ArcelorMittal (‘the
Company’) has today published a concept for a low-carbon emissions steel
standard to help incentivise the decarbonisation of steelmaking globally and
support the creation of market demand for physical steel products which would
be classified as lower, and ultimately near-zero, carbon emissions steel.
The creation of
clear definitions for low-carbon emissions physical steel is an important
component of ‘demand pull’ and ‘supply push’ mechanisms that are required to
support the steel industry in its transition to net zero by 2050. Clear
definitions will also help inform targeted policy to support the scale-up and
commercialisation of these near-zero technologies.
Three core principles
At the heart of the concept are
three core principles:
• It must include a
dual score system comprising a LCA value for finished products (EPD for
construction products) alongside a decarbonisation rating system which
categorises low and near-zero carbon emissions per tonne of hot rolled steel
and rewards producers as they decarbonise from their starting point.
• It must be
designed in such a way that incentivises the decarbonisation of all methods of
steel production through technology shifts, rather than simply through
increasing scrap rates using existing technology. This can be done by using a
sliding scale based on the percentage of scrap used in production, a system
which is also at the heart of the ResponsibleSteel™ and International Energy
Agency (‘IEA’) low-carbon emissions steel models.
• It must include a
clearly defined boundary from which carbon emissions are counted for the
decarbonisation rating system.
The concept is
designed to be complementary to methods for rewarding virtual low-carbon steel,
at least until significant amounts of physical low-carbon steel are available.
Commenting, Brad
Davey, Executive Vice President, ArcelorMittal, and chair of the Company’s
Climate Committee, said:
“Setting a standard to classify low-carbon emissions steel during our
industry’s transition to net zero is critical to our decarbonisation journey.
We have spent a lot of time thinking about how to do this in a fair way that
incentivises all steelmakers to reduce emissions and ultimately achieve net
zero. At the heart of our concept is a system that ensures that all
steelmakers, both primary and secondary, are incentivised to further improve
their emissions, and progress towards near zero is recognised and rewarded.
“We know that there
are many organisations giving this question a lot of thought. We are in close
discussion with several of these organisations and have welcomed the
opportunity to share our expertise of steelmaking with them as they develop their
recommendations. As this is such a critical topic for the industry, we decided
to directly publish the key principles we believe should be at the core of any
system to officially categorise lower and near zero carbon steel.
“We believe these
principles will help incentivise the industry and will also prove intrinsic in
providing transparency and clarity to steel consumers, guiding their purchasing
decisions and helping to develop green steel lead markets.”
Geert van Poelvoorde, Executive
Vice President and CEO of ArcelorMittal Europe, added:
“We know that our
customers want low-carbon steel products. That is why we launched the XCarb™ green
steel certificates which have proved very popular with our customers. However,
these are virtual low-carbon products and we must also have a system that
defines what constitutes physical low-carbon steel during the transition to
near and ultimately net zero. This will help support a return on the investment
required to transition to low-carbon steelmaking which will be more costly than
the technologies used today. We believe it is important that any standard has a
dual approach that clearly states the LCA value of the product as well as a
rating to show decarbonisation progress. This makes the embodied carbon content
of the product clear to customers but also the progress that producer is making
towards near zero – a vital component of ensuring every company contributes to
achieving the Paris Agreement.”
A dual scoring system to enable
like-for-like comparisons and incentivise decarbonisation
Any standard must
incorporate a dual score consisting of: a LCA value for finished products so
that customers can clearly see the embodied carbon emissions of the steel they
purchase, and; a decarbonisation rating system akin to the labelling system
already used in the EU for white goods, which measures the level of steel
producers’ decarbonisation progress.
Sliding scale based on
percentage of scrap input
Any standard must
incentivise all steel producers to progress towards net zero, irrespective of
the technology they start with. The carbon emissions in a tonne of steel is
heavily influenced by the metallic input used in steelmaking, with secondary
steelmaking (scrap-based) carrying a much lower carbon footprint than primary
steelmaking (iron ore based). Although scrap steel has an important role to
play in the decarbonisation of the global steel industry, it is a finite
resource which is already fully utilised, and primary steel will continue to be
needed to meet steel demand until well beyond 2050. Therefore, we firmly align
with the view of both ResponsibleSteel™ and the IEA that a low-carbon emissions
steel standard needs to incorporate a sliding scale which accounts for the
metallic input (primary/iron ore vs. secondary/scrap) of steelmaking and
incentivises decarbonisation through the introduction of low-carbon emissions
technology rather than simply by increasing the amount of scrap used.
Boundary
It is critical that
a consistent boundary is used in order to enable a like-for-like comparison
between steel producers for the decarbonisation rating system, and that this
boundary is representative of the core emissions of steel production.
Therefore, in its initial phase our concept proposes a core steel system
boundary that can be readily measured today, based on the Net-Zero Steel
Pathway Methodology Project, which counts all Scope 1 and 2 emissions as well
as selected Scope 3 emissions from ironmaking, steelmaking, casting and
rolling1. As measuring methodology and primary upstream emissions data becomes
available this boundary would then be extended in a second phase to include
upstream emissions.
The graph below
demonstrates the concept of how the decarbonisation rating system would work.
A steel producer’s
position on the graph would be based on their embodied carbon emissions per
tonne of hot rolled steel (y-axis) and the metallic input they use (x-axis).
The producer’s position would fall above or below a threshold line, indicating
whether they would be producing low-carbon emissions steel or not.
Furthermore, steel
producers which fall on or below the threshold would then be split into six
bands – A+ to E – with the producer progressing through the bands as they decarbonise.
This system could therefore be used by policy makers and customers to
incentivise producers to further decarbonise in order to attain a higher rating
(with A and A+ being the highest and the only category where producers could
claim their steel to be near zero (A) or net zero (A+)). Similar to
ResponsibleSteel™ and the IEA, the threshold for near-zero steel should be set
at a level which supports all potential decarbonisation routes.