Zeroing in on Steel Sector Emissions for Market Transformation

The briefing highlights that iron production accounts for over 80% of steel supply chain emissions and argues that a common 'near-zero emissions' iron definition is necessary to guide investment and trade. It proposes a threshold of 350 kgCO2e/t iron to exclude coal-based production and suggests that hydrogen-based direct reduction (DRI) is the primary commercial pathway to achieve this. To overcome supply chain complexities, the document advocates for direct procurement and 'book and claim' systems, announcing that RMI will design and test a climate-credible book and claim system for iron and steel in 2025.

• Iron production is the primary driver of emissions in the steel sector, accounting for more than 80% of the total supply chain emissions. While the share of iron produced from ore in steelmaking is expected to drop from over 70% today to approximately 54% by 2050 due to scrap availability limits, it remains a critical decarbonization target.
• Current global capacity for direct reduced iron (DRI) is growing five times faster than blast furnace-based production, with significant growth in the Middle East and North Africa. However, fossil fuel-based DRI facilities under construction have nearly three times the capacity of hydrogen-based DRI projects, and only about 2.5Mt of capacity have defined plans to use 100% renewably produced hydrogen.
• The document proposes a near-zero emissions iron threshold of 350 kgCO2e/t iron, based on a cradle-to-gate boundary (Scope 1, 2, and upstream Scope 3). This specific threshold is designed to filter out coal-based iron production; natural gas-based DRI would only meet this limit if it used low methane leakage gas and additional upstream decarbonization.
• A standardized iron-level definition is identified as critical for four primary use cases: decarbonizing mini-mill products, facilitating transition finance for banks using frameworks like the Sustainable Steel Principles, enabling corporate Scope 3 procurement, and aligning international trade with climate goals such as the EU's Carbon Border Adjustment Mechanism.
• To address the difficulty of tracing emissions through complex multi-tier supply chains, the document suggests two indirect procurement models: reconfiguring supply networks to establish direct relationships with upstream producers, or using a "Book and Claim" system to purchase emissions attributes separately from the physical goods.
• RMI intends to design, test, and launch a climate-credible book and claim system for iron and steel in 2025, drawing on previous experience with the Sustainable Aviation Buyers Alliance and Maritime Book and Claim.

APA

RMI (2025). Zeroing in on Steel Sector Emissions for Market Transformation. https://rmi.org/resources/zeroing-in-on-steel-sector-emissions-for-market-transformation/

Chicago

RMI. Zeroing in on Steel Sector Emissions for Market Transformation. 2025. https://rmi.org/resources/zeroing-in-on-steel-sector-emissions-for-market-transformation/.

Wikipedia

{{cite report |author=RMI |title=Zeroing in on Steel Sector Emissions for Market Transformation |date=22 January 2025 |url=https://rmi.org/resources/zeroing-in-on-steel-sector-emissions-for-market-transformation/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025zeroing, author = {{RMI}}, title = {{Zeroing in on Steel Sector Emissions for Market Transformation}}, institution = {RMI}, year = {2025}, month = jan, url = {https://rmi.org/resources/zeroing-in-on-steel-sector-emissions-for-market-transformation/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }