China's steel transition is attracting billions in investment, but the wider value chain still needs more

New Climate Bonds report finds expanding finance for raw materials and strengthening demand to low-carbon steel will be key to the next stage of decarbonisation

Highlights:  

• China’s Hebei province has granted CNY46.9bn (USD6.9bn) in steel transition lending as of end-2025, demonstrating that clear transition guidelines drive financial flows.
• Of 12 GSS+ steel bonds issued in China in 2025, seven (CNY7bn/USD1bn) targeted scrap processing and electric arc furnace construction.

• Expanded Chinese taxonomies create new opportunities to channel finance across the steel value chain.

   

Beijing/London, 22 July 2026 – Deep decarbonisation of China's steel industry requires financing across the full value chain, not just steel production, a new report from the Climate Bonds Initiative finds. A high green premium and the lack of unified standards for defining and procuring green steel continue to limit uptake at scale. China's transition finance frameworks expand from production to cover the broader steel value chain, creating opportunities to boost demand, lower costs, and accelerate decarbonisation. 

Labelled debt is emerging as a key financing channel. Hebei, the country's top steel-producing province, has granted CNY46.9bn (USD6.9bn) in transition loans by end-2025, offering lower rates and longer tenors. Nationally, 12 steel-related labelled bonds were issued in 2025, with seven worth CNY7bn (USD1bn) earmarked for scrap processing and EAF construction.

Near-term priorities include stronger demand-side incentives from policymakers, including public procurement and alignment with international green steel standards; a pipeline of bankable transition projects from steel companies; and continued innovation in financing tools from financial institutions across the value chain.

Wenhong Xie, Head of China Programme, Climate Bonds Initiative:

“China's steel sector demonstrates how quickly capital can be mobilised when policy direction is clear. Yet financing remains concentrated in steelmaking technologies and production processes. Achieving deep decarbonisation will require capital to flow across the entire value chain, from low-carbon raw materials and enabling infrastructure to downstream buyers prepared to create demand for low-carbon steel. Given the scale of its steel industry and market, China will play a decisive role in shaping the development of the global low-carbon steel market. This report provides insights for policymakers, financial institutions and steel companies as they navigate the next phase of China’s steel transition.”

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For more information, please contact: 

Xiaoyan Shen 

Senior Communications and Marketing Specialist, Climate Bonds Initiative

Xiaoyan.shen@climatebonds.net  

Notes for journalists:

About Climate Bonds Initiative: Climate Bonds Initiative is an international organisation working to mobilise global capital for climate action. It promotes investment in projects and assets needed for a rapid transition to a low-carbon, climate resilient, and fair economy. The mission focus is to help drive down the cost of capital for large-scale climate and infrastructure projects and to support governments seeking increased capital markets investment to meet climate and greenhouse gas (GHG) emission reduction goals. Climate Bonds conducts market analysis and policy research; undertakes market development activities; advises governments and regulators; and administers a global green bond Standard and Certification scheme.