The study by ResponsibleSteel and LESS highlights that Europe’s steel industry, as the world’s second-largest producer, is responsible for 6% of the European Union’s total emissions. With ambitious EU targets aiming for a 55% reduction in net greenhouse gas emissions by 2030 and net zero by 2050, the way steel decarbonisation is measured and incentivised is of critical importance.
A key finding of the study by ResponsibleSteel and LESS is that current policy discussions, including the European Steel and Metals Action Plan (ESMAP) and proposals for voluntary carbon labels for steel, risk undermining climate goals if they fail to account for the fundamental constraints on scrap availability. Despite a high global steel recycling rate of 85%, only about 32% of the world’s demand for new steel can currently be met with recycled scrap due to the long lifetime of steel products, according to the International Energy Agency (IEA). While the amount of available scrap is set to increase, the IEA estimates that scrap will still only be sufficient to meet 46% of steel demand by 2050.
“Steel decarbonisation requires an appropriate base for comparing steel products in terms of their global climate impact,” said Dr. Martin Theuringer, Secretary General of LESS aisbl. “Scrap is a valuable and limited resource. Any label or standard that ignores this risks distorting markets and ultimately slowing down the transition to truly low-emission steel. Our approach ensures that both primary and scrap-based production are incentivised to decarbonise, not just to compete for a fixed pool of scrap.”
ResponsibleSteel and LESS propose the adoption of a “steel decarbonisation scale” that complements traditional carbon footprinting by explicitly accounting for the ratio of scrap and primary iron used in steelmaking. This approach, already recognised by the G7 and incorporated into international standards, would:
- Prevent fruitless competition for a limited scrap supply
- Incentivise decarbonisation across all steel production routes
- Promote technology-neutral, WTO-compliant solutions
- Support the competitiveness of European industry while advancing global climate goals
“A European label for steel is a great opportunity to incentivise steelmakers to become globally competitive on their real decarbonisation progress,” said Annie Heaton, CEO of ResponsibleSteel. “A well-designed classification system will do this by taking into account scrap content in addition to the measurement of steel‘s carbon intensity, recognising that scrap will at best provide half of the world’s steel by 2050. As a result, this ‘steel decarbonisation scale’ approach incentivises investments that drive progress in the steelmaking process itself, whether in primary or secondary iron and steel making.”
The two organisations call on the European Commission to integrate the steel decarbonisation scale into the development of voluntary labels, lead markets, and investment support mechanisms, ensuring that future measures are effective, fair, and aligned with Europe’s climate ambitions.
Read our Interview with ResponsibleSteel CEO Annie Heaton here.
