Decarbonizing Hard-to-Abate Industries: The Importance of a New Accounting Method

RMI proposes a shift from corporate-level carbon aggregation to product-level accounting that differentiates the emissions intensity of virgin and recycled materials. This method aims to address the lack of transparency in the supply chains of steel, aluminum, and petrochemicals, which together accounted for 14 percent of global GHG emissions in 2019. While circularity offers immediate emissions cuts and environmental benefits—such as reducing iron ore extraction by 37 percent—recycled inputs are projected to meet only 70 percent of steel demand by 2050, necessitating the simultaneous scaling of zero-carbon technologies for virgin materials. The proposed accounting guidance is intended to help corporations verify supplier progress, allow producers to gain competitive advantages, and assist policymakers in enforcing instruments like the Carbon Border Adjustment Mechanism (CBAM).

• Steel, aluminum, and petrochemicals are critical targets for decarbonization, as they collectively represented 14 percent of global greenhouse gas emissions in 2019.
• Increasing circularity provides significant environmental gains beyond carbon, including a 37 percent reduction in iron ore extraction, the saving of 344 million m3 of water, and the avoidance of over 170 acres of land use change annually, based on 2020 global iron ore production data.
• Recycling alone cannot achieve net-zero by 2050 because scrap supply is limited by product lifetimes; optimistic models suggest recycled inputs will only satisfy 70 percent of total steel demand by 2050.
• Current corporate-level carbon accounting lacks the transparency needed for green procurement, as it fails to provide visibility into specific product carbon specifications or the decarbonization efforts of upstream suppliers.
• The proposed accounting solution of distinguishing emissions intensity between virgin and recycled supply chain segments can support the enforcement of policy instruments such as the Carbon Border Adjustment Mechanism (CBAM).

APA

RMI (2022). Decarbonizing Hard-to-Abate Industries: The Importance of a New Accounting Method. https://rmi.org/resources/the-importance-of-a-new-accounting-method/

Chicago

RMI. Decarbonizing Hard-to-Abate Industries: The Importance of a New Accounting Method. 2022. https://rmi.org/resources/the-importance-of-a-new-accounting-method/.

Wikipedia

{{cite report |author=RMI |title=Decarbonizing Hard-to-Abate Industries: The Importance of a New Accounting Method |date=6 September 2022 |url=https://rmi.org/resources/the-importance-of-a-new-accounting-method/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2022decarbonizing, author = {{RMI}}, title = {{Decarbonizing Hard-to-Abate Industries: The Importance of a New Accounting Method}}, institution = {RMI}, year = {2022}, month = sep, url = {https://rmi.org/resources/the-importance-of-a-new-accounting-method/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }