Zeroing in on Steel Sector Emissions for Market Transformation

This briefing by RMI argues for the establishment of a standardized near-zero emissions threshold for iron production to stimulate investment and trade in decarbonized steel. It proposes a threshold of 350 kgCO2e/t iron and suggests implementing a 'book and claim' market mechanism to connect corporate buyers with clean iron producers, overcoming the complexities of multi-tiered supply chains.

• Iron production is the primary driver of emissions in the steel supply chain, accounting for more than 80 percent of total emissions. While iron from ore currently makes up over 70 percent of steelmaking, it is projected to decrease to approximately 54 percent by 2050 due to limited global scrap availability.
• Direct reduction (DRI) technology is expanding five times faster than blast furnace production, with significant capacity emerging in the Middle East and North Africa. However, fossil fuel-based DRI facilities under construction have nearly three times the pipeline capacity of hydrogen-based DRI facilities, and only 2.5Mt of hydrogen-based capacity have defined plans to use 100 percent renewably produced hydrogen.
• RMI proposes a near-zero emissions iron threshold of 350 kgCO2e/t iron based on a cradle-to-gate emissions boundary. This specific threshold is designed to exclude coal-based iron production; natural gas-based DRI would only meet this limit if it uses low methane leakage gas and incorporates additional upstream decarbonization, such as in pelletizing.
• A standardized iron-level emissions definition is identified as critical for four primary use cases: helping electric arc furnace mini-mills source clean iron, assisting banks in targeting transition finance toward high-impact facilities, enabling corporate procurement to address Scope 3 hotspots, and facilitating trade alignment with regulations like the EU's Carbon Border Adjustment Mechanism.
• To overcome supply chain complexity and the dilution of demand signals, RMI suggests two indirect procurement models: reconfiguring supply networks to establish direct commercial relationships with upstream producers, or utilizing a "Book and Claim" system where buyers purchase only the emissions attributes of the steel 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} }