Transatlantic Cooperation on Green Steel: Developing Effective Standards
In countries with ambitious climate goals, the industrial sector faces a difficult path to significantly reduce direct greenhouse gas emissions from production while maintaining competitiveness in a growing global market. Heavy industry, including steel, cement and chemicals, accounts for nearly 40% of global CO2 emissions. Steel alone accounts for around 8% and, to meet the Paris Agreement targets, the industry must reduce its direct CO emissions2 emissions by around 58% by 2050.
The transatlantic partnership has the potential to boost these efforts, particularly given its collective market power and regulatory influence. Industry on both sides of the Atlantic has already dedicated significant resources to capitalizing on this window of opportunity. However, these efforts have so far been made in a system that lacks standardization, methodology and trade policy support, resulting in a global steel market mired in overcapacity, leakage, externalities unintended environmental impacts and unequal competitive conditions for producers seeking to do their jobs. part. For low carbon steel to become the global industry standard, thoughtful and comprehensive policy frameworks that enable market predictability and harmonization must be deployed.
Efforts are already underway to harmonize global markets among trading partners. For example, the October announcement of the EU-US Comprehensive Steel and Aluminum Agreement is an example of climate-trade alignment between two major trading partners. The arrangement included the suspension of the Trump administration’s steel (25%) and aluminum (10%) import tariffs, as well as retaliatory tariffs imposed by the EU and filing with the WTO. He also announced the creation of a technical working group between the EU and the US to share data and develop a common methodology to assess embedded emissions in steel and aluminium.
The announcement came at an opportune time, as the EU also recently updated its industrial strategy and launched its “Fit for 55” package, an ambitious target to cut emissions by 55% by 2030. key bolsters EU emissions trading schemes (ETS) to put more pressure on industries like steel. At the same time, the EU is set to adopt a new Carbon Border Adjustment Mechanism (CBAM) to tackle carbon leakage. The bloc expects that with a conducive regulatory framework and good infrastructure, the steel sector can reduce CO emissions2 emissions by 30% by 2030 and by 80 to 95% by 2050.
Across the Atlantic, the US steel industry produces low-carbon steel compared to its European counterpart, largely due to its higher use of recycled scrap in production rather than direct climate policy efforts . However, the combination of the recent passage of the Biden administration’s bipartisan infrastructure bill and Senator Coons’ proposed “FAIR” law suggests that policies aimed at discouraging imports of labour-intensive products carbon loom on the horizon. At the federal level, the Biden administration’s Federal Buy Clean Initiative is still in its infancy. However, at the state level, there are promising actions, notably in California. The state’s Buy Clean California Act (BCCA) allows for the calculation of global warming potential standards for building materials, including steel, and requires manufacturers to disclose environmental product declarations for certain materials in building projects. Other states, including Washington, Oregon, Texas, Minnesota, New York and New Jersey, quickly followed suit by introducing similar legislation.
Outside of the direct legislative arena, several groups are proposing standards for low carbon steel to facilitate a level playing field across the industry. In June 2021, the UNIDO-coordinated Clean Energy Ministerial launched the Industrial Deep Decarbonization Initiative (IDDI) which aims to stimulate policy-making by stimulating the market for low carbon-emitting materials. carbon. ResponsibleSteel, in partnership with the SteelZero initiative of the Climate Group, has developed international standards that are based on a two-step certification process that compares the sum of upstream emissions and methane emissions to a consistent endpoint (crude steel) . RMI has launched a Center for Climate-Aligned Finance – part of which is focused on steel – and is also involved in the Coalition on Materials Emissions Transparency (COMET), a collaborative initiative to create a universal framework for calculating greenhouse gases for mineral supply and production chains.
The development of these methodologies, in a relatively short period of time, raises concerns about How? ‘Or’ What and who methodologies will be adopted and implemented, who will certify product claims and what the potential long and short term consequences may be.
As standards for green steel continue to be developed and proposed, the effectiveness of any standard will likely depend on its general acceptance; its success will depend on it following a widely shared methodology for measuring embedded emissions and that the calculations made are familiar and accepted by the industry. Several priorities should be considered before adopting a common standard:
- Ensure that standards remain neutral across technologies.
- Ensure supply chain emissions are accounted for.
- Ensure that standards take into account efforts to acquire renewable energy and further green the producer’s supply chain by purchasing low-carbon energy.
- Ensure that calculation metrics are well understood and considered scientifically valid.
As setting standards for low carbon steel nationally and internationally has become a top priority, especially after last year’s EU-US arrangement, policy makers are s There are growing concerns about the transparency of the process and among industry the standards set will lack the technical specificity and flexibility needed for production. As both sides of the Atlantic strive to advance a green steel industry by advancing technology and advancing climate policies, industry leaders are calling for a cohesive regulatory framework to advance a steel industry green with a level playing field. In order to meet the unique challenges of today to advance a green steel industry and pave the way for the future decarbonization of other energy-intensive and trade-exposed industries, defining boundaries, common methodology, solutions Scalable technologies and supply standards are a necessity.
Kelsey Forren is associate director and Maia Sparkman is program assistant at the Atlantic Council Global Energy Center.
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