- GHG Protocol revision to boost global standardisation of green steel
- New AMI standards to offer clarity on Scope 3 accounting framework
Japan Metal Daily: In the upcoming revision of the GHG Protocol, a leading international framework used by companies to calculate greenhouse gas (GHG) emissions, industry participants believe that the concept of “carbon dioxide (CO2) reduction contribution” will be incorporated.
The CO2 reduction contribution concept, originally proposed by Japan, forms the basis for the production and classification of green steel (GX steel). Its inclusion in the GHG Protocol would mark a major step toward the international standardisation of GX steel. The drafting body of the GHG Protocol is currently working on revisions, with a final decision expected in 2028.
AMI framework emerges as key focus area
One of the main focus areas in the revision process is the creation of new Action Market Instruments (AMI) standards covering the use of tools such as emission credits. The drafting body has formed an AMI working group, which is examining ways to evaluate environmental value, particularly emission reduction contributions.
At the end of March, the AMI working group released an interim report proposing a new accounting approach for emissions linked to purchased products and services, using green steel as an example. The aim was to enable companies, when calculating Scope 3 GHG emissions (those arising from the purchase of raw materials and other inputs), to factor in the specific reduction contributions embodied within the products they have purchased.
Scope 3 accounting clarity could boost GX steel adoption
Green steel is categorised as such by allocating “reduction contributions” to specific steel products; these contributions are generated through measures such as the installation of equipment or the substitution of raw materials undertaken specifically for the purpose of reducing CO2 emissions. Methods for allocating these contributions include the mass balance approach, as well as the carbon footprint (CFP) allocation method, among others.
The current GHG Protocol does not provide clear standards for accounting for emission reduction contributions linked to specific products. As a result, some customers purchasing GX steel have been cautious about including these reductions in their own Scope 3 emissions calculations.
If the revised protocol explicitly establishes criteria for such reduction contributions, GX steel would effectively gain international recognition, likely encouraging greater adoption among steel consumers.
Japan pushes for global standardisation of GX steel
In October last year, the Japan Iron and Steel Federation (JISF) introduced the GX Steel Guidelines to clarify the definition of low-carbon steel products as a growing range of such products entered the market. At the same time, the federation launched efforts to establish international standards for emission reduction contributions to support wider adoption of GX steel, which offers significant emissions-reduction potential.
As part of this initiative, the federation sent representatives to participate in the AMI working group. These efforts now appear to be reflected in the ongoing revision of the GHG Protocol.
Note: This article has been published in accordance with a content exchange agreement between Japan Metal Daily and BigMint.
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