FINANCE

China’s Steel Industry Faces $14 Billion Green Financing Gap as Decarbonization Push Accelerates

Published: Sep. 27, 2025 4:43 a.m. GMT+8

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A steel plant in Huaian, Jiangsu province, on Dec. 12, 2022.

China’s steelmakers face an annual funding gap of more than 100 billion yuan ($14 billion) to hit the country’s ambitious carbon neutrality targets, as banks shy away from financing costly and risky low-carbon projects, a new report warned this week.

The Natural Resources Defense Council (NRDC) said Thursday that the shortfall comes mainly from equipment upgrades, financing research into cleaner technologies, and sustaining operations during the transition.

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China’s steel sector faces an annual funding gap exceeding 100 billion yuan ($14 billion) for low-carbon upgrades, due to banks’ reluctance to fund risky and costly projects.
Steelmakers’ profits dropped sharply, from 85.5 billion yuan in 2023 to 42.9 billion yuan in 2024, far below the investment needed for decarbonization.
Smaller, cleaner producers are often excluded from financing, and experts call for chain financing and third-party carbon certification to support sector-wide transition.

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Who’s Who

Bank of Jiangsu: Bank of Jiangsu's green finance division, represented by senior manager Leng Jiahao, acknowledges the immense financing challenges faced by China's steelmakers in their low-carbon transformation. Leng highlights that projects demand huge sums, have long payback periods, and often involve unproven technologies, making banks reluctant to fund them.

Sichuan Metallurgical Holding Group Co Ltd.: Wang Xingmin, the chief financial officer at Sichuan Metallurgical Holding Group Co Ltd., highlighted that banks' capacity requirements for loans effectively exclude short-process plants, despite these plants being critical for sustainable development due to lower carbon emissions. He also noted that electric furnace equipment, having little resale value, serves as weak collateral, driving up borrowing costs and limiting loan sizes.

Citic Pacific Special Steel Group Co. Ltd.: Citic Pacific Special Steel Group Co. Ltd. is a steelmaker in China. Luo Kun, their chief low-carbon researcher, emphasizes that financing for green transformation should encompass equipment upgrades, basic research, and compliance costs like third-party data verification. They advocate for industry-wide chain financing mechanisms to encourage the procurement of low-carbon steel.

Industrial Bank Co. Ltd.: According to Zhang Shengxuan, a green finance manager at Industrial Bank Co. Ltd., the bank believes steelmakers and financial institutions must collaborate. This involves sharing environmental data, cooperatively developing financial products, and aligning long-term transition strategies to facilitate the low-carbon transformation of the steel industry.

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