The Breakthrough Agenda – launched by 45 world leaders COP26, and now backed by 61 governments – has been established as an annual collaborative process.
Each sectoral “Breakthrough” covered by the Agenda is represented by various nations and sector-specific stakeholders, who regularly meet throughout the year and work together to boost efforts to achieve sector-specific goals.
The steel segment of the Breakthrough Agenda – led by Germany and the UK – has an objective to make near-zero emission steel the preferred choice in global markets, with efficient use and near-zero emissions steel production established and growing in every region by 2030.
“We are concerned that the steel sector may not meet that target, because to do so requires the work of all steel producers, and we are disheartened that there are industry players that do not have the ambition or commitment to achieve the goal,” Adina Renee Adler, executive director of the Global Steel Climate Council (GSCC), told Fastmarkets.
According to the third and latest annual Breakthrough Agenda report, published in November 2024, the steel sector is not on track to meet net-zero by 2050.
Total emissions have continued to increase over the past decade and a high number of new high-emission blast furnaces is anticipated, with an estimated 65 million tonnes of steel production in planning or under construction by the end of 2026, the report said.
The report also said that while announcements for new near-zero emission capable primary steel projects are rising, there is a need for “firmer timelines for transitioning to fully near-zero emission, and stronger policy support and demand signals to be converted to investments.”
The Agenda outlined 5 key priority actions for the steel sector to focus on in order to accelerate the green transition: definitions and standards, demand creation, research and innovation, trade conditions and finance and investment.
One of the key things the report suggests to focus on is an acceleration of the adoption of common standards and definitions for low emission and near-zero emission steel.
The lack of common widely-recognized standards for low emission steel has already been brought up by steel market participants in both the US and Europe numerous times, Fastmarkets heard.
For example, Sweden-based steelmaker SSAB called on policymakers to introduce common emission measurement rules during COP29 in Baku, Azerbaijan.
“SSAB believes that ambition and speed in the climate transition must increase. We need to phase out fossil fuels and it must cost to emit. Global carbon pricing mechanisms and common emission standards are needed to set the foundation for faster industrial decarbonization,” Martin Pei, chief technology officer at SSAB, said on November 11.
Major flat steel suppliers in Europe are already offering their own green steel brands with lower-carbon footprints – including XCarb, Arvzero, SSAB Zero, Bluemint and Greentec – but there is currently no common standard for the industry, in Europe or globally.
“We need a coordinated approach from the entire sector – a simple approach that is applicable to all members,” a trading source in Switzerland told Fastmarkets.
Fastmarkets’ methodology defines European green steel as “steel produced with Scope 1,2 & 3 emissions at a maximum of 0.8 tonnes CO2 per tonne of steel.”
And Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €80-200 per tonne on November 21, widening downward from €100-200 per tonne on November 14.
Producers in the US also offer a slew of low-carbon emissions products, with electric-arc furnace (EAF) producer Nucor offering Econiq, its line of certified low-embodied carbon steel, and integrated producer US Steel offering verdeX, which contains up to 90% recycled steel content, according to the company’s website.
Despite an existing market for low-carbon steel, there still lacks clarity around what constitutes as green steel in North America, a buyer told Fastmarkets.
Aligning emissions standards within the steel industry will take time to fully achieve, sources previously told Fastmarkets.
“There’s been a great deal of progress in terms of the amount of understanding globally on how to measure carbon emissions,” Kevin Dempsey, American Iron and Steel Institute (AISI) president and chief executive officer, said.
“There isn’t a complete consensus but the amount of attention being given to it is positive. It’s a process toward building a consensus, and that takes some time,” Dempsey said.
The Agenda offers a few steps to address the issue, including:
To support steelmakers’ decarbonization efforts, governments have to commit to buying green steel and establish appropriate implementation frameworks.
Notably, increasing public and private procurement commitments, including the introduction of incentives to use green steel in key downstream sectors, such as automotive and construction, would be necessary to support the sector, Fastmarkets understands.
This echoes the key concerns of the European steel industry.
“The demand for low-CO2 steel should be stimulated through public procurement and in public auctions… A well-recognized labeling system for green steel should be developed by the industry and stakeholders, to be used as a benchmark and reference,” the EU Steel Action plan, published by European Steel Association Eurofer and European trade union IndustriAll in November 2024, reads.
In Europe, deteriorating macroeconomic conditions and slowing consumption across key steel-consuming sectors have been limiting buying interest for green steel, market participants said.
“The demand for green steel can only come from the top. We need to increase green steel uptake by stimulating green steel use in construction projects, maybe subsidizing green steel purchases,” a steel service center in Germany said.
But despite the limited buying interest of green steel in Europe, Adler said that there are good growth opportunities in the region “because of regulations that obligate steel consumers to incorporate low-carbon and circular-made materials into finished goods, and we hope this competitive landscape will also stimulate demand in other regions.”
Another important milestone would be having aligned trade conditions globally, which would help to establish a level playing field for low-emission steel trading.
One such trade instrument is Europe’s Carbon Border Adjustment Mechanism (CBAM) – a carbon leakage protection measure, designed to protect EU markets from import commodities, including steel and aluminium, that don’t comply with EU climate regulations.
CBAM implementation, however, still raises certain concerns, especially among European steel market participants, due to the several unaddressed issues.
One major unaddressed issue in particular was the lack of focus on exports, which was compromising European steelmaker competitiveness in global markets.
Notably, export-oriented European steel companies bear additional carbon costs, which undermine their competitiveness in global markets, Fastmarkets understands.
“It is necessary to ensure that EU steel exports do not become uncompetitive because of the costs and regulatory burdens associated with decarbonization,” a steel producer in northern Europe said.
European steel export volumes have been declining in past years: from 22.6 million tonnes in 2019 to 15.2 million tonnes in 2023, according to Eurofer data.
The relationship between the EU and the US is significant, considering that both parties have previously negotiated future arrangements for trade in the steel and aluminium sectors, to combat both global non-market excess capacity and the carbon intensity of those industries.
Both parties announced the Global Arrangement on Sustainable Steel and Aluminium (GASSA) partnership in October 2021, but negotiations have been stalled since 2023 and are postponed until the end of March 2025.
The US has also cracked down on a flood of unfairly traded steel imports hurting the industry, with members of Congress introducing the Leveling the Playing Field 2.0 Act (LTPF 2.0).
“Congress must take action to update our trade laws to address these and other trade-distorting practices,” AISI said in a press release in July, urging members of Congress to cosponsor the LTPF 2.0, which currently has 82 cosponsors in both the Senate and the House.
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