Executive summary
The G7 can lead the way in defining a shared vision for the transition to a net zero steel industry. In May 2022, the G7 committed to accelerate the pace of decarbonisation in heavy industries, noting the “importance of decarbonising key industrial sectors to keep a limit of 1.5°C temperature rise within reach”. Achieving this goal as part of a people-centred transition will require global effort. Through its economic weight and the international collaboration it can mobilise, the G7 is well-positioned to catalyse the net zero transition for the steel industry. The steel industry faces challenges for substantially reducing its stubborn emissions while remaining competitive. The steel industry accounts for around 2.8 gigatonnes of CO2 emissions per year, or 8%1 of total energy system emissions. “Peak steel” may have come and gone for many advanced economies, but emerging market and developing economies are likely to see sustained growth in their domestic industries. Despite a strong push on material efficiency strategies, such as vehicle lightweighting or extending the lifetimes of buildings, steel will continue to be an essential input to infrastructure, buildings and mobility systems, as well as a critical enabler of the global energy transition. Near zero emission technologies for iron and steel production are still at early phases of development in many cases, and are often more costly than incumbent methods of production. This poses challenges for substantially reducing emissions from the steel industry, the products of which are traded in highly competitive global markets.

Introduction
Emissions Measurement and Data Collection for a Net Zero Steel Industry is a report by the International Energy Agency (IEA), prepared for the 2023 G7 Presidency of Japan. The report provides reviews of existing greenhouse gas (GHG) emissions measurement methodologies and data collection frameworks for the steel sector. These reviews inform the report’s recommendations for the Group of Seven (G7) on improving data availability, transparency and comparability, which if undertaken would constitute an important enabling step for the net zero transition of the steel sector. Commonly agreed emissions measurement methodologies and emissions thresholds are the two principal components of definitions of what constitutes near zero emission material production and products. The report Achieving Net Zero Heavy Industry Sectors in G7 Members, prepared by the IEA as an input to the Industrial Decarbonisation Agenda (IDA) of the G7 in 2022, outlined the vital need for common definitions for accelerating progress on achieving substantial emissions reductions in these sectors. That report focused on emissions intensity thresholds for near zero and low emission steel and cement production, which were “recognise[d] … as a robust starting point” in the 2022 G7 Climate, Energy and Environment Ministerial Communiqué.

Emissions measurement methodologies will be important for a number of applications in support of a net zero steel sector, including but not limited to emissions benchmarking, regulatory compliance, access to finance, procurement policies, progress tracking and carbon market access (see Figure 1). While there are likely to be a number of different measurement methodologies in use for these different purposes, it will be important that there is consistently measured data being collected and used by the steel industry, governments and stakeholders along supply chains.

The key building blocks for implementing standards in support of decarbonisation policies

Emissions measurement methodologies An emissions measurement methodology is a measure, norm, or model used in comparative evaluations. More specifically, an emissions measurement methodology can typically be defined as a method or model used to evaluate emissions. In this review, emissions measurement methodologies fall into two broad categories: those that are specific to steel production or products; and those that are for general emissions reporting but can be applied to steel production (or some part of the supply chain). Product-level standards are often associated with detailed lifecycle assessment (LCA) methodologies that factor in a range of environmental and other impacts, beyond just greenhouse gases (GHG). Production-level standards are used more frequently for performance benchmarking between facilities, and often require less granular data than existing product-level standards.

Timeline for the publication and review of key emissions measurement methodologies in the steel sector

Summary of emissions boundaries for key measurement methodologies

Evaluation and potential next steps The emissions measurement methodologies and data collection frameworks reviewed in Chapter 1 constitute a starting point for efforts to establish a common basis for quantitative, comparative and international discussions on achieving a net zero steel industry. This chapter begins with an evaluation of some of the key insights that emerge from those reviews. It focuses on the relative merits of five key measurement methodologies with respect to: their governance and participation; their current and potential future usage; and their fitness for purpose for international comparative assessments and a net zero steel industry. This is followed by suggestions for some potential next steps to advance the compatibility and interoperability of existing measurement methodologies and to establish a Global Data Collection Framework for their application. Since it is not possible to predict the outcomes of each of these steps, nor the ability of the parties involved to take the necessary actions, we have supplemented these suggestions with “net zero principles” – for both measurement methodologies and data collection frameworks – to guide the processes that are eventually realised. These principles and next steps should be considered as a blueprint for a potential pathway forward, not an exhaustive plan that is immune to revision. The evaluations, principles and suggested next steps outlined in this chapter form the basis for the recommendations to G7 members presented at the beginning of this report.

Current and potential future usage Developed in 1995 and 2006 respectively, the worldsteel LCI and CO2 methodologies have been in use the longest among the five key measurement methodologies identified here. They are used annually in conjunction with their associated data collection frameworks (see below) in data collection exercises. The CO2 benchmarking methodology covers around one quarter of the world’s steel plants (or more than half if the People’s Republic of China [hereafter “China”] is excluded)4 and the LCI methodology covers over 160 sites. The detailed results of these data collection exercises are confidential. worldsteel publishes only the global average results by process route from the CO2 benchmarking data collection, and the global (as well as regional in some cases) results for 17 products from the LCI data collection. Members have access to the full dataset but are not permitted to disseminate it, with the exception of their own company’s data. All worldsteel members could potentially participate in the current rounds of data collection, which for the CO2 benchmarking methodology closes for data submissions at the end of May 2023, and for the LCI data collection closes at the end of July 2023. G7 members could incentivise, or mandate, all existing members of worldsteel operating within their jurisdictions to participate, and incentivise non-members to join worldsteel. Alternatively, worldsteel could choose to allow non-members to submit data to the annual exercise.

Evaluation of key measurement methodologies against net zero principles

To avoid a protracted series of revisions, the second phase should target completion by the end of 2025, with the achievement of a high degree of interoperability among the methodologies. The exact end state will depend on how the comparison and revision process proceeds. It could be that the exercise results in consolidation of methodologies. If revisions result in two or more methodologies becoming very similar, there could be an agreement to use only one of them. This could occur between a production and product methodology, if the production “building block” within the product methodology is determined to be a robust way to collect production data. This could also occur between two or more production methodologies, or two or more product methodologies, led by different organisations, if they became sufficiently similar during the revision process. However, it may be the case that, even after the revision process concludes, multiple interoperable methodologies are retained, with, for example, differences in the level of detail of data collected to serve different purposes. As consensus on the use of a single measurement methodology could take time, interoperability may be a sufficient end state, at least in the medium term, to avoid delay.

Second phase of revising emissions measurement methodologies

The data collected via each of these three avenues would then be made available to the co-ordinating organisation(s). An iterative mode of data exchange and feedback could then be established, to facilitate progress towards interoperability between the measurement methodologies (see above). These iterations would yield an increasingly comparable analysis of the emissions intensities of production and products, together with a specific set of revisions to be undertaken at each iteration. The findings of these updated analyses could be discussed with G7 members initially, but then also be used to drive progress across larger groups of countries, such as the Group of Twenty (G20). Industry stakeholders, initiatives working on steel decarbonisation, and relevant non-governmental and international organisations would also be included in these discussions where appropriate. Synergies and interoperability with other data collection systems – including those addressing sectors beyond steel – should also be considered during this development phase.

Interim phase of the proposed Global Data Collection Framework

Aggregated data would need to continue to be made available to institutions tasked with tracking progress towards energy and climate goals (e.g. the IEA), those governing trade (e.g. the WTO) and those engaged in standard-setting and monitoring (e.g. ResponsibleSteel, ISO). Identifying the exact destination and responsibility for these harmonised data is beyond the scope of this report, but worldsteel remains a clear potential option for collecting and reporting such information in the private sector (e.g. in future releases of its Statistical Yearbook). Government statistical offices and agencies are another option, with compilation at the global level by an existing international organisation. Whichever arrangement is chosen for co-ordinating this final phase, the principles of inclusiveness (i.e. facilitating and having the ability to incentivise maximum participation globally), accountability (i.e. verifiable data and claims), and efficiency (i.e. minimising the reporting burden and any duplication of processes) will be critical to the success of a robust and lasting framework for data collection for the steel and other industry sectors.

Source:http://IEA