Governments worldwide are pursuing two objectives simultaneously: reducing emissions from steel production while protecting domestic jobs, competitiveness and industrial capacity. However, these goals are being pursued through separate, unaligned streams, creating a growing patchwork of overlapping and discordant policies and frameworks, according to a report by Responsible Steel.

Such fragmentation, it is argued, is increasing inefficiency, distorting fair competition, deterring the investment needed to finance the transition and ultimately undermining the shift to low-emission steelmaking.

Global Steel Decarbonisation: From complexity to coherence is the title of the new report, published by Responsible Steel.

Annie Heaton, CEO of Responsible Steel commented: “We cannot afford this inefficiency. Right now, policy fragmentation is slowing down the very transition it is meant to accelerate. Greater alignment is entirely achievable, and essential, if we are to unlock investment and deliver steel decarbonisation at the pace required.

The report claims to provide a global review of steel decarbonisation policy, using the European Union (EU) and India as examples, being two of the world’s three largest steel producers and markets. It examines their trade and sustainable finance policies, public procurement, green steel labelling and ESG frameworks.

In both regions, policy is advancing rapidly but without sufficient alignment. In the EU, instruments such as the Emissions Trading System (EU ETS), Carbon Border Adjustment Mechanism (CBAM), Steel Trade Defence Instrument and Industrial Accelerator Act (IAA) are being introduced in quick succession. In India, the Green Steel Taxonomy, Green Steel Action Roadmap and forthcoming Carbon Credit Trading Scheme (CCTS) are being developed and scaled in parallel.

Yet many of these policies and frameworks, argues Responsible Steel, sit on incompatible foundations. "Diverging definitions of ‘low-emission’ steel, inconsistent emissions accounting methodologies and different approaches to scrap (recycled steel) content are creating friction in global markets and increasing uncertainty for producers," it is claimed.

The report warns that trade defence measures which fail to distinguish between high- and low-emission steel risk penalising the very producers that climate policy aims to support. At the same time, fragmented carbon accounting rules make it harder for cleaner producers to demonstrate their competitive advantage across markets, weakening the investment case for decarbonisation.

The commercial stakes are significant. Europe is the second-largest destination for Indian steel exports, with trade worth an estimated $6–6.5 billion annually. The report cites estimates that CBAM-related costs on Indian steel could reach $1.2–1.5 billion a year, rising to $8–9 billion by 2030, highlighting the scale of potential disruption if global approaches to steel decarbonisation remain misaligned.

“Investments on the scale required need clear, consistent and predictable rules that let low-emissions steel markets thrive” added Annie. “Governments have the opportunity to create a level playing field that rewards real progress on decarbonisation and cuts red tape.”

Responsible Steel.

The report argues that greater policy coherence is achievable through better alignment between existing standards, independent certification systems and data requirements. Every country that imports or produces steel, and seeks to establish policies that promote steel decarbonisation both within its borders and in relation to the steel it imports, faces the same challenges.

The report sets out practical, near-term steps governments can take to reduce fragmentation and create a more predictable environment for investment, including:

  • Agreeing consistent rules for measuring steel emissions in reporting systems for producers and buyers.
  • Reducing duplicated reporting requirements by recognising data independently verified emissions under other schemes across markets allowing producers to demonstrate progress across jurisdictions.
  • Creating a common way to account for recycled steel versus primary steel content, including a ‘scrap-variable’ metric that reflects the different emissions profiles of steel made with varying levels of scrap and helps distinguish genuinely lower-emission products.
  • Strengthening traceability across the steel supply chain, through credible downstream chain-of-custody systems that allow buyers and regulators to verify where steel comes from and with what emissions.
  • Integrating wider sustainability criteria found in other policy instruments into the same policy toolbox to streamline data.

By aligning policies around common principles and reliable data, argues Responsible Steel, governments worldwide can ensure climate measures work together rather than against each other.

It is argued that, together, these measures would help fair and competitive markets for low emissions steel, supporting buyers to make the right choices, rewarding genuine progress on emissions reductions and unlocking the investment needed to accelerate steel decarbonisation, competition, reward producers making genuine progress on emissions reductions, and unlock the investment needed to accelerate steel decarbonisation.

‘Global Steel Decarbonisation: From complexity to coherence’ was published today by ResponsibleSteel.