WTO, steel industry urge interoperable carbon pricing
Panellists at the recent WTO Public Forum focusing on steel sought to explain how interoperable carbon pricing mechanisms could support decarbonisation, Kallanish not
WTO deputy director-general Jean-Marie Paugam said interoperability is crucial in carbon measurement and trade mechanisms, emphasising the shared responsibility between the private sector and government.
Ola Hansen from Stegra, formerly H2 Green Steel, asked panellists how market mechanisms and policy instruments could be developed to support decarbonised steel in new markets, noting “deep green steel comes at a higher cost, making carbon pricing essential”.
Panellist Edwin Basson, director general at worldsteel, emphasised that putting a price on emissions, such as through CBAM, is essential for creating a global market, as many regions are considering similar mechanisms.
“CBAM plays now much more than just a European role. It is setting an expectation in other regions of the world as well. A common arbitrage mechanism for CO2 emissions could compel society to bear the costs of carbon emissions,” he noted.
“The key question is whether global systems can be developed that, while different, are interoperable – meaning they allow the comparison and trading of emission costs across various markets. This would be crucial in moving away from the need to subsidise CO2 reduction efforts globally, as a standardised system would drive the reduction of emissions by making their costs explicit and comparable worldwide,” he added.
Lower costs for green steel could come via trade facilitation and reducing regulatory burdens, according to Adina Renee Adler, executive director at the Global Steel Climate Council. “There’s likely a communications issue; as a trade policy community, we don’t always effectively convey what we’re doing,” she said.
Improving communication on the benefits of trade could generate widespread support, which would help lower product costs, even when initial production costs are high.
Meanwhile, Annie Heaton, chief executive at ResponsibleSteel, warned against using carbon policies for other purposes, like addressing overcapacity, instead of focusing solely on decarbonisation.
“We need to ensure that carbon policies are designed not to deal with that [overcapacity] but to deal with the climate change issue,” she opined.
Anne van Ysendyck, vice president and head of government affairs and environment at ArcelorMittal, highlighted the long-term challenge of higher costs associated with low-carbon steel.
She emphasised the need for uniform carbon pricing, such as through CBAM, but also stressed that incentivising both the production and consumption of low-carbon steel is crucial. Building up scale and addressing energy costs will take time and societies may need to bear higher costs in the short term to drive progress, according to Van Ysendyck.
She also underscored the importance of ensuring that measures are implemented globally and that both production and consumption incentives are effectively supported.
Marc Delobelle, head of fossil-free materials purchasing at Volvo Group, meanwhile, acknowledged there is a premium for green steel but stressed the importance of scaling production to reduce costs in the long term.
Elina Virchenko UAE
