Definition of Green Steel: A Label System for Green Lead Markets

Green lead markets for basic materials such as green steel are a central policy building block on the way to a climate-neutral industry. Their basic idea is to provide targeted incentives for the use of green steel on the demand side as well, in order to enable the gradual conversion to climate-friendly processes, which are associated with high investment and initially even higher operating costs. This will relieve the burden of the necessary state start-up financing and replace it in the long term.

To this end, definitional questions must first be clarified: When is steel to be classified as green or climate-neutral? To what extent can investments be made creditable that only lead to climate-neutral steel when, in particular, sufficient green energy (electricity, hydrogen) is also available? And finally: What standards can ensure that all actors calculate and balance according to the same rules, so that different transformation paths can be compared and thus also evaluated? Clarifying these questions is urgent and important in order to be able to set the political course and give companies planning security for their investment decisions.

The German Steel Federation (Wirtschaftsvereinigung Stahl) already formulated the first key points for a definition of green steel in May 2022. On this basis, the steel companies in Germany are now presenting a proposal for a label system for climate-friendly steel that goes beyond the carbon footprint of a specific product and also takes into account transformative steps taken by companies towards emission reductions and makes them assessable in a classification system. In this way, the necessary investments for climate neutrality and the ramp-up of green steel could be stimulated and flanked in a targeted manner.

With its proposal, the steel industry in Germany wants to support the politically desired development of (lead) markets for climate-friendly products in Germany and the European Union. In addition, the industry also wants to contribute to the international discussion on the decarbonisation of basic industries. After all, climate clubs and climate alliances can only develop green markets worldwide if they are based on clear definitions. The steel industry’s proposal takes this into account by following on from and further developing a concept of the International Energy Agency that has been recognised by the G-7. Moreover, the label system is the first concept worldwide that was developed by an industry with the participation of all manufacturers.

Hans Jürgen Kerkhoff, President of the German Steel Federation, comments:

“With its proposal for a label system for green steel, the steel industry in Germany is sending a strong signal for industrial transformation. With this, we are presenting a concept that can be used as a basis for concrete discussions on how to create green lead markets, which were already envisaged in the steel action plan from 2020 and also in the coalition agreement. We hope that the German government will now quickly take up this impetus, discuss it with all relevant stakeholders and also introduce it into the ongoing international discussions at the G-7 and within the framework of climate clubs.”

by Hubert Hunscheidt