Nippons Steel AGM 2026 Information Pack

6月 8日, 2026

Nippons Steel AGM 2026 Information Pack

2026, 日本, 日本制铁, 钢铁

Research

By ta-team

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Introduction

Nippon Steel has made substantial investments in EAFs, however, limited progress on decarbonising blast furnace processes can cap the amount of absolute emissions reduction possible to be in line with achieving carbon neutrality by 2050. This info pack covers the FY2025 developments of Nippon Steel’s decarbonisation initiatives and reviews potential risks of being unable to meet decarbonisation commitments.

High-level engagement points:

Accelerating renewable energy procurement to power newly built Electric Arc Furnaces (EAFs) is key to mitigate risks from volatile fossil fuel imports and fully realise the emissions reduction potential of these capital investments.
Transitioning away from internationally debated mass-balance accounting methodologies towards verifiable emissions reductions is critical to protect global market competitiveness and protect the company from greenwashing risks.
Securing a reliable and stable supply chain for Direct Reduced Iron (DRI) is essential to support operational resilience and fully capitalise on the commercial scaling of low-carbon steel production.
Maintaining increased disclosure and transparency regarding the emissions intensity and decarbonisation targets of global expansion initiatives, such as AM/NS, is important to build investor confidence, show compliance with localised environmental standards, and highlight the company’s progress toward its decarbonisation goals.

Progress since the Last AGM

Nippon Steel has set a target of 30% CO₂ emissions reduction (equivalent to 31 million tonnes/year) from FY2013 levels by FY2030, and based on TCFD disclosure has achieved around 27.4% reduction in FY2024.¹ However, Transition Asia’s analysis shows 89% of this reduction has been due to lower production, rather than improvements in emissions intensity, which made up around 11%.² The company has also set a carbon neutrality by FY2050 target, and is aiming to achieve this by creating more GX steel demand and installing the following decarbonisation technologies. The overall CAPEX for implementing these transition technologies was initially estimated at JPY 4-5 trillion, but is now expected to increase as specific implementation plans solidify:

Figure 1. Nippon Steel Emissions Trajectory under BAU and Corporate Targets

Source: Nippon, TA analysis

1. COURSE50: Nippon Steel has been researching and developing ways to inject hydrogen into blast furnaces since 2008. For the COURSE50 project, Nippon Steel estimates a 30% reduction potential, and has planned large-scale demonstrations at the No.2 BF at Kimitsu, which is 400x the size of the test furnace. COURSE50 installation is planned for FY2030, and aims for a timeline of around 50% reduction by around FY2040.³ For the Super COURSE50 project, between February and March 2026, Nippon Steel achieved a 45% reduction in emissions when testing a small-scale test blast furnace in Kimitsu.⁴ Although this is an incredible technological world first, this is just a 2 percentage point increase from what was achieved in FY2024, suggesting progress is slowing down.⁵ Analysis by Transition Asia finds that the potential to reduce emissions through these technologies is limited compared with hydrogen-based DRI (H₂-DRI), especially with the onset of carbon pricing likely leaving residual emissions exposed.⁶ While the pilot test results approach the technology’s 50% performance ceiling, scalability remains unconfirmed, leaving the feasibility of the company’s 2050 net-zero goal uncertain given the projected 2040 installation timeline.

Additionally, part of Nippon Steel’s emission-reduction strategy involves pairing hydrogen reduction in blast furnaces with Carbon Capture, Utilisation, and Storage (CCUS). One key project is the Metropolitan Area CCS project, which is planned to capture 1.28 million tonnes of CO₂ emissions annually from the Kimitsu Area of East Nippon Works and other industries in the Keiyo Coastal Industrial Zone, transport the CO₂ through a 80 kilometre large-capacity pipeline, and store it offshore off the coast of Chiba Prefecture.^{7 8} The companies involved have estimated CO₂ capture and storage by FY2030 and will begin exploratory drilling in July this year.⁹ However, given its limited scales (1.28 million tonnes represents only ~2% of Nippon Steel’s total emissions) and uncertain progress, it remains unclear whether CCUS can scale fast enough to meaningfully contribute to corporate and industry net-zero targets.

2. H₂-DRI: In March 2026, Nippon Steel began tests at a pilot-scale shaft furnace (capacity of 1t/h) at its R&D Center to produce iron from low-grade iron ore and hydrogen. The plan is to scale up tests by FY2027 and establish complete industrial-scale H₂-DRI technology by 2040.¹⁰ While global competitors are ahead on commercial-scale H₂-DRI using high-grade ore, Nippon Steel’s focus on low-grade ore reduction may represent a differentiated technical pathway to address high-grade ore scarcity, which is an emerging bottleneck for DRI scalability. Nonetheless, Nippon Steel has established a joint venture, acquiring a 30% stake in Canada’s Kami iron mine to conduct a development feasibility study on securing high-grade iron ore for DRI production, suggesting the company seeks to maintain flexibility as the low-grade technology continues to develop.¹¹ This approach is complemented by plans for overseas DRI procurement, supported by infrastructural preparations such as the planned installation of a DRI yard at the Yawata Works, which provides more options when dealing with technical challenges of full-scale DRI produced in-house.

3. EAF: Nippon Steel plans to have 3 new EAFs coming online by FY2029, with a combined estimated CAPEX of approximately JPY 868.7 billion.

a. New large scale EAF at Yawata: This EAF will replace a BF going offline, with a capacity of 300-tonnes-per-charge (300 t/ch) and production capacity of 2 million tonnes/year and requires around JPY 630.2 billion (USD 3.96 billion¹²).

b. Expansion of Hirohata: This EAF is being added to the existing facility. Capacity of 100-t/ch scale and a production capacity of 0.5 million tonnes/year will be newly installed, costing around JPY 140.0 billion (USD 880 million). Upon completion, the total EAF capacity at the site will reach 1.2 million tonnes per year.

c. Upgrading and restarting Shunan: This EAF is estimated to start in the second half of FY2028, with capacity of 160-t/ch scale and 0.4 million tonnes/year, costing JPY 98.5 billion (USD 620 million).

The Japanese government is set to provide up to JPY 251.4 billion and Nippon Steel has shared plans to apply for OPEX support in the form of a tax credit up to JPY 20,000/tonne.¹³ The investments in EAF are a very welcome signal, showing Nippon Steel’s commitment to lower emission technologies. However, the true “green” value of this EAF steel remains highly questionable. To provide electricity for this shift to EAF at the Yawata Works, the company plans to build four new LNG-fired power plants, with a combined capacity of 2,000 MW. Relying on new fossil fuel-based captive power generation to run these furnaces significantly undermines the overall decarbonisation impact of the EAF transition.

Key Developments

1. Building GX Steel Demand: Nippon Steel has reported multiple offtake agreements with various sectors to use its NSCarbolex™ product, a “green” steel described as steel that “represents the environmental value of reducing CO₂ emissions in the steel manufacturing process”.¹⁴ One significant agreement is with Nissan motors to use NSCarbolex for mass-produced automobiles. This deal signals demand for lower carbon products in the automobile sector, while also giving the company a chance to meet its goal of 1.6 million tonnes/year increase in supply capacity for NSCarbolex.¹⁵ ¹⁶ Yet, widespread adoption remains limited; while the available sales capacity for FY2026 exceeds 300,000 tonnes/year, cumulative sales over the past 2.5 years have hovered at merely tens of thousands of tonnes. This sluggish demand may be partly due to how the product’s emissions are calculated. The “green” credentials of these products rely heavily on specific carbon accounting methods. Based on the Japan Iron and Steel Federation (JISF) guidelines released in October 2025, Nippon Steel has begun implementing the Allocation Method of carbon accounting alongside the existing Mass Balance method.¹⁷ While Mass Balance would allocate achieved emission reductions to GX steel products, the Allocation Method instead distributes the amount of emissions across products, which Nippon Steel reports as compliant with ISO 14067 (CFP standard) and ISO 22095. Under this method, GX steel is sold as a low-CFP steel product.¹⁸ However, this is a difference in carbon accounting methodology, and does not demonstrate that the specific products claiming low-CFP status is physically linked to verifiable emissions reductions, so Nippon Steel risks creating demand for steel that may not be deemed “green” by international standards. More detail and implications of this can be found in Transition Asia’s FY2025 policy review here.

2. Global Initiatives: Nippon Steel has made significant changes to business operations globally in line with a 100 million tonne target in global crude steel capacity amidst a difficult domestic market:¹⁹

a. Europe: In May 2026, the company gained direct ownership of U. S. Steel Košice (USSK), the largest steelmaker in Central and Eastern Europe, with the plan of managing a hub in Europe, which reflects pressures from European policy including the Carbon Border Adjustment Mechanism (CBAM) and the Industrial Accelerator Act (IAA)’s “Made in Europe” initiative, which could leave outside corporations at a disadvantage. In FY2025, USSK produced 3.22 million tonnes of crude steel, with 3 major blast furnaces. USSK will become Nippon Steel Slovakia s.r.o.” (NSSK) in October 2026.²⁰ Regarding its future outlook, Nippon Steel’s CEO noted in July 2025 that it has the potential to scale up to 10 million tonnes. He emphasized that further production increases will be considered in tandem with European market conditions.²¹

b. India: Nippon Steel is expanding capacity by 6 million tonnes/year to approx. 15 million tonnes/year at ArcelorMittal Nippon Steel India Limited’s Hazira Works location. Nippon Steel asserts that AM/NS India will also upgrade the product mix for full-scale entry into the automobile market. ²²In March 2026, AM/NS began construction of an integrated steel plant in Southern India, with a crude steel production capacity of 7 million tonnes.²³ Since integrated facilities rely on blast furnaces, this development clearly signals further growth in Nippon Steel’s overseas BF-based capacity, and emissions lock-in. However, it is worth noting that AM/NS has become the first integrated steel producer in India to receive a Green Steel Certification under the Ministry of Steel’s taxonomy. Its Hot Rolled (HR) and Cold Rolled (CR) coils received four and three stars respectively, out of a maximum five-star rating.²⁴ While AM/NS India has set a target to reduce its emissions intensity by 20% by 2030 (against a 2021 baseline), the latest available data from 2022 indicates an actual increase in intensity compared to 2021. The addition of this new blast furnace capacity is likely to exacerbate this trend, making the achievement of their 2030 reduction target even more challenging.²⁵

c. Thailand: Nippon Steel has the only integrated EAF sheet steel manufacturing capabilities in Thailand through G Steel Public Company Limited and G J Steel Public Company Limited and have reported a plan to restructure. Thailand plans to implement its own version of CBAM, which may have implications for Nippon Steel’s operations.^{26 27}

Additionally, Nippon Steel’s subsidiary U.S Steel’s board approved a USD 350 million budget to reline the blast furnace at Gary Works.²⁸ Although the investment was announced as an investment to “enhance steelmaking capabilities, improve competitiveness, and increase capacity”, investing capital into the longevity of blast furnaces over decarbonised steelmaking technologies raises concerns about the local industry’s actual competitiveness in a decarbonising global market.²⁹ This decision not only delays the green transition but also undercuts the trajectory set by the USD 1.9 billion DRI project at Arkansas’s Big River Steel Works, a first in the United States that Nippon Steel actively supported.³⁰

Material Updates for Investors

Climate Strategy and Disclosure Updates

In March 2026, Nippon Steel disclosed more information in the Japanese GX Initiatives seminar, covering topics such as DRI use and the scrap strategy and in April 2026, disclosed the company’s lobbying efforts in the last year, showing efforts at both the domestic and global stage to gain industry support for CCUS and policy support.³¹ Additionally, disclosures made during the international “GX Transformation Initiatives” webinar in May 2026 provide more details into the factors influencing investment decisions, such as the supply-and-demand side factors, as well as anticipated costs and infrastructure needs. This was after active engagement by a group of institutional investors, including Australasian Centre for Corporate Responsibility (ACCR), which have stated these disclosures reflect progress in responsiveness to investor engagement and provide stakeholders with greater visibility into the company’s transition strategy.³²

Governance and Shareholder Rights

In July 2025 and most recently in March 2026, Nippon Steel’s CEO advocated to remove the “300 voting rights” threshold of shareholders, which states that shareholders may file a proposal if they continuously hold at least 1% of the total voting rights or at least 300 voting rights in the preceding six months. By changing this right, it would be harder for shareholders to file proposals at company AGMs and indicates pressure Nippon Steel feels by shareholder proposals.³³

Key Actions Required for Future Decarbonisation

Reduce reliance on fossil fuel: In July 2025, it was announced that Nippon Steel was considering the use of 4 new LNG plants, making up a total of 2,000 Megawatts, to power the new EAF in Yawata.³⁴ Documents show that Nippon Steel plans to construct a 2 GW LNG-fired GTCC facility and retire existing boiler turbine generators that co-fire coal, LNG, and by-product gases. However, current global difficulties in LNG procurement raise questions about the long-term cost viability of this strategy. Furthermore, disclosure shows plans to eventually transition to hydrogen or ammonia co-firing but the feasibility and readiness of this is not shared. Transition Asia is aiming to release a report on renewable energy procurement options for EAFs, based on global examples in 2026.
Nippon Steel has heavily focused on promoting its mass-balance accounting approach and allocation methodologies to global initiatives. However, as international frameworks like the EU’s CBAM, and emerging equivalents in Thailand and Taiwan, gaining traction, the company can better invest in shifting its focus toward genuine, technology-driven emission reductions. Rather than relying on Japan’s policy support for GX steel and relative emissions reduction over absolute emissions reduction, Nippon Steel can prioritise the production of genuine low-carbon steel to maintain global competitiveness.
To align with evolving global governance standards, Nippon Steel can follow JFE’s lead by linking executive remuneration directly to climate change KPIs.

Conclusion

Although investments in a diversified portfolio to improve profitability are commendable, investments in blast furnaces without proven technology to decarbonise the operational emissions does not align with global shifts. Additionally, Nippon Steel’s acknowledgement of the importance of green steel aligned with global standards is important. However, the use of carbon accounting to rearrange emissions to sell as low CFP using the allocation method is questionable.

Endnotes

Data and Disclaimer

This analysis is for informational purposes only and does not constitute investment advice, and should not be relied upon to make any investment decision. The briefing represents the authors’ views and interpretations of publicly available information that is self-reported by the companies assessed. References are provided for company reporting but the authors did not seek to validate the public self-reported information provided by those companies. Therefore, the authors cannot guarantee the factual accuracy of all information presented in this briefing. The authors and Transition Asia expressly assume no liability for information used or published by third parties with reference to this report.

Author

Sala Tsuzuki

Japan Programme Officer

Kenta Kubokawa

Japan Lead

Akira Kanno

Research Analyst