solar PPAs)
    \item \textbf{R\&D and Quality Control}: RMB 5-10 billion (technology development)
\end{itemize}

\textbf{Financing Challenges:}
\begin{itemize}
    \item Private steel companies face capital constraints (Shagang, other private mills)
    \item State-owned enterprises have better access to low-cost capital
    \item Green bond markets developing but limited track record
    \item International investment limited by geopolitical concerns
\end{itemize}

\textbf{Financing Solutions:}
\begin{itemize}
    \item Provincial green development funds
    \item National development bank lending
    \item International climate finance (Asian Development Bank, World Bank)
    \item Corporate green bonds (Shagang leadership potential)
    \item Customer advance payments for green steel offtake
\end{itemize}

\subsubsection{Competitiveness and Market Risks}

\textbf{Cost Premium Challenge}: Green steel production costs 20-40\% more than conventional

\textbf{Market Risks:}
\begin{itemize}
    \item \textbf{Green Premium Uncertainty}: Will customers pay \$50-100/t premium for low-carbon steel?
    \item \textbf{International Competition}: European and Japanese producers also targeting premium markets
    \item \textbf{CBAM Complexity}: Compliance requires detailed emissions accounting and verification
    \item \textbf{Technology Lock-in}: EAF pathway may limit flexibility if hydrogen costs decline unexpectedly
\end{itemize}

\textbf{Risk Mitigation:}
\begin{itemize}
    \item Develop hybrid EAF-DRI facilities capable of multiple feedstocks
    \item Secure long-term offtake agreements with premium-paying customers
    \item Invest in emissions monitoring and certification systems
    \item Maintain technology flexibility with modular plant designs
\end{itemize}

\subsection{Policy and Regulatory Risks}

\subsubsection{Implementation Consistency}

\textbf{Primary Concern}: Policy stability and implementation consistency

\textbf{Specific Risks:}
\begin{itemize}
    \item \textbf{Policy Reversal}: Changes in national or provincial leadership affecting commitment
    \item \textbf{Implementation Gaps}: Capacity replacement policies not rigorously enforced
    \item \textbf{Regional Protectionism}: Local governments protecting employment over environmental goals
    \item \textbf{Regulatory Uncertainty}: Evolving standards for green steel certification
\end{itemize}

\textbf{Risk Mitigation:}
\begin{itemize}
    \item Lock in investments through formal approvals and permits
    \item Develop multi-stakeholder implementation committees
    \item Secure international certification (ISO, ResponsibleSteel) for credibility
    \item Build coalitions with downstream customers supporting transformation
\end{itemize}

\subsubsection{International Trade and Carbon Border Measures}

\textbf{CBAM Compliance Requirements}:
\begin{itemize}
    \item Detailed emissions accounting for all production processes
    \item Third-party verification of emissions data
    \item Carbon price payments for emissions exceeding EU benchmarks
    \item Administrative burden and compliance costs
\end{itemize}

\textbf{Competitive Positioning}:
\begin{itemize}
    \item Jiangsu EAF steel: 0.4-0.8 t CO$_2$/t vs EU benchmark 1.3 t CO$_2$/t
    \item Potential competitive advantage in EU markets
    \item Opportunity to capture green premium in other markets (Japan, Korea, US)
\end{itemize}

\newpage
\section{Conclusions and Policy Recommendations}

\subsection{Key Findings}

\subsubsection{Jiangsu's Strategic Advantage in Steel Decarbonization}

\begin{enumerate}
    \item \textbf{Technology Leadership}: EAF pathway offers 55-60\% cost advantage over hydrogen routes while achieving similar emissions reduction
    
    \item \textbf{Circular Economy Integration}: Potential to process 60-70 Mt scrap annually by 2030, creating China's largest steel recycling hub
    
    \item \textbf{Infrastructure Readiness}: Superior grid capacity, port access, and renewable resources position Jiangsu for rapid transformation
    
    \item \textbf{Economic Viability}: Lower steel dependency in provincial GDP (5-8\% vs 15-20\% in Hebei) reduces political resistance to capacity restructuring
    
    \item \textbf{Market Positioning}: EAF-based green steel well-positioned for CBAM compliance and premium market capture
\end{enumerate}

\subsubsection{Transformation Scale and Impact}

\begin{itemize}
    \item \textbf{Capacity Transformation}: 65 Mt BF-BOF capacity retirement with 40 Mt EAF capacity addition
    
    \item \textbf{Emissions Reduction}: 129.5 Mt CO$_2$ annual reduction (55\% from 2024 levels) by 2030
    
    \item \textbf{Investment Requirement}: RMB 100-150 billion over 5-6 years, primarily private investment
    
    \item \textbf{Scrap Economy}: 60-71 Mt scrap processing capacity, creating circular economy ecosystem
    
    \item \textbf{Renewable Integration}: 80-100 TWh clean electricity requirement, driving renewable development
\end{itemize}

\subsection{Policy Recommendations}

\subsubsection{Provincial Government Actions}

\begin{enumerate}
    \item \textbf{Accelerate Scrap Infrastructure Development}
    \begin{itemize}
        \item Establish provincial scrap collection and quality certification system
        \item Invest RMB 10-15 billion in advanced sorting and processing facilities
        \item Develop closed-loop partnerships with automotive and appliance manufacturers
        \item Streamline regulations for scrap imports through Shanghai and Nanjing ports
    \end{itemize}
    
    \item \textbf{Secure Renewable Electricity Supply}
    \begin{itemize}
        \item Allocate 15-20 TWh offshore wind capacity to steel sector through PPAs
        \item Develop distributed solar on steel plant properties (2-3 GW target)
        \item Negotiate Western China renewable imports through ultra-high voltage grid
        \item Invest in grid stabilization technology for EAF operations (RMB 5-8 billion)
    \end{itemize}
    
    \item \textbf{Implement Capacity Replacement with Flexibility}
    \begin{itemize}
        \item Phase BF-BOF retirements to maintain supply stability (2025-2030 timeline)
        \item Provide transition support for displaced workers (training, relocation)
        \item Use M\&A exception (1.25:1 ratio) to encourage industry consolidation
        \item Maintain some BF-BOF capacity for high-quality virgin steel production
    \end{itemize}
\end{enumerate}

\subsubsection{National Policy Support}

\begin{enumerate}
    \item \textbf{Green Steel Certification and Standards}
    \begin{itemize}
        \item Develop national green steel standard aligned with international frameworks
        \item Establish third-party verification system for emissions accounting
        \item Create preferential procurement policies for certified green steel
        \item Align with EU CBAM requirements to facilitate exports
    \end{itemize}
    
    \item \textbf{Financial Incentives and Support}
    \begin{itemize}
        \item Provide low-cost green loans for EAF and scrap infrastructure
        \item Develop carbon pricing mechanism that rewards EAF emissions advantage
        \item Support green bond issuance by private steel companies
        \item Offer tax incentives for scrap processing and recycling investments
    \end{itemize}
    
    \item \textbf{Research and Development Funding}
    \begin{itemize}
        \item Fund advanced scrap sorting and quality control technology development
        \item Support hybrid EAF-DRI technology for quality maintenance
        \item Develop digital systems for scrap traceability and quality certification
        \item Fund demonstration projects for grid-EAF integration solutions
    \end{itemize}
\end{enumerate}

\subsubsection{International Cooperation}

\begin{enumerate}
    \item \textbf{Technology and Knowledge Exchange}
    \begin{itemize}
        \item Partner with European and Japanese steelmakers on scrap quality management
        \item Collaborate on EAF efficiency and grid integration best practices
        \item Join international initiatives on green steel standards and certification
        \item Participate in global carbon accounting and verification frameworks
    \end{itemize}
    
    \item \textbf{Market Development and Trade}
    \begin{itemize}
        \item Develop green steel branding and marketing for international markets
        \item Secure long-term offtake agreements with European and Japanese customers
        \item Participate in CBAM implementation dialogue to ensure smooth compliance
        \item Explore green steel certification mutual recognition agreements
    \end{itemize}
    
    \item \textbf{Climate Finance Access}
    \begin{itemize}
        \item Access international climate funds for demonstration projects
        \item Partner with multilateral development banks on green steel financing
        \item Attract international investment in Jiangsu's green steel transformation
        \item Develop joint ventures with technology leaders in scrap processing
    \end{itemize}
\end{enumerate}

\subsection{Global Relevance and Replicability}

Jiangsu's EAF-centered decarbonization model offers valuable lessons for other regions:

\begin{itemize}
    \item \textbf{Coastal Industrialized Regions}: Similar geographic advantages exist in North Italy, South Korea, Japan coastal areas, US Great Lakes region
    
    \item \textbf{Scrap-Based Circular Economy}: Regions with mature manufacturing and construction sectors can replicate scrap collection and processing systems
    
    \item \textbf{Grid-Integrated Steelmaking}: Areas with strong electricity infrastructure can leverage EAF technology advantage
    
    \item \textbf{Private Sector Leadership}: Jiangsu demonstrates how private companies can drive transformation with appropriate policy support
    
    \item \textbf{Gradual Transformation Pathway}: Phased approach balancing emissions reduction with economic stability
\end{itemize}

\subsection{Concluding Remarks}

Jiangsu Province represents a critical test case for steel decarbonization at a scale unmatched outside China. Its EAF-focused strategy offers a potentially more rapid and cost-effective pathway to deep emissions reduction compared to hydrogen-intensive approaches pursued in Europe and other Chinese provinces. The success of Jiangsu's transformation will depend on coordinated action across scrap mobilization, renewable electricity access, technology deployment, and market development.

If successful, Jiangsu could demonstrate that circular economy principles, when applied at massive scale through EAF technology, can achieve steel decarbonization while maintaining economic competitiveness. This would provide a replicable model for other industrialized regions globally and significantly accelerate progress toward global climate goals in one of the most challenging-to-abate industrial sectors.

\newpage
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