POSCO is advancing toward carbon neutrality in line with its 2050 Decarbonization Roadmap, which outlines a comprehensive mid- to long-term strategy encompassing technology development, facility investment, raw material sourcing, and energy procurement. In the short to medium term, we aim to utilize existing facilities to expand the use of carbon-reduced fuels and raw materials, as well as bridge technologies such as intensifying hydrogen use in blast furnaces, operating at a low hot metal ratio (HMR), and introducing electric arc furnaces (EAF). Building on our hydrogen infrastructure, we aim to achieve carbon neutrality in the long term by gradually adopting HyREX, our proprietary hydrogen reduction ironmaking technology.
In 2024, POSCO set a carbon emissions target of 75.7 million tons, with actual performance recorded at 71.1 million tons.

POSCO incorporates climate change response into all levels of its decision-making system. Climate-related strategies and facility investment plans are reviewed and deliberated by the ESG Committee, which operates under the Board of Directors. The Carbon Neutral Committee, chaired by the CEO, oversees departmental implementation of carbon neutrality and coordinates any issues that arise during execution. It serves as the control tower for climate action. At monthly management meetings, greenhouse gas emissions performance is tracked alongside the financial impacts of climate response initiatives.

 

The Technology Strategy Office, which reports directly to the CEO, serves as the secretariat for the six subcommittees of the Carbon Neutrality Committee, which are responsible for establishing decarbonization strategies, developing related technologies, and monitoring implementation at the Pohang and Gwangyang Works. To support a smooth transition to a carbon reduced steel production system, we are strengthening our execution capabilities through two dedicated teams: the HyREX Project Team, which oversees the hydrogen reduction ironmaking project under the direct supervision of the CEO, and the Electric Arc Furnace Project Team, which is based at Gwangyang Works.

A converter is a large cauldron-like facility that holds molten iron produced in a blast furnace. Oxygen is blown into the molten iron to remove impurities and adjust the composition of molten steel as needed. We estimate that approximately 80% of the total carbon emissions associated with producing one ton of molten steel are generated during the production of molten iron. Accordingly, the converter-based bridge technologies focus on reducing the volume of molten iron used while increasing the proportion of scrap charged into the converter. There are two main approaches to achieving this:

The second is the Oxygen Top & Bottom Blown (OTBB) Converter technology, which secures an additional heat source to increases the use of steel scrap in the converter by blowing oxygen from both the top and bottom. Without relying on external heat, the converter instead utilizes the heat from the molten iron itself. As more scrap is added, the temperature of the molten iron decreases. The advantage of using an OTBB Converter is that it maximizes secondary combustion and heat transfer efficiency by injecting oxygen from both the top and bottom of the converter.

Technologies that enable the use of large amounts of scrap iron in place of molten iron―such as the Melted Scrap Charging Method and OTBB Converter technology―are collectively referred to as “low Hot Metal Ratio (HMR) operation technologies.”

In February 2024, POSCO began construction of a new electric arc furnace (EAF) facility with an annual capacity of 2.5 million tons at the Gwangyang Works, targeting operational launch in 2026. This initiative aims to meet growing demand for carbon-reduced steel. The EAF method can reduce carbon emissions by up to 75% compared to conventional blast furnace operations, making it a highly effective carbon reduction production system.

POSCO is exploring the application of Carbon Capture, Utilization, and Storage (CCUS)¹⁾ technology to reduce CO₂ emissions generated during the steelmaking process.

Since 2021, POSCO and the Research Institute of Industrial Science & Technology (RIST) have been jointly conducting a national R&D project to demonstrate carbon capture and conversion technology through a public-private partnership. This technology captures CO₂ from the steelmaking process, injects it into a coke oven, and utilizes it as a heat source for by-product gas power generation. In January 2024, Pohang Works successfully demonstrated the viability of injecting medium-purity CO₂ into coke ovens, confirming that energy-intensive purification to high-purity CO₂ is not necessary. As a result, the amount of coke oven gas (COG) generated increased by approximately 7%. COG is a versatile energy source that can be used as fuel gas, a feedstock for producing by-product hydrogen, or a raw material for high-value-added chemicals. The higher the calorific value of COG, the greater its potential for utilization. In recognition of this innovation, our CO₂ blowing conversion technology utilizing coke ovens was selected as one of the Top 10 R&D Technologies of 2024 by the Ministry of Trade, Industry and Energy (MOTIE).

We are reviewing a project to produce liquid carbonic acid with 99.99% purity and sustainable aviation fuel (SAF) using by-product gases generated from our steelworks. Through this initiative, we aim to gradually expand our industrial gas portfolio. In 2024, we established the Steel Industry CCU Consortium in partnership with LG Chem, the Korea Research Institute of Chemical Technology (KRICT), and the Gyeongsangbuk-do Provincial Government. The consortium is currently participating in the CCU Mega Project led by the Ministry of Science and ICT (MSIT), and has proposed Pohang Works as the demonstration site. Final approval was granted by MSIT in October 2024, and the demonstration is scheduled to begin in 2026 following a preliminary feasibility review in 2025. The CCU Consortium plans to demonstrate a technology at Pohang Works that captures CO₂ from by-product gas generated during the steelmaking process and converts it into syngas―a mixture of carbon monoxide (CO) and hydrogen (H₂). This syngas can either be sold externally as a raw material for chemical products such as sustainable aviation fuel (SAF), or injected back into the steelmaking process to serve as a reducing agent for iron ore, thereby creating an efficient resource circulation system.

POSCO plans to capture CO₂ in phases using commercially available standalone technologies such as absorption, adsorption, membranes, and cryogenics. The captured CO₂ will be converted to conditions suitable for transportation and storage―specifically, minus 51°C, 5.5 bar, and a purity of 99.9% or higher―through compression, liquefaction, and purification processes. It will then be injected into abandoned oil and gas fields or saline aquifers with sealed geological formations for permanent sequestration. Sealed geological formations refer to layers where impermeable cap rocks cover porous sedimentary formations, effectively preventing gas leakage. We are currently exploring potential storage sites in the Donghae region of Korea, Indonesia and other parts of Southeast Asia, as well as northwestern Australia. In parallel, we are reviewing a plan to react captured CO₂ with slag―a by-product of the steelmaking process―to produce carbonized material for permanent storage, in the form of reclaimed ash in abandoned mines. In 2024, our project was selected as an International Feasibility Study Support Project by the Export-Import Bank of Korea. That same year, we completed a pre-feasibility study for CCS at our overseas integrated mill, PT. KRAKATAU POSCO, located in Cilegon, Indonesia. In 2025, we plan to conduct a full feasibility assessment to refine our CCS application strategy.

Hydrogen reduction ironmaking is a technology that reduces greenhouse gas (GHG) emissions by replacing metallurgical coal―traditionally used as a reducing agent and heat source in the steelmaking process―with hydrogen. In 2024, our HyREX technology was designated as a National Strategic Technology in recognition of its critical importance to national security and its broad economic impact. That same year, the Ministry of Science and ICT (MSIT) selected the Optimized Iron Ore Technology Development for Korean Hydrogen Reduction Ironmaking (Steel) project as a Global R&D Flagship Project. In line with national policy projects, we are currently preparing the Korean-type Hydrogen Reduction Ironmaking Demonstration Project, aiming to complete technological development by 2030.

HyREX, POSCO’s proprietary hydrogen reduction ironmaking technology, is based on the fluidized bed reduction furnace used in the already-commercialized FINEX process. This approach differs from the shaft furnace methods adopted by overseas competitors, both in terms of raw materials and equipment design. In terms of raw materials, whereas shaft furnaces require iron ore to be processed into uniform spherical pellets, HyREX can utilize fine ore directly. This flexibility not only simplifies raw material procurement but also reduces production costs. From an equipment perspective, HyREX offers superior temperature control due to its use of a fluidized bed reduction furnace.

In 2021, POSCO began the site permitting and approval process for the construction of a hydrogen reduction ironmaking plant at Pohang Works, covering an area of 1.35 million ㎡ (approximately 410,000 pyeong). The following year, in July 2022, we signed an engineering partnership agreement with Primetals Technologies, a company with extensive experience in designing FINEX facilities. Through this partnership, we are jointly designing the key facilities for the HyREX demonstration plant, with the aim of constructing a 300,000-ton-per-year test facility at Pohang Works.

 

Building on these efforts, in 2023, POSCO introduced a hydrogen fluidized bed reduction experimental furnace with a capacity of 50 kg per batch at RIST to validate the hydrogen-based reduction technology. This was followed in April 2024 by the completion and successful first test of a 1-ton-per-hour electric smelting furnace (ESF) experimental facility at Pohang Works. These milestones have laid a solid foundation for the development of core element technologies for both the fluidized bed reduction furnace and the ESF and the HyREX process.

In January 2024, we established the HyREX Project Team to lead the development of hydrogen reduction ironmaking technology and launched the Hydrogen Reduction Development Center to bring together experts from across our group companies. Looking ahead, we aim to construct a demonstration plant that will serve as a cornerstone for the implementation and future commercialization of HyREX technology.

 

At the global level, POSCO is also actively building international technology partnerships to advance decarbonization in the steel industry. In 2021 and 2022, in collaboration with the World Steel Association (worldsteel) and Swedish steelmaker SSAB, we led efforts to launch the Hydrogen Iron & Steel Making Forum (HyIS Forum), which in 2023 was expanded into the Breakthrough Technology Conference organized by worldsteel.  Since 2023, POSCO has taken a leading role in organizing and operating the HyREX R&D Partnership as a dedicated platform for building global consensus on HyREX technology. The partnership, comprising 19 related companies―including global steelmakers, raw material suppliers, and energy firms―held its first HyREX R&D Partnership Conference in November 2024. Through this initiative, we aim to accelerate the development of carbon reduction technologies for the steel industry in close cooperation with global partners. 

We are establishing internal standards for decarbonization and implementing them in a phased manner.

Since 2003, POSCO has participated in the Carbon Disclosure Project (CDP) to ensure the transparent disclosure of climate-related information. In 2020, we became the first Korean manufacturer to declare support for the Task Force on Climate-related Financial Disclosures (TCFD) and began disclosing carbon data in line with its recommendations. In 2024, POSCO was rated B for Climate Change and received an A- in the CDP Water Security evaluation.

Since 2022, POSCO has conducted third-party verification of its Scope 3 emissions in accordance with ISO 14064-3¹⁾ standard, as disclosed in our Annual Sustainability Report. Building on these efforts, in 2024, we established a working group comprising POSCO and POSCO FLOW―our group’s logistics company―to enhance the calculation methodology for purchased raw materials and related transportation.

In 2024, POSCO introduced and began systematically operating an internal carbon pricing system to manage climate-related business opportunities and risks, and to support the transition to a decarbonized business structure. The internal carbon pricing initiative is used to raise employee awareness of climate change and to assess the economic feasibility of investments and project commercialization. It is managed within a system that enables timely responses to market changes through periodic rolling.

POSCO is advancing the development of carbon-reduced steel to meet our customers’ decarbonization demands. 

We aim to reduce carbon emissions per ton of crude steel by approximately 10%¹⁾  compared to existing blast furnaces, by adopting a dual scrap charging technology that increases the scrap ratio during the steelmaking process. In addition, we are accelerating our efforts to achieve continuous carbon reduction by constructing a new large electric arc furnace (EAF), which can reduce carbon emissions by up to 75%²⁾ compared to existing blast furnaces.

POSCO comprehensively manages its annual scrap procurements.

In 2024, the total volume of ferrous scrap imported or purchased domestically amounted to 1,924 thousand tons, with an associated cost of KRW 929.6 billion. Additionally, recycled material purchases ―such as increased recycling of used and waste materials―totaled KRW 315.7 billion in the same year.