Steel and Aluminum Industries: Decarbonization Strategies and GHG Accounting Harmonization

Steel and aluminum production represent two of the largest industrial sources of greenhouse gas (GHG) emissions, and producers of these materials have excessive leeway when it comes to the accounting of their emissions. CCSI’s reports examine the shortcomings of GHG accounting methodologies in the steel and aluminum industries and propose frameworks to improve these methodologies.


A Market Mechanism for the Creation of a Climate-Differentiated Market in the Steel Industry (2024) introduces a dual-market mechanism designed to help accelerate the transition to low-carbon steel production. Central to this mechanism is the Green Steel Certificate (GSC) paired with a Virtual Offtake Agreement for Steel (VOAS), ensuring genuine emissions reductions and financial certainty for steel producers. The GSC verifies emissions intensity of low-carbon steel, while the VOAS secures demand, creating a synergistic effect to finance and implement decarbonization projects.

 

 


Green Public Procurement: How to Fulfill the Promise of Decarbonizing the Hard-to-Abate Sectors (2024) explores the pivotal role of Green Public Procurement (GPP) in decarbonizing hard-to-abate sectors like steel manufacturing. The study explores how governments can leverage their purchasing power to scale low-carbon alternatives and drive industrial innovation. It identifies challenges that currently hinder GPP's effectiveness and provides a roadmap for the evolution of GPP into a proactive tool that, if strategically implemented, can leverage its potential to inspire private-sector adoption and significantly impact industrial decarbonization.

 

 



GHG Accounting for Low-emissions Branded Steel and Aluminum Products (2023) outlines how demand for “green” products has increased substantially in recent years. The report argues that while green-branded products can play a role in incentivizing and supporting the expansion of green procurement, they exist in a market that lacks the harmonized system for emissions accounting necessary to drive emissions reductions in the materials sector.

 

 


Harmonizing Product-Level GHG Accounting for Steel and Aluminum (2023) discusses specific areas in which industry groups and standards-setters should engage in dialogue to move towards harmonized GHG accounting and reporting not just for these two sectors, but also for the metals industry as a whole. By analyzing several accounting methodologies, the report identifies key differences and points to opportunities for these methodologies to converge, resulting in a more harmonized and comparable accounting framework across steel and aluminum.


 


GHG Accounting Methods in the Aluminum Industry (2023) notes that GHG accounting in the aluminum industry, which accounts for roughly 2% of annual global GHG emissions, has gradually consolidated around one industry framework. However, aluminum producers are still using prior versions of this framework, in addition to other competing frameworks, all of which apply different system boundaries and calculation methods. The report compares three accounting methodologies used in the primary aluminum sector and examines Intergovernmental Panel of Climate Change guidelines on accounting for primary aluminum production.

 

 

Conflicts Between GHG Accounting Methodologies in the Steel Industry (2022) highlights differences in accounting boundaries, calculation methods, and credit allocation between GHG accounting methodologies applied in the steel industry. A harmonized greenhouse gas accounting framework is urgently needed in the steel industry to solve the gaps and misalignments of current accounting methods that lead to significant differences in reported emissions.