• Total CO2 emissions remain largely unchanged from recent years, while direct CO2 emissions intensity has seen an uptick since 2021. 

• Both must fall in the coming years to get on track with the IEA’s Net Zero Emissions by 2050 Scenario (NZE Scenario).

• Blast furnace-basic oxygen furnace (BF-BOF) routes make up about 70% of global steel production today1.

• Hydrogen direct reduced iron electric arc furnace (H2 DRI-EAF) routes are emerging as a preferred low-emissions option in certain regions. Early commercial plants using 100% hydrogen blends are estimated to cost 50-140% more than BF-BOF plants today, varying based on region, which is slowing deployment.

• Capacity for near-zero emissions iron by 2030 remains unchanged from 2024, at about 10 Mt. Near-zero emissions capable capacity is largely the same as in 2024, at just over 80 Mt. Of this, 25 Mt has plans to operate as near-zero emissions by 2030 but comes from early-stage projects. The rest plan to operate using natural gas initially, with unclear timelines for transitioning to full near-zero emissions 2.

• Getting on track with the NZE Scenario will require accelerating these near-zero emissions capable projects to run as fully near-zero emissions by 2030.

Why is it important to achieve the success statement to reach the sectoral breakthrough goal?

• Definitions and standards that establish emissions intensity thresholds for near-zero and low-emissions steel production can underpin enabling mechanisms and policies. These can feed into product-level thresholds, which can support further emissions reductions as well as material efficiency measures.

• Interoperability and/or comparability of different definitions, standards and certifications for near-zero and low-emissions steel – either through a method for determining equivalency established for use by governments and buyers, or mutual recognition among standards owners – provides greater transparency and clarity to actors across international markets, which can unblock action.

• Emissions measurement methodologies underpin definitions and standards, as well as other uses, by providing a framework for measuring and accounting emissions.

• Interoperable and net zero compatible 3 methodologies can improve comparability and reduce reporting burden. Existing schemes offer a robust basis, but some require revisions to make them fit for purpose, and a way to translate between methodologies is needed.

• Chain of custody schemes help track materials and attributes through supply chains, and alternative schemes are emerging as mechanisms to provide flexibility and encourage action on decarbonisation. In all cases, robust reporting and verification are important to avoid double-counting emissions reductions and ensure additionality, as are rules for consistent emissions accounting and appropriate, transparent marketing of materials.

• Greater clarity on the process and responsibilities for revising existing methodologies could accelerate and guide convergence towards greater alignment, especially in policy applications.

Quantitative indicator for success

• Number of leading definitions4 and standards that have established equivalency or mutual recognition.

• Share of production potentially covered by voluntary labels for near-zero and low-emissions steel.

Qualitative examples of collaboration

• The Steel Standards Principles (SSP) group is working towards interoperability of emissions measurement methodologies for steel, including building on the IEA’s Net Zero Measurement Principles. This is supported by input and guidance from its 60+ endorsing organisations, which include intergovernmental organisations that can ensure co-ordination with discussions among governments.

• Multilateral fora (e.g. the IEA Working Party on Industrial Decarbonisation, Climate Club, OECD Inclusive Forum on Carbon Mitigation Approaches and Industrial Deep Decarbonisation Initiative [IDDI]) are facilitating co-operation between governments on definitions and measurement methodologies. The Climate Club Members Statement at COP 29 affirmed emerging common understandings on definitions and convergence among scientific, public and private initiatives on thresholds.

• The International Organization for Standardization (ISO) and Greenhouse Gas (GHG) Protocol recently announced a partnership to harmonise their existing GHG standards and co-develop new standards for emissions measurement and reporting, serving as a potential positive step towards greater interoperability for emissions measurement that could be taken forward in the steel sector.

Why is it important to achieve the success statement to reach the sectoral breakthrough goal?

• Demand commitments for near-zero emissions steel are a major pull factor for the establishment of lead markets, helping to de-risk early deployments of emerging technologies and encourage scale-up. In parallel, demand for low-emissions steel can facilitate progress on decarbonisation and growth of markets for lower-emissions materials.

• Despite efforts from first movers, demand for near-zero and low-emissions steel has not been sufficient to encourage production growth at the pace and scale needed for the industry transition, and regional and sectoral gaps remain.

• Demand commitments, especially when aggregated, can amplify market signals and accelerate the process of securing offtakes. Public procurement commitments can be a key lever. Commitments across different regions and sectors build momentum for broad market scale-up.

• Firm offtakes and advance purchase agreements provide certainty for suppliers, facilitating final investment decisions (FIDs) and supporting the establishment of supply chains.

Quantitative indicators for success

• Cumulative number of public and private offtakes or purchase agreements for near-zero emissions steel.

• Number of countries in which public and/or private organisations have made demand commitments for near-zero emissions steel or in which government policies to incentivise private purchases have been implemented.
  

Qualitative examples of collaboration

• Existing public and private sector initiatives (First Movers Coalition, SteelZero, IDDI) for near-zero and low-emissions steel demand aggregation are enabling market formation through focused efforts to support their members in translating demand commitments into offtakes. Today, over 70 organisations have made commitments under these initiatives. Further momentum was built at COP 29 with a joint call to action for governments to take up the IDDI Green Public Procurement Pledge.

• Buyer-supplier matching programmes are getting off the ground (Sustainable Steel Buyers Platform, First Suppliers Hub, Near-Zero Steel 2030 Challenge), signalling a total of 3.3 Mt of demand in 2024 to help facilitate new offtakes.

Why is it important to achieve the success statement to reach the sectoral breakthrough goal?

• Emerging markets and developing economies (EMDEs) are not well represented in the project pipeline for near-zero emissions steel, partly because conditions for first-of-a-kind investments are typically less favourable than in advanced economies. Financial and technical assistance could help enable deployment.

• Many existing assistance programmes are still at an early stage and require successful piloting before being scaled up. Stronger and broader engagement in matchmaking platforms can improve the delivery of assistance to help fast-track large-scale projects in EMDEs.

• Learnings from the first wave of large-scale near-zero emissions steel projects – mainly in advanced economies – could de-risk and facilitate subsequent deployments in EMDEs. Likewise, collaboration on RD&D, including with EMDEs, could support development of emerging solutions.

• Deepened engagement in initiatives that aim to improve the quality and efficacy of knowledge exchange can enable faster innovation and drive down deployment costs.

• Expansion of targeted assistance programmes and bilateral strategic partnerships can offer more tailored support and, in the case of the latter, can foster stronger relations and co-operation that can create reciprocal benefits.

Quantitative indicator for success

• Number of large-scale projects for near-zero emissions steel reaching FIDs in EMDEs that are engaged in assistance programmes and/or relevant bilateral partnerships.

• Amount of venture capital funding invested in the steel sector globally and by region.

Qualitative examples of collaboration

• The COP 29 Global pledge for scaling international assistance for industry decarbonisation committed USD 1.3 billion in support from several governments and initiatives.

• The Global Matchmaking Platform (GMP) was launched at COP 29 by the United Nations Industrial Development Organization (UNIDO) and the Climate Club, with the aim of making support for industrial decarbonisation more accessible for EMDEs. To date, over 20 countries have been engaged through the GMP.

• Climate Investment Funds selected 7 countries for support through their USD 1 billion Industry Decarbonization Investment Program, with an offer of technical assistance to another 19 countries.

• ITA announced new partnerships with Bahrain, Egypt, and the United Arab Emirates to advance industry decarbonisation and help fast-track projects to reach FID.

• Bilateral partnerships have taken steps forward, such as Brazil-United Kingdom’s expanded partnership on industrial decarbonisation and India-Sweden’s recently announced funding for project development.

Why is it important to achieve the success statement to reach the sectoral breakthrough goal?

• Strategic trade partnerships for near-zero and low-emissions iron and steel can create economic opportunities, including opportunities for EMDEs to export higher-value materials in the supply chain, and for partner countries to source cost-efficient materials, boosting competitiveness.

• Current global trade dynamics make it difficult for near-zero and low-emissions iron and steel to compete in global markets, and trade partnerships could therefore help unlock investment that may otherwise be held back.

• Co-operation between smaller groups on trade partnerships could help establish supply chains for export of near-zero and low-emissions iron and steel, serving as seeds of progress. This could include co-ordination on a shared understanding of definitions – and the underlying emissions measurement methodologies – for near-zero and low-emissions steel (see success statement 1).

• Lessons learned from early trade partnerships could inform discussions within international fora to better guide dialogue, assess benefits and impacts in existing supply chains, identify and address priority trade barriers, raise policy ambition, and foster further partnerships, to the benefit of the broadest possible number of governments.

• Concrete actions and collective outcomes of this kind are a key step towards enabling competitive markets for near-zero and low-emissions steel and iron.

Quantitative indicator for success

• Number of countries in which public and/or private organisations are involved in trade partnerships for near-zero emissions iron or steel.

Qualitative examples of collaboration

• International trade partnerships are emerging for near-zero and low-emissions iron and steel (HyIron-Benteler near-zero emissions iron, Thyssenkrupp-Progressive Green Solutions near-zero emissions iron, HBIS-Italy low-emissions steel). Other collaborations are developing supply chains for scaling-up trade partnerships in the future (Fortescue-Baowu Steel).

• International fora continue to deepen dialogue around factors that could impact trade of near-zero emissions iron and steel, such as on globally interoperable definitions and standards (Climate Club), carbon leakage and spillovers (Climate Club) and on emissions and trade (OECD Steel Committee Global Forum on Steel Excess Capacity, World Trade Organization).