What is Green Steel?

Definitions and Scopes from Standards, Initiatives, and Policies around the World

Authors: Ali Hasanbeigi and Adam Sibal

In decarbonizing the global steel industry, standards, protocols, initiatives, and government policies have a significant role to play. In recent years, major growth has been seen in the number of standards, protocols, initiatives, and policies focused on decreasing the emissions from iron and steel production. An additional level of complexity is introduced into the current efforts to decarbonize the steel industry whereby the standards, protocols, initiatives, and policies tend to focus on either the producers of steel, the demand side of steel procurement, the finance and funding side or some combination thereof.

However, through the sheer number of standards, protocols, initiatives, and policies and the variation and complexity in features, target audience, assessment boundaries, targets, pathways, requirements, reporting, certifications, and validation procedures, there has not yet been a cohesive report that compiles the information in one place to support industry, government, and other stakeholders in achieving the goal to decarbonize the steel industry.

In this report, “What is Green Steel?”, we aim to address this information gap and bring together a summary of the current major standards, protocols, initiatives, and government policies focused on reaching the goal of green/low-carbon steel production and decarbonization of this sector. Additionally, we provide a clear indication of whether a standard, initiative, or policy directs its focus on the steel producers, the demand side steel procurement, and/or the finance and funding sectors. We assessed seven different standards and protocols ( e.g. Responsible Steel Standards & Certifications, WRI’s GHG Protocols for Steel, Climate Bonds Initiative’s Criteria for Climate Bonds for the Steel Industry), eleven different initiatives (e.g. Industrial Deep Decarbonization Initiative (IDDI), Science Based Target Initiative for Steel (SBTI), First Movers Coalition Initiative, and the SteelZero Initiative) and several selected policies from some of the world’s largest steel producing countries/region (i.e. the EU, U.S., China, India, Japan, South Korea, and Canada).

We additionally present a first of its kind cross comparison matrix that compiles the currently disaggregated standards, protocols, initiatives, and policies' key information into one table to aid industry, government, non-government organizations, and academia in quickly comparing them. This cross-comparison matrix is followed by an emissions boundary comparison figure comparing the emissions boundary of several standards and initiatives.

This in-depth review of the global standards, protocols, and initiatives related to the decarbonization of the global steel industry also investigates the steel market focus area. Each of these is discussed in detail in the body of this report.

There are a significant number of standards, protocols, and initiatives that focus on steel producers. Of these steel producer-focused standards and initiatives, 3 (ResponsibleSteel, SBTi, and the IEA) provide specific numerical targets for the tons of CO2 emitted per ton of steel produced (emissions intensity), and a common thread exists for the numerical target structure for emissions intensity between ResponsibleSteel, the IEA, and ArcelorMittal’s Low Carbon Steel Proposal in which a scrap utilization proportional sliding scale with tiered product ranking values is proposed similar to that shown as a representative example from the IEA in Figure 1.

The emissions intensity for near-zero steel production for ResponsibleSteel and the IEA is defined as 0.05 to 0.4 tons of CO2 per ton of steel, depending on the ratio of scrap used. On the demand side, IDDI, the First Movers Coalition, and SteelZero take the same definition with varied steel procurement targets. Other stated targets for standards and initiatives include specific emissions reduction targets over time (SBTi, Climate Bonds Initiative, Climate Action 100+). The remaining production-focused standards and initiatives focus largely on establishing frameworks for emissions accounting and reporting (e.g. GHG Protocols, ISO Standards, and The World Steel Association).

However, the Global Steel Climate Council (GSCC), an international coalition of steel producers and stakeholders, has expressed concern with scrap utilization proportional sliding scale methodology as they argue that this definition focuses on improvements relative to today’s emissions rather than on total emissions and say that the IEA’s sliding scale proposal may help to stimulate decarbonization of primary steel production but does so at the expense of disguising the much greater emissions reduction delivered by scrap-based-electric arc furnaces (EAFs), particularly when coupled with low carbon electricity. However, it should be noted that the availability of scrap is limited, and even in 2050, there is a need for 30%-40% iron ore-based primary steelmaking. We need proper incentives and measurement systems to ensure deep decarbonization of primary and secondary steelmaking and increase the availability and quality of recycled scrap globally.

This report also finds that the policies of the world’s major steel-producing countries vary significantly. For example, the U.S., Canada, and Japan have stated targets of obtaining net zero steel production by 2050 and China by 2060. India, one of the world’s largest and emissions-intensive steel-producing nations, has a goal to reach carbon neutrality in 2070. To obtain these goals, individual nations can drive down their steel industry emissions by implementing Green Public Procurement (GPP) programs with emissions intensity thresholds for the steel they procure, as is being done currently in California and the EU with planned GPP programs more broadly in development in the U.S. and Canada. Nations can additionally implement other policies and regulations and/or incentive programs to lower their steel production emissions intensities through the adoption of technologies and measures such as energy efficiency, material efficiency, fuel switching to low/no-carbon fuels, technology shift to EAF, Direct Reduction of Iron (DRI) using green hydrogen, and CCUS.

Upon completing a thorough analysis of the various steel industry decarbonization standards, protocols, initiatives, and policies, the following three key focus areas were identified as crucial to meeting Paris Agreement Goals and decarbonizing the steel industry.

1. A standard, protocol, initiative, or policy should be aligned with the Paris Agreement 1.5°C target. To be aligned with the 1.5°C target, the global weighted average CO2 emissions intensity of primary steelmaking should be below 0.9 and 0.1 ton CO2/ton crude steel in 2040 and 2050, respectively. The global weighted average CO2 emissions intensity of secondary scrap-based steelmaking should be below 0.2 and 0.1 ton CO2/ton crude steel in 2040 and 2050, respectively. This is based on the carbon budget allocated to the steel industry by IEA up to 2050 in the 1.5°C scenario.

2. Standards, protocols, initiatives, and policies should consider Scope 1, 2, 3 emissions and provide clear boundary definitions for the calculation of their emissions guidelines. This will allow the industry to move forward consistently in achieving the deep decarbonization targets. For primary steelmaking, the system boundaries should certainly include emissions related to the main ironmaking processes (blast furnace, sintering, coking), which account for around 90% of primary steelmaking’s CO2 emissions. The indirect emissions related to electricity use (Scope 2) should also be included, especially for EAF steel production. For the Scope 3 emission, system boundaries should ensure that emissions related to purchased pig iron and DRI are included. Finally, methane emissions from natural gas systems and coal mining are important and should be seriously considered in Scope 3 emissions in systems boundaries.

3. The reliability and availability of the product- and plant-level data should be increased, which will be very important to continue to monitor the progress of the industry and help in the identification of areas for improvement to achieve deep decarbonization. It should be noted that steel companies and steel plants, and most governments collect and have all the data needed to comply with the requirement of the standards, protocols, initiatives, and policies listed in this report. However, such data and information may not be publicly available.

Our study shows that there are several standards and protocols and many initiatives and policies related to the decarbonization of the steel industry. These standards, protocols, initiatives, and government policies often serve different purposes and address different segments or aspects of the steel value chain. Some target the demand side, while others target the supply side of the steel value chain. Some may be targeted toward the finance community, while some are for green public procurement policies. Therefore, it may not be possible to only have one standard for all purposes these initiatives and policies are trying to serve. In addition, given the different contexts in which the steel industry operates in different countries, it is impractical to assume that a single standard would be used in all countries for all purposes around the world. Instead, we may need a few high-quality standards and protocols that are aligned with each other as much as possible.

It is imperative that these few standards and protocols communicate and coordinate with each other to align their requirement and reduce the burden on the steel industry and other stakeholders as much as possible. Some aspects of standards that could benefit from global harmonization are emissions accounting boundary, types of GHG covered, and definition or quantitative threshold of what qualifies as zero-emission or near-zero-emission steel. Also, it is critical to bring major steel-producing emerging economies’ perspectives (especially China and India) into decarbonization standards and initiatives.

To read the full report and see complete results and analysis of this new study, Download the full report from the link above.

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