Shandong Iron and Steel Company Ltd. (600022.SS): PESTLE Analysis [Dec-2025 Updated]

Dominant state backing and industry consolidation leave Shandong Iron and Steel well-positioned to scale and capture Belt & Road infrastructure contracts, while rapid technological upgrades-hydrogen steelmaking, digital twins and specialty-steel lines-offer a clear path up the value chain into higher‑margin markets like EVs and renewables; however, slim commodity margins, volatile input costs, trade barriers and strict provincial emission curbs create acute operational and financial pressure, making the company's success contingent on executing its low‑carbon transition and product mix shift to convert political advantage and R&D momentum into sustainable profitability-read on to see where risks and opportunities collide.

Shandong Iron and Steel Company Ltd. (600022.SS) - PESTLE Analysis: Political

State-led consolidation reshapes national steel champions: Since 2016 China's central government has actively promoted consolidation in the steel sector to reduce overcapacity and enhance global competitiveness. Policies overseen by the State-owned Assets Supervision and Administration Commission (SASAC) and the Ministry of Industry and Information Technology (MIIT) encourage mergers, asset swaps and cross-provincial integration. Between 2016-2023, the number of large state-owned steel enterprises decreased while the top national groups expanded market share; the top 10 Chinese steel firms increased share of national crude steel output from approximately 45% in 2015 to roughly 55-60% by 2022. For Shandong Iron & Steel (600022.SS), this environment creates pressure and opportunity to participate in regional consolidation, secure state support, and access lower-cost capital for capacity rationalization and CAPEX.

Top ten firms targeting 60% of output under policy: Central policy targets have informally aimed to concentrate roughly 55-60% of national steel production within the largest conglomerates to improve pricing power and environmental compliance. This target is reflected in provincial coordination plans and national restructuring roadmaps. Key numeric implications for Shandong Iron & Steel include potential forced capacity transfers or mergers and benchmarking against peers: average EBITDA margins among China's top 10 steelmakers improved from ~5% in 2015 to ~8-12% in 2019-2021 (cyclical), and state-backed consolidation may improve access to long-term financing with government-related rates often 50-150 basis points lower than market rates for major projects.

Regional green and low‑carbon mandates drive plant upgrades: Provincial governments-Shandong province included-have set explicit timelines for emissions reductions, ultra-low emission retrofits, and long-term carbon neutrality alignment with national targets (peak CO2 by ~2030, carbon neutrality by 2060). Local mandates include:

• 2023 provincial target: 20-25% reduction in CO2 intensity for heavy industry vs. 2020 baseline;
• 2024-2026: phased closures or emission controls on small blast-furnace capacity under 300 m3;
• 2030: alignment with national steel sector roadmaps requiring widespread adoption of energy-efficient BF-BOF upgrades and pilot CCUS projects.

These mandates force CAPEX reallocation: estimated retrofit and green-capex needs for medium-large steelmakers average RMB 8-20 billion per major integrated mill over 2023-2030 for electrification, waste-heat recovery, and partial hydrogen/CCUS pilots. Shandong Iron & Steel will face specific provincial inspections and periodic production caps during retrofit campaigns.

Belt and Road demand secures long‑term project pipelines: China's Belt and Road Initiative (BRI) continues to underpin export opportunities for long-lead structural steel, rebar, and plate for infrastructure projects. From 2018-2022, BRI-related steel demand accounted for an estimated 10-15 million tonnes per year of Chinese exports. For Shandong Iron & Steel, participation in state-backed BRI tenders can provide multi-year off-take contracts and financing support from policy banks. Typical contract sizes range: 50,000-500,000 tonnes per large infrastructure contract; export prices are often negotiated in USD or RMB with competitive but politically-facilitated financing terms (export credit, concessional loans), reducing commercial risk vs. spot-market exports.

Trade barriers and tariffs constrain export strategy: Anti-dumping duties, safeguard measures and retaliatory tariffs from major importers (EU, US, India, Turkey, Brazil, South Korea) materially affect Shandong Iron & Steel's export economics. Representative data:

Jurisdiction	Measure Type	Typical Duty Range	Impact on 2022 Exports
European Union	Anti-dumping/safeguards	5%-25%+	Reduced apparent competitiveness; EU imports from China fell ~20% in targeted categories in 2021-2022
United States	Section 232/anti-dumping	Up to 25%+ tariffs, case-specific	Minimal direct finished-product volumes due to high tariffs; focus on third-country routing
India	Safeguards/AD duties	10%-50%+	Significant market contraction for long products since 2018
Turkey/Brazil	Anti-dumping duties	10%-40%+	Export redirection to Southeast Asia and Africa

These trade barriers increase the importance of local partnerships, downstream value-add exports, and pricing strategies. Tariffs raise effective export costs and compress margins-export-oriented product lines may deliver 5-15 percentage points lower net margin than domestic sales after duties and logistics.

Political risk management priorities for Shandong Iron & Steel:

• Maintain strong relations with SASAC, MIIT and provincial authorities to secure favorable consolidation outcomes and financing;
• Allocate RMB-denominated capex for mandated green upgrades (estimated RMB 8-20bn per integrated plant) while pursuing national subsidy and tax incentive programs;
• Leverage BRI project pipelines to lock multi-year off-take and secure policy-bank financing to hedge export demand volatility;
• Adapt export strategy via joint ventures, third-country processing, and product differentiation to mitigate tariffs and anti-dumping exposure.

Shandong Iron and Steel Company Ltd. (600022.SS) - PESTLE Analysis: Economic

Infrastructure-led demand supports steel consumption: Sustained government fiscal support for transport, energy and urban infrastructure in China drives material demand. National fixed-asset investment growth for infrastructure averaged ~5-8% year-on-year in 2021-2023 in cyclical stimulus periods; provincial infrastructure projects in Shandong and neighboring provinces account for significant regional steel consumption. Major projects (rail, highways, ports, power) individually require steel volumes ranging from 50,000 to 500,000 tonnes per project, supporting annual domestic apparent steel consumption for China of ~900-1,000 million tonnes (2021-2023 range).

Low interest rates and stable inflation enable capex: Monetary accommodation from the People's Bank of China (PBOC) with one-year Loan Prime Rate (LPR) in the 3.6-4.3% range (2021-2024) and consumer inflation (CPI) generally between 0.5-3.0% over the same period reduce real borrowing costs for corporates. For SISCO (600022.SS), lower rates enable refinancing of existing debt and investment in modernization: sample impact - a 100 basis point reduction in financing cost on RMB 10 billion of debt lowers annual interest expense by RMB 100 million, improving free cash flow for capacity upgrades and environmental controls.

Raw material input costs squeeze margins: The company's margin profile is highly sensitive to iron ore, coking coal and scrap prices. Benchmark 62% Fe iron ore fines prices traded between ~USD 100-160/tonne in 2021-2023; premium ore and lump prices can be 10-30% higher. Coking coal CFR China ranged widely ~USD 200-450/tonne in the same period. Typical cost sensitivity: a RMB 100/tonne increase in iron ore cost can increase steel production cost by ~RMB 50-80/tonne depending on blast furnace utilization and sinter blending, directly compressing EBITDA margins where domestic steel prices do not fully pass through input inflation.

Export currency dynamics affect competitiveness: RMB exchange rate volatility versus USD and emerging-market currencies alters export margins and import input costs. A weakening RMB vs USD improves RMB-denominated competitiveness for exports priced in USD and reduces real cost of domestically-sourced inputs priced in RMB when global commodity prices are USD-denominated. Example indicators:

Indicator	Recent Range (2021-2024)	Impact on SISCO
USD/CNY	~6.3-7.3	Weaker CNY (higher USD/CNY) increases export competitiveness; stronger CNY compresses export margins
Iron ore CFR (USD/tonne)	~100-160	Higher prices increase production cost per tonne; hedging limited historically
Coking coal CFR (USD/tonne)	~200-450	Volatile; materially alters coke charge and coking costs
Domestic HRC/CRC steel price (RMB/tonne)	~3,000-6,000	Direct revenue driver; determines margin pass-through
Benchmark interest rate (1Y LPR)	~3.6-4.3%	Lower rates support capex and debt serviceability

Urbanization sustains long‑term steel demand: Continued urban migration and municipal construction underpin structural demand for construction steel (rebar, section steel) and long products. China's urbanization rate rose from ~60% in 2019 to ~64% by 2023; urban housing starts and municipal infrastructure projects remain key demand drivers. Over a 10‑year horizon, incremental urban population of tens of millions supports an annual steady-state incremental steel demand estimated in studies at several million tonnes per year for provinces with high industrialization like Shandong.

Economic factors - summarized operational implications:

• Capex planning: Low financing costs justify brownfield upgrades (EAF conversion, desulfurization) to improve cost and emissions profile.
• Margin management: Hedging procurement and optimizing blast furnace/blast alternatives are critical given iron ore and coal price volatility.
• Pricing strategy: Domestic price cyclicality and export currency shifts necessitate dynamic sales allocation between domestic and export markets.
• Demand forecasting: Regional infrastructure pipelines and urban housing metrics should drive production timing and inventory strategy.

Shandong Iron and Steel Company Ltd. (600022.SS) - PESTLE Analysis: Social

Sociological pressures shape product mix, operations and community relations for Shandong Iron & Steel (Shandong Iron & Steel Co., hereafter 'SDIS'). Rapid urban migration in China-urbanization reached approximately 64.7% in 2023-increases demand for housing, infrastructure and prefabricated construction components where light, high-strength steel is preferred. Urban construction cycles drive short‑to‑medium term volume growth in structural and coated steel products.

Key urbanization metrics and implications:

Metric	2023 Value / Trend	Implication for SDIS
China urbanization rate	64.7%	Higher demand for prefabricated steel, structural sections and coated products
Annual new urban housing starts (approx.)	Millions of units; cyclical but concentrated in tier‑1/2 cities	Stable market for construction steel and long products
Prefabricated construction share	Rising, government target growth in infrastructure modernization	Opportunity to supply modular, pre‑fabricated steel components

An aging workforce in China raises labor cost and productivity challenges. The proportion of population aged 60+ was around 18-19% following the 2020 census and has been rising. For SDIS this translates into higher wages, increased benefits and talent shortages in front‑line production roles, pushing the company toward automation, robotics and digital factory investments to maintain margins.

Workforce and automation indicators:

• Share of population aged 60+: ~18-19% (post‑2020 trend upwards)
• Manufacturing wage growth (estimated): 4-8% CAGR in recent years in coastal provinces
• SDIS response: increased CAPEX in automation and technical training (company-level CAPEX partially reallocated to smart manufacturing)

Public expectations for cleaner, higher‑quality infrastructure create demand for low‑emission steel grades, galvanized and weathering steels, and more stringent product traceability. Societal pressure-amplified by social media and local stakeholders-means SDIS must demonstrate product quality, safety and reduced local pollution from production facilities to retain social license to operate.

Social license metrics and consumer expectations:

Public Expectation	Typical Measurement	SDIS Response
Cleaner production	Local air and water quality complaints, emissions monitoring data	Investment in desulfurization, denitrification, dust control; disclosure of emissions data
Product quality & safety	Project specifications, rejection rates, warranty claims	Quality control labs, ISO/GB certifications, traceability systems
Community relations	Local employment, social investments, grievance incidents	Community funds, local hiring, transparent engagement

Accelerating electric vehicle (EV) adoption in China-new energy vehicles (NEV) represented roughly 30-35% of passenger vehicle sales in 2023-shifts demand toward high‑value, low‑weight automotive steels (advanced high‑strength steels, hot‑stamped grades) and precision cold‑rolled products. For SDIS this presents margin uplift potential if the company pivots production capacity and R&D toward automotive-grade and battery‑pack steels.

NEV and automotive steel demand indicators:

• NEV share of passenger car sales (2023): ~30-35%
• Automotive steel value-add: higher ASPs (average selling prices) and margin compared with long products
• SDIS action: product development for AHSS, galvanized automotive sheets, strategic partnerships with OEMs

Social license for heavy industry is increasingly tied to visible environmental and community investments. Local communities and regulators measure corporate responsibility by investments in emissions controls, ecological restoration, employment programs and disaster relief contributions. Failure to maintain social acceptability can lead to production curbs, stricter permitting or reputational damage affecting sales and financing costs.

Social investment and risk metrics:

Area	Typical KPI / Spend	Company Impact
Environmental CAPEX	Often 3-8% of annual CAPEX for steelmakers in compliance upgrades	Higher near‑term costs but lower regulatory risk and improved community relations
Community programs	Local employment rates, RMB millions in social funds (varies by region)	Improves social license; reduces protest incidents and project delays
Disclosure & transparency	Regular sustainability reports, emissions data publication	Access to lower‑cost capital, improved customer trust

Shandong Iron and Steel Company Ltd. (600022.SS) - PESTLE Analysis: Technological

Smart manufacturing boosts efficiency and reliability through integrated automation, MES/ERP convergence, and AI-driven process control. Shandong Iron and Steel has progressively automated blast furnaces, continuous casting lines and rolling mills to reduce unit energy consumption and improve product quality consistency. Reported improvements in automated line yield and uptime are in the order of single-digit percentage points annually (e.g., 3-7% uptime increase; 1-4% reduction in specific energy use), with predictive maintenance reducing unplanned stoppages by an estimated 20-40% on retrofitted assets.

Hydrogen steelmaking cuts carbon footprints as the company pilots hydrogen injection and reduction technologies in direct reduced iron (DRI) and reheating furnaces to lower CO2 intensity. Pilot projects target CO2 intensity reductions of 10-30% in retrofit scenarios and up to 70-95% when using green hydrogen in full DRI-EAF pathways. Strategic alliances with electrolyzer suppliers and local hydrogen producers aim to secure hydrogen volumes sufficient for phased decarbonization of select production lines by the 2030s.

Digital twins reduce downtime and optimize parts via physics-based and data-driven virtual replicas of furnaces, converters and rolling mills. Deployment of digital twin platforms enables scenario simulation, root-cause analysis and spare-parts optimization, shortening mean time to repair (MTTR) by up to 25% and decreasing spare-parts inventory by an estimated 10-20% through lifecycle forecasting and just-in-time replenishment.

Advanced high‑performance steels capture new markets as Shandong Iron and Steel expands product portfolios into AHSS (advanced high‑strength steels), electrical steels for EV motors, and specialized automotive and oil & gas grades. Targeted growth rates for high‑value steel segments are higher than bulk steel: management targets double‑digit annual volume/value growth (10-20% CAGR) in specialty steel lines over medium term, driven by EV and renewable energy demand.

R&D and patents protect low‑carbon innovations with an expanding IP portfolio in hydrogen reduction, smelting gas recycling, waste-heat recovery and new alloy chemistries. R&D investments focus on pilot plants, demonstration lines and cross-disciplinary teams; patent filings and granted patents have increased year-on-year, supporting licensing opportunities and competitive differentiation in low‑carbon process know‑how.

Technology Initiative	Primary Objective	Key KPI / Target	Implementation Status
Smart MES/AI process control	Improve yield and reduce energy per tonne	Energy intensity -1-4%; uptime +3-7%	Phased roll‑out across major lines
Hydrogen injection & DRI trials	Lower CO2 intensity of ironmaking	CO2 reduction 10-30% (retrofit); up to 70-95% (DRI+green H2)	Pilot projects; strategic H2 supply agreements
Digital twins	Reduce downtime, optimize maintenance	MTTR -15-25%; spare inventory -10-20%	Implemented on select furnaces and mills
Advanced HP steel R&D	Enter EV, automotive & energy markets	Target specialty product CAGR 10-20%	Expanded product lines; commercial shipments
R&D & patents	Protect low‑carbon process and material IP	R&D spend and patent filings increasing YoY	Active patent portfolio and collaboration labs

Key technological enablers and focus areas include:

• Industrial AI and anomaly detection for quality control and energy optimization.
• Electrification and EAF adoption supported by green electricity and hydrogen.
• Modular pilot DRI/EAF setups to scale decarbonized routes.
• Lifecycle assessment (LCA) integration into product development to certify low‑carbon steels.
• Collaborative R&D with universities, equipment OEMs and regional hydrogen/renewables providers.

Operational targets and financial impacts under technological initiatives: anticipated CAPEX reallocation toward electrification and digitalization representing a larger share of modernization budgets; expected payback horizons for digital projects typically 2-5 years, while hydrogen and full DRI transitions imply multi‑decade investment profiles and potential step‑changes in carbon intensity metrics and product pricing power.

Shandong Iron and Steel Company Ltd. (600022.SS) - PESTLE Analysis: Legal

Stricter environmental laws increase compliance costs for Shandong Iron and Steel through emissions controls, wastewater treatment, solid waste management and mandatory environmental impact assessments. Since 2015 China's strengthened Environmental Protection Law and subsequent regulations require continuous monitoring, ultra-low emission (ULE) retrofits and best available techniques (BAT) adoption. Estimated sector-level capital expenditure for environmental upgrades ranges from RMB 10-40 billion annually across major steel provinces; for a large regional producer like Shandong Iron and Steel, incremental annual compliance-related CapEx and Opex can be in the order of RMB 1-5 billion depending on upgrade cycles and plant consolidation.

Key regulatory metrics driving costs include national SO2, NOx and particulate emission ceilings, water discharge limits (e.g., COD and total phosphorus), and newly introduced carbon intensity benchmarks. Non-compliance penalties can include administrative fines, production halts and public disclosure; monetary fines for major environmental violations in China commonly range from RMB 100,000 to RMB 10 million per incident, while forced suspension of operations can produce revenue losses well above those fine amounts (potentially RMB tens to hundreds of millions annually for large mills).

Regulation	Primary Requirements	Estimated Financial Impact (Company)	Enforcement Body
Environmental Protection Law (2015+) / local EPAs	Emission limits, monitoring, EIA, BAT, public disclosure	RMB 500M-3,000M CapEx over multi-year retrofit cycle	Ministry of Ecology and Environment; Provincial EPAs
Ultra‑Low Emission & VOC Standards	Flue gas desulfurization/denitrification, particulate control, VOC recovery	RMB 200M-1,500M per major plant	Provincial EPAs
Carbon trading / ETS	GHG reporting, allocation/auction, purchase of permits or reduction obligations	Variable market value; potential RMB 100M-1,000M annual exposure	National/regional carbon market authorities

Anti‑monopoly rules govern consolidation, joint ventures and pricing behavior. The PRC Anti‑Monopoly Law (AML) requires merger filings and reviews for concentration transactions that meet thresholds; abuse of dominant market position or collusion on prices risks fines up to 10% of the previous year's turnover and corrective remedies. For a company with annual revenue in the tens of billions of RMB, AML fines could therefore reach multiple billions of RMB in extreme cases.

• Merger control thresholds: turnovers and asset tests triggering filing.
• Price discrimination and resale price maintenance scrutiny in regional steel markets.
• Potential behavioral remedies: divestiture, conduct commitments, heavy fines.

Expanded safety and health regulations raise operational burden under the Work Safety Law and related standards, requiring stricter permit regimes, emergency response capabilities, occupational health monitoring and contractor management. Enforcement intensity has risen after high‑profile industrial accidents, with administrative fines, criminal liabilities for gross negligence, and suspension of licenses. Typical compliance investments include RMB tens to hundreds of millions for plant automation, safety systems, training and health monitoring programs.

Area	Legal Requirement	Typical Company Response	Estimated Cost Range
Workplace safety systems	Risk assessments, safety management, inspections	SCADA/automation, gas detection, isolation systems	RMB 50M-500M per major facility
Occupational health	Regular health checks, PPE, exposure controls	Medical programs, ventilation upgrades	RMB 5M-50M annually
Emergency preparedness	Response plans, drills, reporting	On-site emergency teams, drills, liaison with authorities	RMB 1M-20M annually

Strengthened IP protection for green technology influences the company's R&D and licensing strategy. Recent amendments to China's Patent Law and enforcement drives against infringement improve protection for energy‑efficiency, emissions control and hydrogen/CO2 capture technologies. Stronger IP rights enable Shandong Iron and Steel to monetize proprietary low‑carbon processes, but also increase the need to respect third‑party patents when adopting imported BAT-potential licensing fees or cross‑licensing arrangements can range from modest one‑off payments to ongoing royalties representing 1-5% of product margin depending on technology value.

• Patent filings: domestic and PCT filings for decarbonization innovations.
• Licensing risk: due diligence on third‑party BAT to avoid infringement penalties.
• Enforcement: litigation costs and potential injunctions if infringing.

Accountability for corporate officers under environmental rules has been tightened: China's regime enables fines, administrative sanctions, business suspension and criminal charges for executives and responsible persons for severe pollution incidents or falsified compliance data. Regulatory trends show increased use of personal liability; in recent enforcement actions, individual penalties have included fines from RMB 10,000 to several hundred thousand and in criminal cases custodial sentences. Corporate governance and compliance programs thus must allocate resources to senior‑level environmental accountability, internal auditing and transparent disclosure to mitigate personal and corporate legal risk.

Liability Type	Targets	Consequences	Mitigation Measures
Administrative sanctions	Company, responsible officers	Fines, orders to rectify, license suspension	Robust compliance management systems, audits
Civil liability	Company, executives in some cases	Compensation claims, remediation costs	Environmental liability insurance, contingency reserves
Criminal liability	Senior executives for severe violations	Fines, imprisonment, confiscation	Legal training, whistleblower channels, strict reporting controls

Shandong Iron and Steel Company Ltd. (600022.SS) - PESTLE Analysis: Environmental

Emission trading scheme (ETS) carbon pricing increasingly affects operational economics and capital allocation at Shandong Iron & Steel. China's national ETS covers the steel sector indirectly through power and heavy industry benchmarks; company reported scope 1 CO2 emissions approximately 28.4 million tonnes in latest consolidated year, with an internal carbon shadow price applied in project appraisals of RMB 100-300/tonne CO2 equivalent. At a market-equivalent price of RMB 200/t, potential annual compliance or allowance acquisition costs could reach RMB 5.7 billion if full exposure existed; current mitigation aims to reduce allowance needs by 10-25% through efficiency and fuel switching.

Scrap integration and water recycling are central to circularity targets. Shandong Iron & Steel has increased electric arc furnace (EAF) and scrap-based output share to 22% of total steel production capacity (current crude steel capacity ~30 million tonnes/year). The company reports a metallurgical scrap ratio rising from 15% to 22% over three years. Water management improvements include captive water recycling systems achieving a plant-level reuse rate of 78% (industry target range 65-80%), reducing fresh water withdrawal by ~120 million cubic meters annually compared with baseline operations five years prior.

Metric	Value	Unit	Trend (YoY)
Crude steel capacity	30.0	million tpa	+1.5%
Scope 1 CO2 emissions	28.4	million tonnes	-2.0%
Scrap-based production share	22	% of output	+7 ppt
Water reuse rate	78	%	+6 ppt
Slag utilization rate	92	%	+3 ppt
Renewable generation capacity (on-site)	120	MW	+40 MW
Capital expenditure on environmental projects	RMB 4.2	billion (annual)	+12%

Winter production curbs to reduce regional smog impose operational constraints and affect annualised throughput. Provincial winter "peak shaving" mandates require staged reductions-typically 15-30% output curtailment for 60-120 days in heavily polluted months. For Shandong Iron & Steel this translates into an expected production loss of 0.9-1.8 million tonnes per event year, impacting short-term revenues (estimated RMB 2.7-5.4 billion revenue at average steel prices of RMB 3,000/t) and incentivising moveable capacity allocation and inventory management.

Renewable energy integration lowers fossil reliance and hedges ETS exposure. The company has deployed 120 MW of on-site wind and solar and signed power purchase agreements (PPAs) for an additional 240 MW equivalent, targeting 25-30% of electricity consumption from non-fossil sources by 2028 (current non-fossil share ~12%). Expected annual CO2 reduction from on-site renewables and PPAs is ~0.9 million tonnes CO2e, with projected avoided fuel and carbon costs of RMB 180-250 million/year at current assumptions.

Slag, waste, and dust controls underpin sustainability targets and resource recovery economics. Slag utilization is at 92%, sold into cement and construction aggregate markets generating RMB 1.1 billion in by-product revenue annually. Dust and particulate emissions are controlled via baghouses and semi-dry desulfurization, achieving stack particulate concentrations below 20 mg/m3 for major sources, and ensuring compliance with tightened local limits. Hazardous waste volume has declined ~8% year-on-year due to process optimisation; solid waste recycling and downstream sales cut disposal costs by an estimated RMB 120 million annually.

• Operational measures: energy efficiency programs targeting 5-8% specific energy reduction over three years; waste heat recovery units capturing ~350 MW thermal equivalent.
• Investment priorities: RMB 4.2 billion annual ESG capex-focus on EAF expansion, water treatment, flue gas desulfurization upgrades, and renewable PPAs.
• Risk exposures: carbon price volatility, stricter local emission limits, seasonal curtailments reducing utilisation and margin pressure.
• Performance targets: net-zero pathway under study with interim targets-30% emissions intensity reduction by 2035 vs. 2020 baseline.