The Steel Decarbonisation Scale

Europe is the world’s second largest producer of steel, producing 126 Mt in 2023, and responsible for the emission of 183 Mt of CO2 , around 6% of the European Union’s total emissions.

The EU has set ambitious targets for steel decarbonisation, aiming for a 55% reduction in net greenhouse gas emissions by 2030 compared to 1990 levels, and for netzero emissions by 2050. In this context, the European Steel and Metals Action Plan (ESMAP), and related discussion of a voluntary label on the carbon intensity of industrial products, are of critical importance.

An appropriate basis for comparing steel products in terms of their global climate impacts, while also ensuring the competitiveness of European steel production, is fundamental to the success of these initiatives.

There is currently intensive discussion about the design of a voluntary carbon label for steel products, which could also serve as a basis for establishing lead markets for clean steel. We, ResponsibleSteel and the Low Emission Steel Standard (LESS), have developed practical solutions to these challenges that could and should be immediately implemented.

A key issue for the design of any solution relates to the role of ferrous scrap in the decarbonisation of the steel industry, both globally as well as in the European Union. ESMAP acknowledges the constraints on scrap availability. As two leading organisations in this f ield, we are united in the conviction that labels and definitions themselves have to take proper account of the constraints on the supply of ferrous scrap. The adoption of labels or performance measures that neglect this fundamental point would lead to fruitless competition for access to an inherently limited supply of scrap, driving up scrap prices, creating distortions in steel and scrap trade flows, and disincentivising the decarbonisation of primary production that is essential for achieving European and global climate goals.

This briefing paper elaborates on this conviction in more detail. In particular, this paper explains how a simple modification to take account of scrap content, in addition to the measurement of a steel product’s carbon footprint or Life Cycle Analysis (LCA), addresses this challenge. We refer to this as the ‘steel decarbonisation’ approach.