ResponsibleSteel has launched a revised version of its responsible steel standard in a bid to decarbonise the global steel industry.
- The Responsible Steel International Standard V2.0 drives higher accountability for the global steel industry.
- Steel is a vital component of both current and future infrastructure, but the industry is currently one of the three biggest emitters of carbon.
- The standard is likely to play a supportive role in steel’s decarbonisation, but its effectiveness will depend on voluntary adoption as encouraged by consumer demand and tightening legislation.
Developed in collaboration with leading steel companies and environmental organisations, the ResponsibleSteel International Standard V2.0 aims to make companies within the steel value chain more accountable for their greenhouse gas emissions, thus incentivising the transition towards a decarbonised steel industry.
The standard provides a framework for steel sector operators to demonstrate their emissions reduction efforts. Although it is largely focused on emissions reduction, it also incorporates issues including labour rights, water consumption and pollution.
Gerry Tidd, chairman of ResponsibleSteel’s board of directors said, “Steel customers can now be confident in specifying ResponsibleSteel certified steel products. The Standard sets a new high watermark for steelmakers, their supply chain and customers who want to address essential issues like biodiversity, GHG emissions, labour rights, water, and waste.”
CEO Annie Heaton added, “ResponsibleSteel’s new International Standard comes at a critical time, with the unfolding energy crisis alongside the climate challenge only magnifying the need for a global scale transition to a decarbonised economy. By providing a practical tool for both steelmakers and all their stakeholders to measure and reward progress, it paves the way for society to work together on this gargantuan challenge”.
Although it has already been approved by ResponsibleSteel’s membership body, the organisation is yet to conduct its official review of the standard. This process is slated to begin from 2023.
The steel industry’s carbon footprint
The International Energy Agency (IEA), in its Iron and Steal Technology Roadmap, estimates that the iron and steel sectors combined are directly responsible for an annual 2.6 gigatonnes of CO2 emissions, equating to around 7% of the global total.
It has also revealed that the steel sector is currently the largest industrial consumer of coal, which provides approximately three quarters of its total energy requirements.
Despite these alarming figures, global steel demand is expected to rise by more than a third before 2050, adding a further 2.7 gigatonnes to its yearly CO2 emissions.
Unfortunately, steel remains a major component of much of society’s infrastructure, and will continue to be used throughout the transition to net zero. The ongoing need for steel during the low carbon transition is exemplified by the fact that up to 90% of an individual wind turbine is made from steel and iron. Wind energy developer Vestas has reported that steel contributes around half of the emissions generated within its supply chain.
How can the steel industry be decarbonised?
Operators within the steel industry have demonstrated their willingness to reduce their carbon emissions. The sector’s UK trade unions, for example, filed a motion in 2021 which called for the general council of the Trade Union Congress to actively lobby the government for support and investment in steel’s decarbonisation.
US Steel, meanwhile, has announced its goal of achieving net zero emissions by 2050. The firm has invested in direct action to support its goal, including its issuance of a $290 million green bond.
Such financial measures will prove crucial in decarbonising steel, as many of the technologies likely to be used are still in the early stages of their development.
The IEA’s roadmap highlights this dependency on technological advances, assuming that the implementation of new technologies will account for around 30% of the industry’s cumulative emissions reduction under its Sustainable Development Scenario.
Wood Mackenzie estimates that, between 2021 and 2050, the steel sector’s carbon emissions could fall by almost a third. Not only is this projection far from full decarbonisation, it is also highly reliant on a major increase in the uptake of hydrogen-based direct reduced iron, electric arc furnaces and carbon capture technologies.
Such developments will come at an enormous cost, which may be unpalatable to a commodity industry that already operates on low margins. Given that the ResponsibleSteel standard is an entirely voluntary commitment, operators within the sector will need to be convinced of the benefits it can bring.
These benefits will come in the form of customer demand, giving suppliers of responsible steel a competitive advantage, ability to comply with increasingly strict legislation and the opportunity to avoid rising carbon costs.
Each of these factors represent material value to investors, providing them with an incentive to back steel operators that have secured ResponsibleSteel certification for their compliance with its new standard.
The standard could, therefore, help drive the capital needed to reduce the steel industry’s emissions – but its role will be more as a supportive instrument than a direct solution.