Two steel non-profit organisations have joined forces to produce “The Steel Decarbonization Scale” (SDS) – a policy briefing advocating a “robust and realistic,” and “scrap-conscious” approach to European steel decarbonization.
The joint study by ResponsibleSteel and LESS aisbl (Association Internationale Sans But Lucratif) calls for greater awareness of the limitations of past and present decarbonization policy measures that define green steel solely in terms of site-level greenhouse gas (GHG) emissions, or the “carbon footprint” identified through life cycle analysis of a steel product. The briefing instead calls for direct accounting of scrap content in assessing steel sustainability.
“Steel decarbonization 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. […] Our approach ensures that both primary and scrap-based production are incentivised to decarbonise, not just to compete for a fixed pool of scrap.”
In painting a picture of the fundamentals of scrap-based steelmaking – past, present, and future – the organisations illustrate inherent insufficiency in scrap availability, noting a disconnect between the general steel recycling rate of 85% (as high as 95% for new or directly-integrated scrap collection, according to a cited Material Economics study) and the average recycled content of new steel at 32%.
This is primarily due to the long life-cycle enjoyed by steel products, ranging from 15-75 years, based on Material Economics data, and averaging to around 35 years in the SDS briefing.
Scrap limitations
ResponsibleSteel and LESS suggest that this longevity sets a theoretical maximum “post-consumer recycled content” for steel on the basis of steel production 35 years prior, assuming no extra inefficiencies or losses in scrap circularity. In 1989, this amounted to 0.78 bnt of crude steel, limiting the recycled content of steel in 2024 to a theoretical maximum of 41%.
Studies cited in the SDS paper suggest that while the quality of collected and processed scrap could be improved, volumes collected are already running at near-maximum efficiency due to the maturity of the scrap markets. Material Economics demonstrate in their 2020 report that value-loss suffered through steel industry circularity – around 31% after first-use – is largely defined by process inefficiencies. These inefficiencies generate quality and price losses as scrap is refined back to general use purposes to wipe the “memory” from the steel, removing alloy content and other quality-defining elements as waste.
Copper content in steel also threatens to compound as an issue if scrap becomes a circularity hegemon prematurely. Copper is generally a contaminant in steel production, detracting significantly from steel strength and quality even in miniscule volumes. While some steels like rebar can accommodate copper content up to 0.40%, other commodity steel products suffer at contents above 0.15%, with crude steel limited to 0.10% on Material Economics data. As secondary, or scrap steel, averages 0.15% Cu or above, some steelmakers already “dilute” their melt with virgin steel to ensure copper contamination is kept within production tolerances.
ResponsibleSteel and LESS thus hold that as scrap is already utilised at maximum capacity, any decarbonization metrics that do not directly account for scrap content risk misrepresenting overall GHG or carbon emissions. If steelmakers offer green steel products in their portfolios on the basis of a higher scrap content, this essentially represents a redistribution of the scrap from elsewhere in their or the industry’s supply chain.
As summarised in the SDS briefing: “redistributing scrap redistributes rather than reduces GHG emissions.”
Indeed, scrap shortages from expansions in electric-arc furnace (EAF) production – the most visible decarbonization route for the majority of Europe’s steelmakers – are projected from 2030 onwards, with availability at only 46% of 2050 demand under best case scenarios, according to associations such as Eurofer and the International Energy Agency.
While scrap availability will increase dramatically over time to reflect the historic expansion in steel capacities, to contemporary over-capacity (the briefing estimates 2.5 bnt as possible by 2100), EU decarbonization timelines that demand a 55% emissions reduction by 2030, and net-zero by 2050, cannot afford to wait.
As such, an all-in approach on scrap as the sole saviour of European decarbonization appears doomed to falter. Instead, ResponsibleSteel and LESS advocate for direct accounting of the scrap content of steel on their “Steel Decarbonization Scale,” allowing the industry to track and compare real improvements in the sustainability of their productions.
Emissions reduction benchmarks
The SDS essentially benchmarks emissions reductions both in terms of the volume of CO2 emitted per ton of crude steel produced (t CO2e/t), and the associated scrap content. ResponsibleSteel’s version splits the scale into four “Progress Levels,” certifying more achievable thresholds the lower the scrap content of the steel, as illustrated in appendix 1 to this article.
For example, to be included in the optimal category – Progress Level 4: Near Zero – a blast furnace (BF) producer using 0% steel scrap would be permitted emissions up to 0.40t CO2e/t, whereas an EAF producer with 100% scrap content would be limited to 0.05t CO2e/t.
The briefing lists the advantages of the SDS as promoting the allocation of funds to real emissions reduction projects; greater incentives to achieve these more visible reductions; a prevention of any “masking” of emissions redistribution; and compliance with WTO obligations.
This latter point is premised upon the universality of the SDS to all production routes and their combinations, as well as all categories of steel products such as flats and longs.
McCloskey’s own reduced carbon price marker was designed for similar interoperability, currently calculated weekly in reference to surveyed green hot-rolled coil (HRC) premiums, both on an embedded and mass-balanced basis, and is able to retroactively accommodate scrap-content accounting if the market widely adopts an SDS approach.
An SDS-based system could be welcomed by EAF, and particularly long steel producers. McCloskey’s market sources have described difficulty in achieving similar premiums to flat steel producers, as their emissions have always been comparatively lower, meaning consumers are reluctant to pay green premiums for material they have historically accessed at commodity-grade prices.
As described in McCloskey’s Green Steel Profiles – particularly for the European and Middle Eastern markets – direct-reduced iron (DRI) produced via natural gas, or ideally hydrogen, is also emerging as a leading decarbonization route for EAF producers. On the basis of current emission rates, under the SDS producers would receive a better progress grading for adopting said new inputs over pig iron, or the inherently limited scrap supply.
Institutions including the World Economic Forum; Climate Group; the International Energy Agency; the German Steel Association; and the China Iron and Steel association are described as preferring SDS-based carbon accounting systems similar to the one developed by ResponsibleSteel and LESS.
ResponsibleSteel and LESS are thus calling on the European Commission (EC) to adopt the mechanism in upcoming legislation and policy initiatives laid out in the EU steel action plan, urging them to pursue the plan’s strategies such as the creation of voluntary carbon labels and lead markets for decarbonized products in reference to the SDS, accounting for the limitations of an overreliance on scrap inputs.
In the draft version of the steel action plan, the EC floated the possibility of an export ban on scrap. While not directly addressed in the briefing, ResponsibleSteel and LESS appear to be against such a move, repeatedly emphasising that any present expansion of scrap adoption in European steelmaking would constitute a redistribution of overall emissions rather than any real reduction.
The SDS is described as “neutral as regard to scrap use,” though the authors suggest that under the SDS scrap would still be highly valued as an input for European production, due to relatively low grid emissions in the EU, and a welcoming political context for decarbonization, allowing scrap-based steelmakers to better facilitate real reductions elsewhere in their operations.
Appendix 1: SDS (ResponsibleSteel)
| Progress Levels | Emissions at 0% Scrap content (t CO2e/t) | Emissions at 100% scrap content (t CO2e/t) |
| Level 1 | 2.00-2.80 | 0.35-0.50 |
| Level 2 | 1.20-2.00 | 0.20-0.35 |
| Level 3 | 0.40-1.20 | 0.05-0.20 |
| Level 4 | 0.00-0.40 | 0.00-0.05 |
Benjamin Steven
