The G7 can lead the way in defining a shared vision for the transition to a net zero steel industry. In May 2022, the G7 committed to accelerate the pace of decarbonisation in heavy industries, noting the “importance of decarbonising key industrial sectors to keep a limit of 1.5°C temperature rise within reach”. Achieving this goal as part of a people-centred transition will require global effort. Through its economic weight and the international collaboration, it can mobilise, the G7 is well-positioned to catalyse the net zero transition for the steel industry.

The steel industry faces challenges for substantially reducing its stubborn emissions while remaining competitive. The steel industry accounts for around 2.8 gigatonnes of CO2 emissions per year, or 8%1 of total energy system emissions. “Peak steel” may have come and gone for many advanced economies, but emerging market and developing economies are likely to see sustained growth in their domestic industries. Despite a strong push on material efficiency strategies, such as vehicle lightweighting or extending the lifetimes of buildings, steel will continue to be an essential input to infrastructure, buildings and mobility systems, as well as a critical enabler of the global energy transition. Near zero emission technologies for iron and steel production are still at early phases of development in many cases, and are often more costly than incumbent methods of production. This poses challenges for substantially reducing emissions from the steel industry, the products of which are traded in highly competitive global markets.

Common definitions require sound measurement and robust data. Common, practicable and internationally applicable definitions for GHG emissions performance enable multiple components of the policy toolbox for achieving deep emissions reductions in the steel industry. A commonly agreed emissions measurement methodology underpins a shared understanding of what constitutes near zero emission material production and products. G7 members have pioneered efforts to develop international standards that have facilitated positive change across many industries. The development of coherent, robust and consistent emissions measurement protocols, fit for a net zero steel industry, is an opportunity for the G7 members to demonstrate their technical capacities and abilities to forge international consensus.

Existing emissions measurement methodologies and data collection frameworks avoid the need to start from scratch. They provide a good starting point for efforts to establish a common basis for quantitative, comparative and international discussions on achieving a net zero steel industry. Several key emissions measurement methodologies for the steel sector are either currently under review or due to undergo review in the next two years. There is therefore an opportunity to work towards greater convergence and interoperability in order to strengthen emissions reporting in support of a net zero steel industry.

While several emissions measurement methodologies exist, further efforts are required to ensure that they are fit for purpose for a net zero steel industry. This report proposes net zero principles for emissions measurement methodologies for the steel industry that can serve as a basis for further discussion and iteration by G7 members and other stakeholders. The aim is for these common principles to guide ambition for revising existing methodologies and promoting convergence and interoperability in the medium term. An emissions measurement methodology should allow for comparison between production from all facilities. It should produce interoperable results for steel production and products, using an emissions boundary and scope appropriate for net zero and applying accounting rules for emissions credits and co-products that are compatible with the net zero goal. Finally, methodologies should incentivise the use of site- and product-specific auditable, measured data, as opposed to generic emissions estimates or factors.

Tracking progress on the transition to net zero will depend on improved data collection and reporting. A framework for collecting comparable data on steel sector emissions is an enabling mechanism for the net zero transition. This report proposes net zero data collection principles as a basis for the development and implementation of a Global Data Collection Framework for steel production and product emissions. A data collection framework that is fit for purpose for a net zero steel industry must facilitate maximum possible coverage and transparency, and accommodate the collection of highly granular data on GHG emissions. It should facilitate regular, parallel reporting using multiple measurement methodologies, while minimising the reporting burden as far as possible. No existing data collection framework – or combination thereof – fulfils all of these principles, although some aspects of existing frameworks provide a robust starting point.

G7 members can benefit from active engagement with the amendment and revision of emissions measurement methodologies. Clear standards for emissions measurement and data collection will be critical for incentivising and tracking emissions reductions in the steel industry, and G7 members can play a leading role in guiding future development of the industry. G7 members can also incentivise steel producers and other stakeholders in their countries to participate in efforts to make measurement methodologies and data collection frameworks fit for the net zero transition.

  1. 10% if indirect emissions from electricity generation are included.