Steel

Globally, the steel sector’s direct CO2 emissions amounted to 2.6 Gt in 2019, or 7% of total energy sector emissions and 28% of industrial emissions. (When indirect emissions are included, this total rises to around 3.6 Gt.).

Demand for steel is projected to continue rising. If action is not taken to optimize its efficiency in use, we will see an increase in absolute demand by approximately 30% by 2070.

New guidance for the steel sector

From November 23 2022 to January 23 2023, the SBTi held a two month-long public consultation for the Steel Science Based Target Setting Guidance and Tool, to ensure the criteria and guidance to support steel companies in their decarbonization efforts are robust, clear, and practical.

Acknowledging the comments received, we are moving forward with revision of the guidance and tool to launch in Q2 2023.

Find out more about the project below.

Applying best practice in the steel industry

In 2015, the Science Based Targets initiative (SBTi) developed the Sectoral Decarbonisation Approach (SDA), a scientifically-informed method for companies to set GHG reduction targets necessary to stay within a 2°C temperature rise above pre-industrial levels. This led to the development of a 2°C and a well-below 2°C pathway.

However, the Paris Agreement and the recent IPCC 6th Assessment Report have highlighted the need to keep warming within a 1.5°C temperature rise.

Our new methodologies, tools and guidance will build on the previously developed SDA methodology for steel to develop 1.5°C-aligned resources. They will enable companies to set targets that align with science-based decarbonization pathways within the unique context of their sector.

By setting emission reduction targets in line with this goal and defining appropriate decarbonization strategies, steel companies can help accelerate the transition to a net-zero economy and prevent the worst effects of climate change.

Initial funding for this project has been provided by ArcelorMittal.

Project participants

SBTi is the project lead and convener.

Participating in this project is possible via the following groups:

• Technical partner: In collaboration with the Mission Possible Partnership (MPP), we are working to provide more granular decarbonization pathways that are 1.5°C aligned for the iron and steel sector. MPP is an alliance of climate leaders focused on accelerating the decarbonization of these industrial sectors. Led by the Energy Transitions Commission, RMI, the We Mean Business Coalition and the World Economic Forum, its goal is to propel a committed community of CEOs from carbon-intensive industries, together with their financiers, customers, suppliers, to agree and more importantly to act on the essential decisions required for decarbonizing industry and transport in this decade.

• Expert Advisory Group (EAG): Composed of technical experts from stakeholder organisations and companies interested in setting an SBT and contributing to the project execution. Invitations for participation in the EAG consider the need for a balance of stakeholder categories, geographical diversity and gender balance.
  • Aceros AZA S.A.
  • Aperam
  • ArcelorMittal
  • Baoshan Iron & Steel Co Ltd (Baosteel)
  • Bellona
  • BlueScope Steel Limited
  • Cleveland-Cliffs Inc.
  • E3G
  • Energy Transitions Commission (ETC)
  • Environmental Coalition on Standards (ECOS)
  • Gerdau
  • Imperial College
  • JSW Steel Ltd.
  • Liberty Steel UK
  • Nippon Steel Corporation
  • Outokumpu Oyj
  • POSCO
  • Potsdam Institute for Climate Impact Research
  • ResponsibleSteel
  • Rock Mountain Institute (RMI)
  • Severstal PAO
  • Tata Steel
  • Transition Pathway Initiative
  • VALLOUREC
  • Voestalpine AG
  • World Steel Association
  • WWF (Finland)

• General stakeholder consultation: Both industry and non-industry representatives will be able to provide feedback on each project component through the public consultation. The project lead will ensure a balanced participation of stakeholder categories.

Development process and timeline

The project will build on the previously developed SDA methodology to develop 1.5°C-aligned resources, delivering the following guidelines and tools:

1. Integration of new pathways in SBTi’s target setting tool to allow modelling of targets at the sub-sector level (primary and secondary sources) and integration of sub-sector level targets at the company level.
2. Identification and assessment of scenarios for modelling of 1.5°C-aligned near-term and long-term net-zero targets for primary and secondary steel production.
3. Update to the SBTi target setting tool to integrate adjusted SDA calculation method.
4. Road-testing of new target setting resources.
5. Development of guidance for science-based target setting in the steel sector.

To socialize the resources developed as part of this project, we envision joint capacity building activities, including webinars and/or workshops.

Provisional project timeline