Policies and progress: The pathway to net zero steel | Climate Group Skip to main content
Steel beams stacked

Policies and progress: The pathway to net zero steel

14 November 2022, 12:46 UTC 6 min read

Businesses are stepping up their climate commitments, particularly when it comes to the steel and concrete they’re using. Through our SteelZero initiative, run in partnership with ResponsibleSteel, we’re seeing companies that buy and use steel take a hard look at the carbon emissions associated with the production of this highly used material. These businesses recognise that to meet their own net zero targets, often set to 2040 – only 17 years away, they have to take action on steel now.

The corporate demand signal for responsibly produced steel is rapidly growing. Companies are shaping the conversation and laying the foundations for a new business as usual. They’re working proactively and collaboratively to embed sustainability requirements into every procurement decision, and across a range of influential steel using sectors.

Our SteelZero members make a public commitment to buy or specify 100% net zero steel by 2050, with an interim commitment of using 50% responsibly sourced steel by 2030, setting an immediate pathway to net zero. This is key to sending a strong signal to global markets, policymakers and investors that there’s a reliable and consistent demand for responsibly produced steel. But we need the industry to move further and faster.

Encouragingly, we’re already seeing steel producers accelerate their decarbonisation strategies because of this increased demand. In 2020 SSAB announced the adoption of Science Based Targets and last year British Steel signalled its move towards adoption also. And this year we’ve seen a marked increase in the number of steelmaking sites gaining ResponsibleSteel Certification – importantly with steelmakers across the globe publicly committing to produce steel with a lighter footprint on people and planet. However, with a host of barriers facing the steel sector on the path to net zero, there isn’t a silver bullet solution.

Governments of course play a crucial role in supporting business, and the wider steel industry along the journey. More concerted effort is needed, and fast. Our global SteelZero policy position paper sets out the steps international, national and sub-national governments must take to support the steel industry in its drive to achieve net zero emissions. We’ve worked with leading industry policy experts and the forward-looking corporates which make up SteelZero in the design of these policy principles. Six essential themes must be addressed to get the steel industry on track to net zero:

What’s considered, and certified, net zero steel

We frequently hear from our members and the entire sector, the need for clear and consistent use of common language and terms of reference. And we now have an answer: our technical partner, ResponsibleSteel has recently ratified and published its updated Standard.

The additional requirements that ResponsibleSteel has added to its Standard define, and importantly verify, what is considered low emission and near-zero steel. It gives buyers the information they need to accelerate action towards net zero. As the Standard 2.0 forms part of the SteelZero commitment, it strengthens our members’ collective voice, boosts the demand signal and drives global alignment. Crucially, it sets the minimum level for the embodied carbon of steel that should be met in all projects going forward. It really is a gamechanger for the industry.  

Governments need to adopt this definition and standard into policy, to bring clarity to businesses across the steel industry and to drive the change at the necessary scale and pace required. This is a critical piece of the puzzle in getting the steel industry on track to absolute net zero.

Public and private sector procurement working hand in hand

Public procurement can account for up to 20% of a country’s domestic steel demand. Harmony between public and private procurement practices is needed. Governments play an integral role here and can mandate the use of low emission, near zero, and ultimately net zero steel in all public projects and tenders. This alignment will strengthen and streamline the message to steelmakers, that decarbonisation of production processes is a global priority. UNIDO’s Industrial Deep Decarbonisation Initiative is already making gains in this area. As a coalition of organisations, it works to drive demand for low carbon industrial materials and to align ambitious public and private sector procurement targets.

We know private sector businesses are already taking action to embed decarbonised steel into their projects; we now need governments, across all jurisdictions, to widely promote these processes for publicly funded projects.  

Guide and regulate the carbon emissions associated with steel in all future projects

Embodied carbon emissions are the total emissions associated with the production of a material and its incorporation into that project, asset or technology. They represent a significant proportion of the carbon emissions associated with a building, vehicle or vessel. But currently embodied carbon emissions aren’t being addressed to the same degree as the emissions from the use of a product, also known as operational carbon emissions.

There’s huge potential here. Policymakers need to develop guidelines and regulations that widely support the sector and address embodied carbon across all use cases. Governments need to promote consistent methodology and reporting across supply chains and sectors. Powerfully, regulations applied to a few key sectors would fast track the creation of a low emission steel industry.

Support the scale up of emerging technologies and infrastructure

Within the next decade, steelmakers and steelmaking regions around the world face pivotal investment decisions. The results of these will have significant impact on the scale up of cleaner technologies, infrastructure, and the overall net zero transition of the industry. With a limited window of time, governments must act now.

Policies that set out detailed expectations and support mechanisms are needed to ensure steel plants drastically cut carbon emissions from their production processes. These will need to include a thorough evaluation and implementation of the best available retrofit technologies and/or upgrade options for existing steel plants.

Decarbonising steel production also hinges upon transforming global energy infrastructure. The build out of solutions including low emission hydrogen and carbon capture and storage (CCS) will be key. Change must happen across the energy system from generation assets to storage facilities to transportation, transmission, and distribution networks.

Underpin action with efficient design and circularity

Effective decarbonisation of the steel sector goes beyond transitioning production processes to lower carbon technologies. The sector must - always first - maximise efficient use of steel in the first place, as well as the quantity and quality that’s then injected back into the supply chain. Strategies to address both these priority areas are available today and have the capacity to vastly reduce carbon emissions associated with the industry.

Governments and policymakers can assist organisations here via a multitude of approaches.  This could include promoting appropriate carbon accounting systems that enhance the traceability of scrap steel for re-use and recycling. Ensuring project, asset and infrastructure designs plan for disassembly and deconstruction, as well as creating dedicated investment and incentives to improve collection, sorting and separation techniques.

Creating a level playing field for net zero steel

Some Steelmakers are already moving towards capturing domestic and international market share for lower emission steel by decarbonising their production processes. It’s essential that such progress is supported, while ensuring that higher emission alternatives don’t undercut markets.

There’s a critical role for governments to play here in ensuring a level playing field. Policymakers need to consider what trade policy levers are appropriate to create the right environment. The emphasis has to be on global solutions that are consistent and create the appropriate conditions to produce low emission and net zero steel across all international regions worldwide.

This links back to the first of the six themes. A globally applicable standard for net zero steel is central to reinforcing consistent international, national, and sub-national policy. The ResponsibleSteel standard has been designed specifically for use in a variety of policy instruments which create a global level playing field, such as trade agreements, Climate Clubs/Alliances, Carbon Border Adjustment Mechanisms (CBAM).

The message we get from our corporate members is that enhanced government support is needed to help them in meeting their net zero steel targets. They’re clear on what needs to be addressed to decarbonise the steel industry and our principles reflect this.

Now is the time for action from business leaders and government decision makers. Given we have less than eight years to halve global carbon emissions to get the world on track to reach net zero by mid-century, decarbonising steelmaking is a critical part of the journey. And we have to start today.