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Bullying by the Trump administration has earned South Africa credit as it attempts to cement an African agenda in global economic governance. 

By Joe Walsh, April 7, 2026

When South Africa hosted the first G20 summit on African soil in November 2025, its ambition was unmistakable.

For decades, the world’s most powerful economies had debated climate finance, development and energy transitions largely without the continent that will experience many of the consequences most acutely. The Johannesburg summit was meant to change that.

South Africa had made its priorities clear at the start of its presidency: strengthening disaster resilience, debt reform, securing finance for a just energy transition, and harnessing critical minerals.

Samantha Graham-Maré, South Africa’s deputy minister of electricity and energy, told Dialogue Earth: “Those issues were chosen because of the need to focus on an African agenda.”

The country’s ambitions stretched beyond setting the tone for a single summit year. Pretoria hoped they would reorient the G20’s long-term agenda around questions of development, energy access and industrial policy which have long dominated African economic debates.

That work unfolded across the architecture of G20 diplomacy: 22 working groups and 13 engagement groups that spent months negotiating policy proposals before leaders gathered in Johannesburg.

Graham-Maré was a member of the Energy Transition Working Group, where South Africa attempted to push the conversation past headline promises and toward tangible goals, such as supporting universal access to clean cooking solutions.

“The summit goals really looked at a shift from fossil fuels to renewable energy,” said Phindile Cebekhulu-Msomi, CEO of Hazile Group, a South African clean energy and agriculture company.

She participated in the sustainable food systems task force of the Business 20, a private-sector group that fed recommendations into the G20 process.

The four presidential priorities and the Africa agenda were “really successful” and “met expectations”, said Narnia Bohler-Muller, an executive at South Africa’s Human Sciences Research Council, and co-chair of the Women’s 20, another group that submitted policy recommendations.

But even as South Africa secured a G20 leaders’ declaration which referenced those priorities, the political drama surrounding the summit threatened to eclipse them. The United States boycotted the gathering, a rupture that continues to shape the G20’s trajectory.

South Africa has since temporarily withdrawn from the G20 after the US blocked it from attending the first preparatory meeting under Washington’s presidency. Pretoria was also absent from the US critical minerals summit held in Washington in February.

Europe steps into the gap

If Washington’s stance threatened to isolate Pretoria, it instead seems to have reshuffled G20 alliances.

Danny Sriskandarajah, chief executive of New Economics Foundation, a UK-based think-tank, believes the tactful way South Africa has handled the “Trump bullying” has gained it respect from other countries.

Europe, locked in its own disputes with the US, has been especially quick to move.

“Our relationship with Europe has, if anything, strengthened as a result of America’s withdrawal from these conversations,” said Graham-Maré.

“Where America has pulled out of our just energy conversation, Europe has stepped into the breach and has said that they will obviously fulfil some of the requirements that America was required to fulfil,” she added.

That shift is already visible in the flow of finance and technical assistance. In the immediate aftermath of the G20 summit, France’s development agency, AFD, provided a EUR 300 million (USD 350 million) loan to support the modernisation and decarbonisation of South Africa’s rail and port infrastructure.

The European Commission, meanwhile, has announced it will spend close to EUR 3 billion in 2026 to strengthen the EU’s access to critical minerals and reduce its dependence on China. That logic puts Europe first, not Africa, but it still overlaps with a central plank of South Africa’s G20 agenda: the push to add value before export including the build-out of local processing infrastructure.

That said, Europe’s commitment to supporting South Africa’s G20 agenda in spite of the US is limited. As evidenced by France’s recent decision to disinvite the country from June’s G7 summit in eastern France. South Africa has been a regular guest at previous G7 summits. The French side denies the invite was withdrawn due to US pressure but rather in order “to hold a more streamlined G7”.

China, too, has moved in ways that South African officials believe reinforces their agenda. A framework agreement has already been reached to allow duty-free access for South African goods into the Chinese market. Starting on 1 May 2026, China will implement zero-tariff treatment on 100% of tariff lines for the 53 African nations it has diplomatic ties with.

All of which lends force to Cebekhulu-Msomi’s argument that bringing the world to South Africa, even without the United States, and securing a declaration was a move towards the rest of the world saying “we are ready, we want to work with Africa.”

The UK has also announced new initiatives, including more than ZAR 100 million (USD 6 million) in funding for South African start-ups, as well as support for rail reform. With Washington now cast as the chief antagonist of the multilateral order South Africa tried to defend, the UK has reason to occupy the space in between. This is especially so given the UK is next in line for the presidency after the US. The troika, made up of the previous, current and next presidencies, is supposed to provide continuity across three years and allow unfinished business to travel forward.

In Sriskandarajah’s reading, “the UK government does believe in these sorts of institutions,” far more than the current US administration. And “Keir Starmer is keen to be a global statesman” especially by holding the G7 on UK soil in 2027.

“The UK will want to position itself as resuming normal service [after the US],” says Sriskandarajah.

That matters because the troika is one of the few mechanisms through which a presidency can try to preserve its agenda. During South Africa’s presidency, Graham-Maré said she had watched Brazil use every troika opportunity “to continue to drive their own narrative, their own agenda” and South Africa intended to do the same regardless of Washington’s current posture.

That ambition has run into the obvious problem: Pretoria cannot use the troika fully if it is not in the room. Despite London’s apparent desire to play intermediary, little has yet been offered to guarantee South Africa’s attendance and participation during the US year. German Chancellor Friedrich Merz is the only G20 leader to publicly state that he would urge Trump to invite South Africa to the US summit.

Although Pretoria initially hoped to defuse the situation over the coming year, Finance Minister Enoch Godongwana has since conceded “South Africa is on leave in 2026” from the G20. He is confident though that it is only a temporary setback until the UK presidency next year.

Still, the fact that South Africa secured a leaders’ declaration at all remains central to how its supporters tell the story of Johannesburg.

“They [the US] really did try to bully us throughout the year, on a number of levels and we held firm and stuck to our guns,” said Graham-Maré.

She described a pattern of obstruction that grew more overt across the year. There was an attempt by the US to attend online an in-person Energy Transition Working Group meeting, which South Africa rejected on principle and which resulted in no US attendance. Then there was the dispatch of a very junior representative to the ministerial-level meeting.

Will the commitments hold?

But rather than side with the US, other countries closed ranks around a leaders’ declaration. By the time Argentina took on an obstructive role for the Americans that position was viewed as in bad faith. Both Graham-Maré and Bohler-Muller confirmed Argentina had became more vocally critical as the year progressed and the Americans stepped back.

But although the presidency succeeded in putting African priorities at the centre of the conversation, it is much less clear that it extracted measurable commitments equal to the rhetoric.

“This working by consensus doesn’t look like it’s going to yield a lot of progress in the foreseeable future… I suspect [2026’s] going to be far worse,” lamented Sriskandarajah.

“A few warm words and a couple of voluntary initiatives or principles just isn’t going to cut it,” for the G20 to achieve those priorities.

Bohler-Muller reached a similarly sober conclusion. “I think the declaration was very much a compromised document. The wording was relatively weak and words really matter,” she said.

That may be the lasting verdict on Johannesburg. The next two presidencies will decide whether South Africa’s year marked a durable shift.

If the troika works as intended, Pretoria may yet preserve parts of its agenda long enough for the UK’s 2027 summit to pick them back up. If it does not, Africa’s first G20 will stand as a revealing achievement: a year in which the continent’s priorities were finally heard at full volume, but not yet secured against the whims of raw power.

Joe Walsh

In an interview with Dialogue Earth, André Corrêa do Lago said an increasingly fractured world makes faster climate implementation more urgent. 

By Sam Meadows, Flávia Milhorance, March 26, 2026

As the consensus on climate action frays, the world needs to stop waiting for negotiations and start implementing what has already been agreed.

That is according to the Brazilian diplomat André Corrêa do Lago. The president of COP30 in Brazil last year, he remains the incumbent for the UN’s flagship climate change summit until COP31 this November, when Türkiye will take over.

Corrêa do Lago told Dialogue Earth that climate diplomacy now needs to place greater emphasis on action and cooperation among groups of countries, businesses and cities: “For decisions you need consensus, for implementation you don’t.”

Corrêa do Lago also highlighted the “important challenge” posed by the withdrawal of the US from several climate agreements earlier this year, and warned of a growing backlash against the costs of climate action.

At COP30, held in Brazil’s Amazonian city of Belém, countries agreed to a target of tripling finance for adaptation to climate change. Meanwhile, a “just transition” mechanism was created, aimed at ensuring workers and communities are not left behind in the shift from fossil fuels. But the summit ultimately failed to reach a consensus on fossil fuels, or on deforestation.

International climate negotiations have long relied on consensus among nearly 200 countries. It has imbued any resulting agreements with strong legitimacy but also made progress slow and politically complex. Corrêa do Lago said the real breakthrough at COP30 was not just a greater focus on implementation, but a clearer separation between implementation and negotiation.

“[Consensus] is a wonderful thing because it gives enormous strength to what is approved,” he said. “But it is also a way of not allowing some things to progress.”

Beyond consensus

Corrêa do Lago points out that countries can act according to their own circumstances and in line with what they have already agreed; smaller coalitions of nations with similar interests can move forward together on issues like the energy transition or deforestation.

“There are many ways of doing the right thing,” Corrêa do Lago said. “And according to each country, it may be completely different.”

That stronger focus on implementation is essential, he argued, because time is running out. “We believe very strongly in science,” Corrêa do Lago said. “And science is telling us that we have very little time.”

A greater emphasis on implementation could also help sustain momentum when political divisions disrupt international cooperation. In January, the US president Donald Trump announced his administration was pulling the world’s largest economy out of 66 international bodies, including several focused on climate, biodiversity and energy.

Corrêa do Lago said the role of the US as both a major emitter and a source of important technological, business and civil-society solutions made this “obviously an important challenge”. But he stressed that climate action in the US extends far beyond its federal government.

“One thing is what the government says, and the other thing is what the communities or the business or the scientific community do,” he said. Negotiations may be the preserve of the government, he added, but “in the action agenda” everybody can participate – be it businesses, universities, scientists, or the authorities of an entire state, like California.

Working to implement agreed climate measures could help fill the gap created by these divisions. Several agreements from past climate COPs have not been fully carried out. Targets for climate adaptation finance, for example, have repeatedly been missed, including a pledge made at COP26 in 2021 to double funding by 2025. Meanwhile, new oil and gas licences continue to be approved, despite the COP28 agreement to transition away from fossil fuels.

A renewed focus on implementation could also help counter a growing assault on the “economic logic” of climate action, he said. While efforts to discredit climate science are not new, Corrêa do Lago argued that this energy has increasingly shifted towards attacking the financial case for solving the crisis.

“That is, I think, maybe even more dangerous,” he said.

Climate action has been pushed down the political agenda in several countries, as governments grapple with overlapping economic, security and cost-of-living crises. In Corrêa do Lago’s native Brazil, the current government presents itself as a climate leader. Yet even here, development priorities include fossil fuel expansion, and continue to compete with emissions-reduction goals.

There has also been growing pushback against the concept of net zero in Global North countries such as the United Kingdom, while right wing think-tanks have continued attempts at what critics describe as “climate obstruction”.

“First it was a questioning of science, and then a questioning of the solution,” Corrêa do Lago said. “I believe that a focus on implementation is what gives us examples that show that the economic solutions do work.”

Roadmaps and contradictions

Corrêa do Lago described the differentiation between negotiation and implementation as one of the “strongest achievements” of COP30. He is now promoting two roadmaps: one on reducing deforestation and another on transitioning away from fossil fuels. They are parallel initiatives that build on existing commitments and are open to input from governments and other stakeholders.

“We decided to do independent roadmaps, so that we advance on it. The idea of the roadmaps is to bring together elements that will help countries to maybe, at some moment, find consensus.”

This sits alongside the COP29 mandate to develop a roadmap to mobilise USD 1.3 trillion in climate finance per year by 2035, which Corrêa do Lago is also working to advance.

To promote the roadmaps, in February Corrêa do Lago visited Türkiye, where COP31 will take place in the coastal city of Antalya. Following a long dispute over the presidency, Australia will lead COP31’s pre-talks with Pacific nations.

Brazil is also developing a national roadmap to translate the country’s climate leadership into a “just and planned” transition – as promised by president Luiz Inácio Lula da Silva in December, shortly after COP30. The plan was expected in early February, but no implementation framework has yet been released.

The Climate Observatory (OC), a coalition of Brazilian civil society organisations, has criticised both the government’s roadmap and the COP30 initiatives. In a letter addressed to Corrêa do Lago, it cautioned that the international roadmaps risk becoming “another document destined to gather dust”. In separate recommendations on the domestic plan, it warned that current policies remain “contradictory” to decarbonisation, and rejected the logic that expanding oil production could finance the energy transition – an approach advanced by Lula.

Corrêa do Lago said such contradictions are not unique to Brazil.

“No country has a unified vision of how to progress in this agenda,” he said, noting governments are often divided across ministries with competing priorities. He added that reliance on fossil fuel revenues reflects limited alternatives: “We may need that because we have not found other ways to get financing for the transition.”

The COP30 agenda also faces a potential rival – or ally – in Colombia. In April, the city of Santa Marta on the country’s Caribbean coast will host the First Conference on Transitioning Away from Fossil Fuels. This initiative has been spearheaded by Colombia and the Netherlands. It remains to be seen what the conference will achieve, and how any potential agreement there could interact with COP30’s own roadmap.

Corrêa do Lago noted that the event’s originally proposed language of “phasing out” fossil fuels has been dropped in favour of “transitioning away” – a form of wordplay that has shaped COP negotiations, too.

“It’s not us against them,” he added. “It will be very interesting to see what happens with Santa Marta. They are parallel processes. They are complementary, but they are parallel.”

Looking ahead, Corrêa do Lago said he is optimistic this stronger focus on implementation and action will endure.

“We have talked a lot with Türkiye and Australia, and one of the things that they have already incorporated – and that I think is very important – is this new structure of the action agenda, based on implementation,” he said. “The fact is that, if we have little time, we should explore all those solutions as much as possible.”

Sam Meadows

Sam Meadows is Dialogue Earth’s Latin America editor based in London. Prior to joining in 2025, he worked as an environmental reporter in Colombia and Argentina, writing for media outlets including the Guardian, New Lines Magazine, Mongabay and Climate Home News. His areas of specialism include conservation, climate change, transition minerals, particularly lithium, and climate finance. Before moving to the region he worked in television production at the BBC and has also worked in news for national papers including the Times of London and the Telegraph.

Flávia Milhorance

Flávia Milhorance is the Brazil editor for Dialogue Earth and joined in 2021. She is based in Rio de Janeiro and has extensively covered Brazilian affairs for both domestic and international outlets, including the New York Times, The Guardian, Time, National Geographic, and BBC Brazil. Flávia holds a master’s degree in financial journalism from Aarhus University in Denmark and City University London in the UK, plus postgraduate diplomas in photography and sociology from top Brazilian universities. Her journey into environmental journalism began with the Rio+20 UN Conference on Sustainable Development in Rio de Janeiro in 2012. Her current interests lie in stories at the nexus of politics, economics, and the environment, especially those concerning under-reported Latin American communities. She speaks Portuguese, English and Spanish.

(Sources: Dialogue Earth)

Finance normally reserved for reducing emissions is being used to secure high-quality ore for greener steel production, raising environmental concerns. 

By Deng Yaowen, March 30, 2026

In January 2024, China Baowu Steel Group issued the first tranche of a bond that raised CNY 10 billion (USD 1.45 billion) on the Shanghai Stock Exchange.

Media reports described it as one of the largest corporate bond issuances by a Chinese state-owned enterprise in recent years. But perhaps most notable is where the money will be used. At least 70% of the proceeds are allocated to developing a huge iron ore mining project in Guinea, West Africa.  

Transition bonds issued in China’s steel sector are normally targeted at decarbonising existing steel production rather than upstream mining projects. The “low-carbon” part of the bond’s name is explained by the stated use of the high-grade ore to make steel in a way that emits less carbon, namely by direct reduction.

Guinea has expressed its ambitions to use the project to develop its own steel-processing industry. However, experts have raised concerns about the feasibility of this, as well as the environmental, social and climate footprint of the mining project.

Why high-grade ore matters

In China, “transition finance” has emerged as a way to support emission reduction in high-carbon sectors such as steel. It is distinct from “green finance” which typically funds projects with clearly defined environmental benefits.

There has been a steady rise in transition loans and bonds since 2021, when regulators began publishing transition finance guidance documents for industries like steel, coal power and building materials.

Issuance of transition-labelled steel bonds rose sharply in 2024, with 12 bonds totalling about CNY 22 billion, according to a 2025 report by non-profit the Climate Bonds Initiative (CBI). Only CNY 5.1 billion had been issued prior to 2024.

The destination of the new funds has drawn particular attention. The northern blocks of the Simandou project in Guinea are reportedly the world’s largest reserve of unexploited, high-grade iron ore.  

The prospectus of the bond argues that Simandou’s ore could feed hydrogen-based direct reduced iron, a process seen as central to steel’s long-term decarbonisation.

Xu Xiaoyun, senior research analyst at CBI, called the bond “quite innovative”, saying it is fairly unique for proceeds from labelled bonds supporting steel decarbonisation to be used to secure high-grade iron ore.

“Direct reduction using hydrogen replaces the coal and coke used in blast furnaces and can enable deep decarbonisation,” she explained. “If the entire process runs on green hydrogen and renewable electricity, emissions could be more than 90% lower than conventional blast furnace production.”

Research by US-based think-tank the Institute for Energy Economics and Financial Analysis suggests that direct reduction requires iron ore grades of around 67% or higher, a threshold met by relatively few global deposits. Simandou’s ore averages above 65% iron and can be upgraded for use in pellet feed for direct reduction. The issuer states that using such ore could lower carbon emissions per tonne of steel to roughly 60% of the current global average – an average very largely formed in coal-fired blast furnaces.

Investing in high-grade iron ore deposits such as Simandou therefore has “strategic value”, according to Xinyi Shen, senior advisor at Finland-based think-tank the Centre for Research on Energy and Clean Air (CREA). This is because it both supports China’s long-term planning for low-carbon steelmaking and strengthens the iron-ore supply chain.

However, Xu noted that the bond prospectus provides limited detail on the company’s broader transition pathway.

“It does not specify whether the hydrogen used would be low carbon, outline a detailed corporate transition plan, or explain how the high-grade ore would be sure to support hydrogen-based steelmaking rather than other production routes,” she said.

A project decades in the making

Following major Chinese investment, the Simandou project was formally commissioned in November 2025 and the first shipment of ore arrived in China this January. Already the world’s top iron ore importer, China is expected to be the project’s primary export market.

The two northern blocks are controlled by Winning Consortium Simandou, in which China Baowu has been a key investor since June 2024 and now holds a 51% stake. The two southern blocks are developed by a Rio Tinto-Chinalco joint venture, with Baowu also involved through its partnership with Chinalco.

With total investment estimated at around USD 24 billion, Simandou includes a 670km heavy-haul railway and a new Atlantic port, making it one of the largest mining-linked infrastructure projects in Africa in recent years.

Environmental fault lines

The connection between the bond, known for short as 24 Baowu K1, and such a large mining project may challenge its credibility as a low-carbon transition mechanism. In China’s steel sector, this kind of bond is typically used to finance plant upgrades or specific decarbonisation technologies within steel production.

There has been some precedent for incorporating iron-ore mining into sustainable finance frameworks. Australia’s latest Sustainable Finance Taxonomy, developed with technical support from the Climate Bonds Initiative, includes iron ore mining as a potentially green activity, Xu Xiaoyun told Dialogue Earth.

The key criterion is that the ore grade must be compatible with hydrogen direct reduction, or other low-emissions routes for producing iron and steel. The taxonomy also requires mining activities to meet targets on emissions intensity.

Simandou has drawn scrutiny from civil society groups over its environmental footprint. In 2022, Human Rights Watch raised concerns that the project could affect local land, water resources and ecosystems, citing risks including deforestation and land acquisition.

The organisation stated that construction of the railway could occupy more than 100 sq km of land and affect habitats of endangered species such as the West African chimpanzee, drawing on an impact assessment by Winning Consortium Simandou itself.

The assessment apparently also estimated that forest clearance and associated activities could result in more than 19 million tonnes of CO2 emissions over the mine’s 22-year lifespan. Other experts argue the emissions impact of deforestation may be even larger.

In July 2025, community organisations raised concerns over potential water and soil contamination. Winning said it remains committed to advancing the project in accordance with Guinean law and international standards.

Under the latest Shanghai Stock Exchange guidelines, issuers of transition bonds are encouraged to have an independent third-party verify the environmental benefits of funded projects and to provide ongoing assessments during the bond’s lifetime.

As well as third-party verification, Xu told Dialogue Earth that the credibility of bonds like 24 Baowu K1 also depends on whether proceeds are used for the stated purposes and information is disclosed transparently. This would all ideally be clarified through the issuer’s future reporting.

As of the time of writing, no such report has been identified. A June 2025 bond management report – which are published by bond issuers to account for how raised money is being spent – states that the port and railway components will conduct environmental and social impact assessments in line with International Finance Corporation standards.

Beyond ore exports

Simandou is tied to Guinea’s industrial ambitions. The government has positioned the project as the anchor of its national development strategy, Simandou 2040, aimed at moving beyond raw ore exports towards long-term industrial growth and economic transformation.

“Guinea, like many resource-rich countries, hopes to use projects such as Simandou to move up the value chain and support structural transformation,” said Yunnan Chen, a research fellow at ODI, a British think-tank.

With rising global demand for critical resources, she said, governments may have an opportunity to negotiate greater technology transfer and higher-value investment from external partners.

Guinea’s presidential chief of staff, Djiba Diakité, said in November 2025 that project partners must complete feasibility studies for building downstream processing facilities, either a steel mill or pellet plant, within two years of production.

Simandou and its associated infrastructure are also seen as long-term national assets. The Guinean government holds a 15% stake in both mining blocks and in La Compagnie du TransGuinéen (CTG), the joint venture responsible for developing the railway and port.

It has proposed industrial zones along the rail corridor to support broader development, including agriculture, alongside the establishment of a sovereign wealth fund to manage future revenues for long-term investment.

Translating resource wealth into a competitive downstream industry is no easy task, said Xinyi Shen of CREA. Doing so requires “supporting infrastructure, skills and stable demand. In many African countries, these conditions are still evolving, and green steel markets are at an early stage. This is where international partnerships can play a constructive role in supporting industrialisation and value addition.”

The bond prospectus states that Simandou will provide essential feedstock to support Baowu’s and the global steel industry’s decarbonisation efforts, and references potential downstream processing in the Middle East and West Africa. It does not, however, outline specific plans for steelmaking facilities in Guinea.

Guinea’s industrial ambitions also sit at the centre of a broader shift in how Chinese companies support overseas resource and infrastructure projects, Chen noted. Projects are moving away from the traditional construction and finance model, in which Chinese contractors build projects financed by loans from policy banks. Instead, companies and investors are playing an increasing role in financing and risk-sharing, including through domestic bond issuance like 24 Baowu K1.

Whether Baowu’s bond ultimately supports Guinea’s industrial ambitions remains uncertain. But by linking domestic transition-labelled financing to an upstream mining project abroad, 24 Baowu K1 suggests one possible pathway through which Chinese companies could support the raw materials needed for low-carbon industrial transitions.

At the same time, it raises questions about how Chinese sustainable-finance instruments should be defined, verified, governed and held accountable when applied to projects far from the steel plants they are meant to decarbonise.

Big auto and steelmakers say they will deepen cooperation on decarbonisation, but use of climate friendlier steel in cars remains at an early stage. 

By You Xiaoying, March 26, 2026

Earlier this year, a group of Chinese automakers and steelmakers gathered in Shanghai to chart a new path for their industries. They pledged to work together to cut the carbon emissions generated by steel production.

Their goal is to speed up automakers’ large-scale use of what they call “low-carbon” steel, and ultimately drive the green transition for China’s manufacturing industries, according to a joint declaration signed by companies from both sectors, alongside key industry associations and research institutes.

The statement echoes a direction laid out in China’s 15th Five Year Plan, the overarching economic blueprint passed by legislators on 12 March in Beijing. In the next five years, the plan said, the country must spur cuts to carbon emissions in “key sectors”. China’s steel industry will likely be counted as it is the world’s largest by production and the country’s second largest emitter.

Chinese automakers are still taking baby steps towards using green steel. But the auto industry can actually serve as a spearhead in the national effort to cut emissions from China’s steel industry, according to Shen Xinyi, a researcher focusing on steel at the Centre for Research on Energy and Clean Air, a think-tank based in Helsinki.

A key reason is that carmakers are more capable of absorbing price hikes of raw materials because their products can fetch larger profits, Shen explains. This basically gives the sector an advantage in creating a market for green steel ahead of other industries, such as construction, she adds.

New trade rules are also adding external pressure for automakers to make the switch so as to build their competitiveness globally, according to Bonnie Zuo, China engagement lead at Transition Asia, a think-tank based in Hong Kong.

She highlights the European Union’s Carbon Border Adjustment Mechanism (CBAM), which puts a price on carbon-intensive imports of products such as steel, and which entered into force this January. The EU has proposed to extend its coverage downstream, bringing some steel car parts under CBAM from the beginning of 2028, potentially subjecting foreign-based carmakers to this carbon tax.

Seeking standards together

The joint declaration was signed by five Chinese car companies, one parts manufacturer and nine steelmakers. They include popular electric vehicle manufacturers, including Li Auto, Nio and Xiaomi, as well as steelmaking giants, such as Baowu, Ansteel and Shougang Steel.

The document was signed voluntarily and has three goals. One is to find out how the auto and steel industries define “low-carbon” steel and work towards aligning their standards – the foundation that will allow them to report their carbon emissions more accurately.

A lack of a clear standard for low-carbon steel is a big obstacle that prevents Chinese automakers from buying the product, Zuo says.

The absence of such standards will make it harder for automakers to calculate carbon emissions throughout the lifecycles of their cars. It will also prevent them from branding their cars as being “low carbon”, she notes.

“Green steel will not attract automakers whatsoever if they cannot do either of those things,” she adds.

There are also different terms used to describe steel produced in more sustainable and climate-friendly ways, such as “green steel”, “low-carbon steel”, “net-zero steel” and “renewable steel” – demonstrated by the variations among researchers’ comments and reference materials for this report.

These terms are related but not identical, according to Shen, and there are not yet internationally agreed definitions that clearly distinguish them.

“Clear standards are the foundation of any market,” she says. “Once green steel, low-carbon steel and other similar terms are clearly defined, then it will become much easier for automakers to invest in it and buy it.”

Beyond cooperation in the domestic context, the China Iron and Steel Association (CISA), the industry body which convened the joint statement in January, also signed a partnership in late 2025 with the global nonprofit Responsible Steel, pledging to collaborate on international frameworks for emissions measurement and classification that could support trade in low-emissions steels.

‘Chicken and egg’ dilemma

The declaration also aims to establish an understanding that there are economic benefits for carmakers to use low-carbon steel – and, more importantly, to help carmakers afford the additional cost or “premium”.

From green steel to renewable hydrogen, many emerging green materials are struggling to take off due to a chicken-and-egg problem: there is no firm demand for these products because they are more expensive than existing – albeit more polluting – options. That discourages manufacturers from making them, essentially creating a vicious cycle.

From the automakers’ perspective, before making any decisions they need to understand clearly how the green steel premium will affect their production costs and how policy and markets may change, Zuo explains.

Currently, the most mature method for making low-carbon virgin steel uses iron processed with green hydrogen and electrified furnaces. When and if the technology is available at scale in China, each tonne of steel would imply a cost up to USD 225 per tonne more than steel produced in conventional, coal-fired blast furnaces, according to a 2024 analysis by Transition Asia. The projection takes into consideration all aspects of steel production, from capital investments to energy costs, including green hydrogen.

Since a car is normally built with around 0.9 tonnes of steel, using green steel made in this way would increase its production cost by up to USD 203, roughly 1% of the price of an average car in China, the report said. Projects to produce such green-hydrogen-fed iron and steel, however, are for now largely at the pilot stage or small scale in China.

The recent joint declaration does not require participating automakers to commit to buying low-carbon steel immediately, according to a source close to the matter. But it does require them to “engage, contribute and participate in a shared process” aimed at making “low-carbon” a commercially viable product, the source said. It also aims to build a platform to make it easier for steelmakers and carmakers to collaborate with each other.

Shen agrees that the declaration is about promoting collaboration along the steel supply chain rather than mandating any action towards buying green steel. But it lays the groundwork for a real market by attempting to address the core problems, she says.

Uphill battle

Although Chinese carmakers are leading the world in making electric vehicles, adopting green steel has proven to be an uphill battle so far.

They have fallen behind their EU, US and Korean rivals in the switch, according to a ranking published by Lead the Charge, a global network of climate, human rights and investor groups monitoring automakers’ progress on socio-environmental issues.

Chinese car companies face intense pressure to control their production costs so as to stay ahead in a price war, and that may have prevented them from buying more expensive steel, says Xing Lei, an independent analyst of the Chinese auto industry. An immature supply chain for green steel is another factor behind their slow action, he adds.

For many, promises by automakers to buy green steel will be significant for growing a meaningful market. “This gives certainty to green steel suppliers that they will have customers in the future,” says Franziska Grüning, raw materials policy officer at Transport & Environment, a Brussels-based nonprofit and a member of Lead the Charge.

“This is something that we still don’t see yet from Chinese companies,” Grüning says.

Out of the four Chinese automakers assessed, BYD, GAC and SAIC have taken little action, the ranking shows. The company that stands out is Hangzhou-based Geely.

“Geely discloses the share of renewable steel in one model, which makes Geely one of only two carmakers [in the ranking] that offer this level of transparency,” Grüning says. The other is the German company Mercedes-Benz.

Geely required its direct suppliers to ensure that recycled steel would account for 20% of their respective annual steel usage by 2025, according to its 2024 environmental, social and governance report. The company also revealed that four of its models were built partly using recycled steel and gave the percentage in each case.

Recycled steel typically means steel derived from scrap rather than produced from scratch. It skips the most carbon-intensive step of steelmaking, which is turning iron ore into pig iron, usually using coal. As such it generates much lower emissions than the conventional coal-based method, Shen says.

Researchers also agree that government policy, such as subsidies, can support car companies to take the first step.

Steel typically makes up 65% of a car’s weight, so it is important that automakers buy green steel, according to Grüning.

Auto manufacturing is currently also looked to as a key driver of steel demand amid the continued slowdown in China’s construction sector, so more ambitious action from carmakers could be a significant signal for green steel development.

“What we want to see, at the end of the day, is green steel or low carbon steel in a vehicle,” Grüning adds.