Political coherence for the decarbonisation of the steel industry
ResponsibleSteel has published a report on the global decarbonisation of the steel industry. It focuses on how fragmented policy frameworks hinder investment and why harmonised standards, data requirements and reporting obligations could support markets for low-carbon steel.
Key takeaways:
- The steel industry accounts for around eight per cent of global greenhouse gas emissions.
- A fragmented policy framework is hampering the transition to low-carbon steel production.
- More consistent emissions data, fewer duplicate reporting obligations and credible traceability can make markets for low-carbon steel more transparent.
Fragmented policy hinders the transition
Steel is central to modern economies. It is needed for buildings, transport infrastructure, energy facilities and industrial production. At the same time, according to ResponsibleSteel, the steel sector accounts for around eight per cent of global greenhouse gas emissions. The decarbonisation of the steel industry is therefore a key building block for achieving global climate targets.
ResponsibleSteel, a global non-profit network of companies in the supply chain as well as environmental and social organisations, has published a report on this topic entitled ‘Global Steel Decarbonisation: From Complexity to Coherence’. In it, the organisation examines how fragmented policy frameworks are hindering the transition to low-carbon steel production.
Governments around the world are introducing measures to reduce emissions from steel production. At the same time, competitiveness, jobs and industrial capacity are to be maintained. According to ResponsibleSteel, these objectives are often fundamentally compatible. In practice, however, they are increasingly being pursued through separate and, in some cases, incompatible policy frameworks.
Different rules create uncertainty
ResponsibleSteel describes a growing web of regulations, reporting requirements, emissions methodologies and product classifications. This web increases complexity for steel companies, creates uncertainty for investors and makes it difficult for markets to recognise and reward genuine progress in decarbonisation.
Annie Heaton, CEO of ResponsibleSteel, describes the political fragmentation – as outlined in the source text – as a hindrance to the transition that regulation is actually intended to accelerate. From the organisation’s perspective, greater coordination is both achievable and necessary to unlock investment and drive the decarbonisation of the steel industry at the required pace.
Focus on the EU and India
The report provides a global overview of policy approaches to the decarbonisation of the steel industry. ResponsibleSteel places particular emphasis on the European Union and India. According to the source text, both are among the world’s largest steel production and consumption markets.
The report examines various policy instruments that influence the transition to low-carbon steel. These include trade measures, frameworks for sustainable finance, public procurement requirements, initiatives for labelling green steel, and ESG-related regulations.
Whilst policy activity is increasing in both regions, ResponsibleSteel identifies significant differences in the underlying principles of individual regulatory frameworks. Divergent definitions of low-carbon steel, inconsistent methods for emissions accounting and differing approaches to calculating the proportion of recycled steel could create friction between markets and weaken investment signals.
Greater harmonisation of existing standards
The report argues that governments do not need to start from scratch. Instead of establishing new systems in isolation, they could harmonise existing standards, certification schemes and data requirements more closely.
ResponsibleSteel identifies more standardised procedures for measuring and reporting steel emissions as practical measures. Furthermore, duplicate reporting requirements should be reduced by ensuring greater recognition of independently verified data across different legal jurisdictions.
Further recommendations concern the handling of recycled and primary steel. According to the report, common approaches to tracking these proportions – including metrics that take scrap into account – could improve comparability. Furthermore, credible supply chain systems should strengthen traceability throughout the entire steel supply chain.
Transparent markets for low-emission steel
ResponsibleSteel sees greater policy coherence as a path towards more transparent and competitive markets for low-emission steel. More uniform rules could raise the profile of steel companies that are making genuine progress towards decarbonisation.
The report also emphasises the importance of environmental, social and governance (ESG) considerations. These should be better integrated into the policy framework for the decarbonisation of the steel industry. The study is therefore aimed not only at policy-makers, but also at industry stakeholders and investors who wish to support the transition to low-carbon steel.
Conclusion:
The ResponsibleSteel report shows that the decarbonisation of the steel industry is not merely a technical challenge. Policy frameworks, standardised emissions data, comparable product classifications and credible supply chain systems all influence whether investment in low-carbon steel is facilitated or hindered. According to the organisation, greater coherence can help to make progress more visible and strengthen markets for low-emission steel.
FAQ
Which materials from fossil-fuel infrastructure are particularly relevant to the energy transition?
The Empa study highlights steel and copper in particular. Both materials are present in large quantities in fossil-fuel infrastructure and are also required for renewable energy infrastructure.
Where could recycled steel from fossil-fuel infrastructure be used?
According to the source text, recycled steel could be used, amongst other things, in mounting systems for solar panels, in wind turbines, in power lines and in electrolysers for hydrogen production.
Why does the study consider the recycling of steel and copper to be beneficial?
The researchers point out that recycling can be more environmentally friendly than primary production. According to Empa, this could help avoid externalised costs and CO₂ equivalents.
