The Ministry of Industry and Information Technology is exploring a steel output limit mechanism to control carbon emissions, pollution and energy consumption.

The move is in line with the nation's active pursuit of carbon neutrality, said officials and experts during the three-day 11th China International Steel Congress that ended on Friday in Shanghai.

The biennial event this year was themed "Green Steel for a Low-carbon Future" and attended by more than 400 participants from the iron and steel industry.

Experts said the steel sector, which accounts for around 18 percent of the nation's carbon emissions, would see both challenges and opportunities in the nation's low-carbon pursuit.

The ministry would explore measures including control of crude steel output, increasing the proportion of short process electric furnaces, and developing hydrogen metallurgy, said Lyu Guixin, an inspector from the department of raw material industry under the Ministry of Industry and Information Technology.

The ministry would also work actively with government bodies, including the National Development and Reform Commission, to consolidate the achievements in overcapacity cuts in the past few years, Lyu said.

Chinese steel mills produced 1.06 billion metric tons of crude steel in 2020, accounting for more than 55 percent of the global output, according to the National Bureau of Statistics.

Having been the world's largest steel manufacturer for 25 years, the Chinese iron and steel industry is resolutely promoting the elimination of outdated production in recent years to restructure the sector, optimize the energy consumption, and shift to lower-carbon operations.

Up to 170 million tons of overcapacity had been cut in the steel sector during the 13th Five-Year Plan period (2016-20), and 229 Chinese steel enterprises were undergoing an ultralow emission restructuring by the end of 2020, according to the Ministry of Ecology and Environment.

China has vowed to have CO2 emissions peak by 2030 and achieve carbon neutrality by 2060. To achieve this, the iron and steel industry, like other major sectors, is speeding up its transition to green, low-carbon and high-quality development mode.

Experts expect big changes in energy, industry, the global economy as well as people's lives, which will be closely connected with the iron and steel industry, creating both opportunities and challenges.

Dai Zhihao, president of Ansteel Group Corp, said he sees a huge potential for steel recycling in the new trend.

"Materials of iron and steel can become fully recyclable. According to the World Steel Association's estimates, 94 percent of iron and steel can be recycled, which is much higher than the 20 percent recyclable rate for cement. And 5 percent of iron and steel can be reused as well," said Dai.

He also believed hydrogen metallurgy is an important technology in promoting low-carbon practices in steel and iron manufacturing, especially as the cost of hydrogen is hoped to be halved in the future. "Low-carbon practices should be applied not only during the production process but also across the complete steel supply chain," he said.

Experts said industry players should expect some difficulties for Chinese steel companies during the low-carbon shift.

"Chinese steelmakers need to strike a balance between decarbonizing and sustaining their steel production scale, because there is still considerable steel consumption demand as the nation's urbanization and industrialization continue," said Zou Jixin, chairman of Baoshan Iron& Steel Co Ltd.

According to Zou, most Chinese steel products were produced and consumed in the past two decades. This means, there is a limited amount of steel available for recycling. Furthermore, China's scrap steel reserves are not high, posing challenges to the low-carbon efforts, said Zou.

The iron and steel industry is the second-largest consumer of energy after the chemical industry, and it is the second-largest emitter of CO2 after the cement industry. About 10 percent of the total global CO2 emissions are contributed by the sector with 3.7 billion tons of direct and indirect CO2 emissions, according to Aashish Gupta, member of management board and global head of upstream of Primetals Technologies.

To date, major steel companies have announced they will try to reach carbon-neutral goals by 2050, but the path to low-carbon steelmaking has multiple technology challenges with significant costs, said Gupta.

He Wenbo, executive chairman of the China Iron and Steel Association, said: "Global steel companies should join forces in the research and development of technology. Market leaders could invest together, share risks as well as achievements.

"Best low-carbon practices in the steel industry should be shared worldwide as much as possible, and all parties involved in the steel sector are encouraged to participate in the global campaign to make our carbon-neutrality goal come true as early as possible."