- K-Steel Act lays legal foundation for low-carbon steel certification scheme
- Industry calls for criteria that reflect domestic steel production realities
As the steel industry’s transition to carbon neutrality accelerates, the question of which types of steel should be recognised as low-carbon steel is emerging as a new challenge. Steelmakers are taking steps to reduce carbon emissions, including switching to electric arc furnaces, expanding the use of scrap steel, and adopting hydrogen-based ironmaking. However, objective criteria and a certification system are needed to distinguish genuine low-carbon products in the market and recognise their value.
Against this backdrop, the Special Act on Strengthening the Competitiveness of the Steel Industry and the Transition to Carbon Neutrality, commonly known as the ‘K-Steel Act’, which came into force last June, has laid the legal foundation for a low-carbon steel certification scheme. However, detailed criteria, including how steel produced through different methods should be evaluated and what levels of greenhouse gas emissions and reductions should be used as certification benchmarks, are still being finalised.
Accordingly, the low-carbon steel certification system outlined in the K-Steel Act, along with the current status of establishing detailed criteria, highlights the challenges that must be addressed to ensure the scheme’s successful implementation.
What is low-carbon steel certification under the K-Steel Act?
The K-Steel Act enables the Ministry of Trade, Industry, and Energy to grant low-carbon steel certification to steel that meets specific certification criteria, with the aim of promoting the use of low-carbon steel.
The key point is that steelmakers will not simply be able to declare their products as ‘low-carbon’ on their own initiative. Products must meet specific criteria and undergo verification procedures to receive official recognition. The law also prohibits uncertified steel from carrying certification marks or similar markings or being marketed as if it were certified.
A legal basis has also been established for the bodies responsible for certification. The Ministry of Trade, Industry, and Energy may designate an organisation, body, or legal entity equipped with the necessary personnel and facilities to carry out low-carbon steel certification tasks professionally and efficiently as a certification body.
The Enforcement Decree distinguishes the roles of certification bodies into ‘certification operating bodies’ and ‘certification testing and evaluation bodies’. Certification operating bodies are responsible for receiving and reviewing certification applications, issuing certificates, and operating and managing the system. Certification testing and evaluation bodies are responsible for on-site audits, technical verification, testing, and evaluation.
In effect, the system establishes an application, review, and verification process through which low-carbon steel is officially certified, rather than relying on company self-declaration.
What will be assessed?
The key question is what type of steel will be recognised as low-carbon steel. The Enforcement Decree of the K-Steel Act stipulates that, when establishing certification criteria, consideration must be given to the steel’s production methods, the technologies applied in production, and the resulting greenhouse gas emissions and reduction levels.
This means certification will involve a comprehensive assessment of production methods, technologies, and actual greenhouse gas emissions and reduction performance, rather than relying solely on the use of specific technologies such as electric arc furnaces or hydrogen-reduced ironmaking.
However, the Enforcement Decree sets out only the broad direction for the certification criteria. It stipulates that the Ministry of Trade, Industry, and Energy shall determine and prescribe the specific criteria, including the greenhouse gas emission levels or reduction achievements required for recognition as low-carbon steel.
The development of detailed criteria will therefore need to address how processes with different production structures, such as blast furnaces and electric arc furnaces, should be evaluated, and how their respective greenhouse gas emissions and reduction levels should be reflected. Ultimately, the core of the certification scheme lies in determining how production methods and carbon reduction achievements will be measured and assessed.
Balancing objectivity with industrial realities
The steel industry is calling for certification criteria that ensure objectivity and reliability while reflecting the realities of domestic steel production.
This is because low-carbon steel certification will go beyond simply distinguishing whether a product is environmentally friendly. It could influence steelmakers’ investment decisions on carbon neutrality, product sales, and procurement decisions by downstream industries.
In particular, the large-scale capital investment in facilities and technology development undertaken by steelmakers to reduce carbon emissions needs to be assessed appropriately during the certification process. The industry argues that, while the evaluation system should be aligned with global standards, it should also take into account the circumstances of the domestic steel industry, which faces substantial transition costs.
International consistency will also be important. For domestic certification to gain acceptance in overseas markets, it will need to be aligned with international assessment frameworks. At the same time, directly applying overseas standards could fail to reflect the production structure, energy mix, and raw material procurement conditions of the domestic steel industry.
Another issue is whether separate certification standards should be established for each product category. There are differences in production processes and raw material composition between rebar, hot-rolled steel, plate steel, steel pipes, and special steels. However, the prevailing view at this stage is that it is more important to establish a common certification system first and ensure that the scheme becomes established in the market, rather than immediately subdividing standards by product category.
The balance will be critical. Excessively strict standards could restrict corporate participation, while overly lenient standards could undermine the credibility and discriminatory power of the certification. The objective should be to establish standards that can be applied in industrial settings while objectively evaluating companies’ carbon reduction efforts and investment outcomes.
From certification to market creation
The significance of the low-carbon steel certification scheme extends beyond classifying products as low-carbon. Its broader purpose is to objectively distinguish products that have actually reduced carbon emissions and ensure that their value is recognised in the market.
Steelmakers need to make large-scale investments in areas such as switching to electric arc furnaces, expanding the use of scrap steel, developing low-carbon production processes, and advancing hydrogen-based ironmaking technology. If products that achieve lower emissions at additional cost are evaluated in the same way as conventional products, however, there will be limited scope to sustain investment in carbon reduction.
Measures that link certification to actual demand will therefore be important. The K-Steel Act focuses not only on the certification system but also on institutional support for market creation and measures such as public procurement.
Once measures to expand demand for certified products and related support schemes are finalised, certification could become a mechanism for evaluating steelmakers’ carbon reduction achievements in the market and, to some extent, compensating for the investment burden. In other words, investment in the low-carbon transition can only be sustained if certification leads to actual purchases and broader demand for certified steel.
Standards and demand need to develop together
The certification system will also need to be backed by genuine demand for, and support of, certified products. The scheme can become a practical tool for advancing the steel industry’s transition to carbon neutrality only when both sides of the market are in place: clear standards for identifying low-carbon steel and a market that recognises the value of certified products.
The development of certification criteria is therefore not simply a regulatory exercise. It will determine how different decarbonisation pathways are valued, how steelmakers’ investments are recognised, and ultimately whether lower-carbon steel can secure a sufficient market premium to support further investment.
Note: This article is published in accordance with a content exchange agreement between SteelDaily and BigMint.
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