Aligning various
methodologies of calculating and reporting greenhouse gas (GHG) emissions in
the steelmaking process has become a challenge in the push towards
decarbonization of the industry, but there’s demand for aligning it
November 21, 2022
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“The American steel
industry’s leadership on reducing emissions is well-known, but there are often
disparate sources and avenues for calculating and reporting,” Kevin Dempsey,
American Iron and Steel Institute (AISI) president and chief executive officer,
told Fastmarkets. “There is a challenge that different groups calculate these
numbers differently. They all use different scopes and so they get different
results, and that can lead to comparisons between data collected by two
different groups that really aren’t comparable.”
“There are multiple
methodologies, frameworks and principles focused on steel
decarbonization with inconsistencies in scope boundaries, emissions
considered and treatment of off gases, to name a few,” according to Shivakumar
Kuppuswamy, policy and impacts director for ResponsibleSteel, a third-party
provider of sustainability standards and certifications. “There has been a
growing demand to harmonize, rather than reinvent methodologies, to mitigate
this challenge, and the trends indicate greater alignment between different
methodologies.”
“Based on what we
hear from the steelmakers, there is a desire to not have a proliferation of
standards,” Lachlan Wright, manager of climate intelligence from RMI, a
nonprofit organization promoting green energy, told Fastmarkets. “There is a
general desire to coalesce around one thing and that makes it easier for them,
both on the reporting side, and also in terms of developing trust. Every time
we talk to a steelmaker, they are interested in how harmonization can occur.”
Wright said he has
noticed steel buyers also are increasingly recognizing the gaps among existing
systems and the need for alignment.
A Nucor
spokesperson told Fastmarkets this week that steel
customers would benefit from a single, transparent global standard for
steelmaking emissions.
Various Methodologies
In November,
Washington-based AISI released its recommendations for GHG emissions
calculation guidelines in the steel industry. The guidelines are designed to “provide
consistent and comprehensive data across the industry on GHG emissions
from steel
production, with a focus on product-level disclosures and corporate-level
reporting,” according to the association.
The association’s
steel production methodology for GHG emissions calculation highlighted that:
·
Calculations should include a comprehensive “cradle-to-gate” scope
analogous to Scope 1 (direct emissions), Scope 2 (emissions from energy and raw
materials used in production), and upstream raw materials, energy and
transportation Scope 3 emissions
·
Calculation of Scope 1 emissions should use the Environmental
Protection Agency’s GHG Reporting Rule methodology for US-based facilities,
with the addition of those facilities below the reporting threshold of 25,000 metric
tons of carbon dioxide equivalent (CO2e) per year
·
Emissions from the purchase of electricity should be based on
local electricity grid factors and reflect renewable energy instruments in
specified instances
·
Emissions should be calculated at the product level for trade,
procurement and environmental product declaration purposes, while a
company-wide basis should be used for corporate reporting
The recommendations
are not intended to be a formal industry standard, according to AISI, but a
reinforcement of the efforts made by American and global steel producers and
others developing GHG emissions calculation methodologies.
Brandie Sebastian,
AISI director of sustainability, explained that while other organizations have
rolled out decarbonization programs that establish a calculation approach and a
benchmark by which emissions must be compared, AISI is solely setting out the
calculation framework for quantifying the emissions without setting or
requiring certain benchmarks or thresholds.
“We’re ensuring a more
complete upstream emissions accounting, all the way to the product level to
capture all the relevant processes in steelmaking,” she added.
In September,
ResponsibleSteel launched a new global standard for the steel industry with a
focus on responsible sourcing.
The US
steel industry is facing potential Scope 3 emissions