Emissions standards for industrial products have gained prominence on the international agenda in recent years as a critical tool to guide global markets during the industrial sector’s energy transition. Steel and cement are at the forefront of these conversations, and for good reason — together, these sectors account for nearly 14 per cent of global energy-related emissions. Interest in standards is also high given that steel products are highly traded on international markets. All countries, even those that are net steel exporters, rely to some degree on imports to meet domestic demand for the wide variety of products and qualities. In 2023, global steel sales amounted to USD 1.4 trillion, or approximately half the value of the global oil market.
As the industrial sector looks to make steel and cement through near-zero or low‑emissions technologies and processes, knowing that there will be a buyer for their products is critical to make the business case for investments. Communicating performance through standards — from clear methodologies for measuring emissions to definitions for which products are considered low or near-zero emissions, as well as labelling or certification systems — can play an important role.
Since many near-zero emission industrial technologies are still in the pilot or demonstration stages, their early deployment comes with higher risks and costs, sometimes referred to as a “green” premium. Targeted government support measures are therefore important to help stimulate early demand. Examples of such policies include green public procurement (like the US Buy Clean Initiative and Green Proving Ground program), carbon contracts for difference (CCfD) (such as Germany’s), and regulations on products (as are being explored for steel by the European Union under the Ecodesign for Sustainable Products Regulation, or with a design similar to a tradeable zero-emission vehicle mandate, as has been proposed by researchers). Standards underpin all of these mechanisms.
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Private sector buyers can also support the move to near-zero and low-emissions production, including by entering into offtake agreements. Downstream steel consumers — from automakers to construction companies to wind turbine manufacturers — are increasingly interested in buying “green” to lower their supply chain emissions. Standards can aid them in their purchasing decisions, helping to communicate in a clear and easy-to-understand manner the emissions performance of different products.
To be most effective, standards need to be globally comparable, even as they are used by different countries and stakeholders according to their own objectives. This increases the coherence and reduces the reporting burden for producers and buyers operating across multiple jurisdictions, facilitates the trade of low- and near-zero emissions materials and products, and provides a common language for tracking market developments — sending a signal to global markets on the direction of travel and providing greater certainty for investments in new technologies.
Common understanding is emerging on principles for definitions and proposals for near-zero emissions thresholds
The IEA has been working with governments as they seek to advance the industrial sector’s transition, including by providing data and analysis that supports the development of clear and interoperable standards. In 2022, the Agency prepared a report at the request of Germany’s G7 Presidency focused on policies and standards for the steel and cement sector, which included a policy toolbox for the industry transition and proposed definitions for near-zero emissions and low-emissions steel and cement; it was recognised in the 2022 G7 Climate, Energy and Environment Ministers’ Communiqué. The following year, for Japan’s G7 Presidency, the Agency developed another report on steel emissions measurement methodologies, which was also recognised by the G7. The Net Zero Measurement Principles proposed in that report were later acknowledged in the Steel Standards Principles launched by a coalition of stakeholders at COP28.
Meanwhile, the IEA has facilitated discussions among governments on this subject through the new Working Party on Industrial Decarbonisation (WPID), established in 2023 under the Committee on Energy Research and Technology, and as part of the interim Secretariat for the Climate Club, which is designed as an inclusive and ambitious high-level forum for industry decarbonisation.
Conversations about standards can quickly go deep into complex technical topics like upstream emissions boundaries or co-product allocation, where views are not always aligned. However, there are already several areas where diverse stakeholders share common perspectives. While the details do matter, agreeing on higher-level principles can help move the dialogue forward, laying the groundwork to then work towards interoperability in areas where somewhat different approaches are likely to persist.
To this end, the IEA Secretariat proposed principles for definitions for near-zero and low-emissions steel and cement in a recently released report, which benefited from dialogue in the IEA’s WPID and the Climate Club over the course of 2024, as well as a questionnaire to governments participating in these two fora. Common principles can provide a guide and set guardrails for developing and assessing definitions. The principles were affirmed by the Climate Club in its COP29 Members Statement.
At the same time, convergence is emerging among major proposals to date on emissions threshold values for what is considered near-zero emission steel and cement, a fundamental component of definitions. Many of these either build directly from or adopt the IEA’s 2022 proposal. For example, the Low Emissions Steel Standard (LESS), launched earlier this year, uses the IEA approach as a foundation and expands coverage for emissions to incentivise emissions reductions in other parts of the supply chain (e.g. upstream alloy production). While originally developed in Germany through a private-public sector collaboration, its developers aim for it to gain traction internationally. The ResponsibleSteel Standard, developed by the multi-stakeholder initiative of the same name, also employs the same near-zero emission steel threshold as the IEA, and the Industrial Deep Decarbonisation Initiative (IDDI) Secretariat has included the IEA definition in its Green Public Procurement Pledge.
Developments on cement and concrete standards are moving in a similar direction. Notably, the Global Cement and Concrete Association (GCCA) recently launched its proposal for cement and concrete definitions, both of which build from the IEA proposal. The GCCA proposal has the backing of its members, who account for approximately 40 per cent of global cement production and is the only known major definitions proposal that specifically includes a near-zero emission threshold for concrete.
The China Iron and Steel Association’s new standard is the latest in labelling systems for the emissions of steel production
Meanwhile, a recently released standard has the potential to cover the largest share of steel production globally. In mid-October, the China Iron and Steel Association (CISA) — a national, nonprofit organisation including enterprises, research institutions and individuals from the industry, which serves as a bridge between the Chinese government and industry through policy engagement — unveiled a new standard that sets carbon dioxide (CO2) performance benchmarks for steel production. Similar to the well-known energy efficiency performance labels, it will enable steel to be labelled with a performance level from A to E. The CISA standard is particularly significant given its potential market coverage; China currently accounts for just over half of global steel production.
The standard was developed over two years through a collaborative stakeholder and research effort led by China Baowu Group, and benefitted from close communication and collaboration with the IEA during the development process. CISA aimed to develop a robust standard following international best practices, so as to facilitate international trade and signal ambition that aligns with a pathway towards net zero global emissions. Consequently, many features of the CISA standard are comparable to those of the IEA’s definitions proposal: the standard is stable and technology-neutral, and it is aligned with the IEA’s definition for near-zero emission steel (50 to 400 kilogrammes of CO2 per tonne of steel, with the precise value increasing according to a decreasing share of scrap use).
The CISA standard follows on from the release of six mandatory national steel standards issued earlier this year by the Ministry of Industry and Information Technology (MIIT). While these focus on quality and production processes, the CISA standard is the first to include emissions benchmarks related to meeting China’s “dual carbon” goals (carbon peaking by 2030 and carbon neutrality by 2060), as well as the Paris Agreement. Industry standards like the one proposed by CISA are not mandatory: they are for reference and voluntary adoption, but they can influence national policy-setting. The CISA standard can be seen as a means for China’s steel industry to signal to the central government their plans to contribute to national decarbonisation efforts, and could influence ongoing policy developments, such as those underway on emissions accounting and verification guidelines for the iron and steel sector related to the expansion of China’s carbon market. CISA also aims to provide guidance to individual companies to help them align with decarbonisation objectives.
Focusing on common interests, such as ensuring well-functioning markets for industrial products, can drive continued international cooperation on standards
The topic of standards for the industry transition is as dynamic as it is complex. But ultimately, diverse stakeholders have many interests in common – whether they be facilitating smooth-functioning global markets for industrial products or ensuring that standards are clear, fair and transparent. As the global dialogue progresses, the IEA is ready to continue supporting discussions among all interested stakeholders to help advance this important topic.
This article was originally published by the International Energy Agency on Dec. 4, 2024. It is republished here under a Creative Commons license.
