“If you add up the market value of all the steel producers in the world, you don’t even get a trillion.”

The good news, according to Pimenta, is that producing carbon-free energy is not a technological challenge today.

“Natural gas, be it for a partial reduction in a transition process, and hydrogen are available. The problem is scaling and cost reduction. Hydrogen today probably costs twice as much as it would need to be for us to start considering hydrogen in the steel production process,”

According to Pimenta, the introduction of carbon-free technologies is likely to be asymmetrical and gradual.

“Some countries that are able to make the transition will do so more quickly. The US, for example, with all its support and subsidies, will move faster. China, on the other hand, will probably take a little longer; the country still has a relatively new industrial fleet and infrastructure.”

Pimenta also stressed the importance of interim solutions such as carbon capture.

In addition, the way countries tax carbon will also be crucial.

“The carbon tax is very important because it guides capital allocation to a certain extent and provides incentives for producers.”

“There will come a time when you have to pay to sell carbon-intensive pellets to Europe, for example. Then companies will be forced to think about solutions like briquettes that leave a smaller carbon footprint.”