1 Introduction

The International Energy Agency (IEA) reports that the iron and steel sector leads in CO2 emissions among heavy industries and holds the position of the second-largest energy consumer in this category. This sector directly contributes around 2.6 gigatonnes (Gt) of carbon dioxide (CO2) annually, accounting for approximately 7% of the global energy system's total emissions. Notably, this emission level exceeds that of all road freight transport. Additionally, the steel industry is the most significant industrial consumer of coal, which supplies roughly 75% of its energy needs (Fajardy et al. 2021; IEA 2020). In the Stated Policies Scenario, it is projected that by 2050, the global end-use demand for steel will reach 2.1 gigatonnes (Gt), marking a substantial increase of nearly 40% from the 1.5 Gt recorded in 2019. This significant growth in end-use demand is primarily fueled by emerging economies, which are in the process of augmenting their in-use steel stock to align with the levels currently observed in more advanced economies (Australian Steel Institute 2018). To address the steel industry's environmental challenges, thorough and precise GHG inventories are essential. These inventories set the stage for effective climate action by establishing the current baseline emissions, pinpointing the production areas contributing most significantly to emissions, and guiding the policymaking and investment strategies needed for sustainable progression. Instruments like the Global Protocol for Community-Scale (GPC) Greenhouse Gas (GHG) Emission Inventories, developed by C40 Cities in 2014, are pivotal in offering a standardized approach to measuring and managing emissions (Financial Times 2021). This standardized protocol allows for consistent comparisons over time and across different organizations and jurisdictions, fostering the identification of best practices and opportunities for emission reduction. The adoption of such frameworks is crucial as the sector navigates the dual challenges of rising demand and the imperative for decarbonization (Sjoberg and Wannheden 2017).

Transitioning to green steel production is a critical step in the industry's sustainability journey. Green steel is defined by its production process that aims to drastically reduce or completely eliminate GHG emissions. Key technological advancements facilitating this shift include the use of electric arc furnaces (EAFs) powered by renewable energy sources, the implementation of direct reduced iron (DRI) technology with hydrogen (which does not result in CO2 emissions as a by-product), and the application of carbon capture, utilization, and storage (CCUS) techniques (Devlin et al. 2023). These innovations offer a significant reduction in carbon emissions compared to traditional methods. The momentum toward green steel is being driven by multiple factors. There is a burgeoning demand for sustainably produced materials as consumer awareness grows and as corporate responsibility standards become more stringent. Additionally, regulatory policies are increasingly favoring low-carbon technologies, often providing incentives for their adoption or penalizing higher-emission activities. This evolving policy landscape is influencing industry practices and investment directions, propelling the adoption of green steel technologies (IEA 2019).

It is clear that the journey towards a lower-carbon footprint within the steel sector is fraught with complexities and formidable challenges. Nevertheless, this transition remains imperative. The realization of this ambition necessitates a holistic approach that encompasses the advancement of low-emission technologies, the enactment of forward-thinking policies, and the responsiveness of markets. Through a strategic synergy of innovation, financial commitment, and global collaboration, the steel industry has the potential not only to sustain its foundational role in modern society but also to emerge as a frontrunner in the collective endeavor to address climate change (Wang et al. 2023). This review will delve into the intricacies of these dynamics, evaluating the current state while casting an eye towards future possibilities for this vital industrial sector.

2 GHG inventory in the steel industry

2.1 Overview of the iron and steel core sustainable development analysis (SDA) boundary

The provided SDA boundary table (Table 1) suggests that the majority of direct GHG emissions in the steel.

Table 1 Detailed emissions breakdown in steel production (shaded in grey is proposed SDA system boundary)
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industry come from the iron and steelmaking processes, specifically coke making, blast furnace, and BOF operations due to their energy-intensive nature and reliance on fossil fuels. The indirect emissions, while not as large as direct emissions, are also significant, especially those related to power production (both imported and on-site) and the downstream processing of steel products (Bellona et al. 2023). The emissions from EAFs can vary greatly depending on the source of the electricity; if the grid is coal-heavy, emissions are higher, whereas if renewable energy is used, these can be much lower, which is a key consideration in the transition to green steel (IKI 2018).

2.2 Current practices for GHG inventory management

Effective GHG inventory management within the steel industry involves a meticulous process of tracking emissions from various stages of production. Compared with SDA boundary, current practices simplify all the sub-processes into 7 main processes (Table 2).

Table 2 Data collection and documentation requirements by input stage
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From the acquisition of raw materials to the delivery of finished products, each phase contributes to the overall carbon footprint of steel manufacturing. The bar chart (Fig. 1a) compares the direct and indirect emissions associated with each stage of the steel production process. Two bars represent each process: one for direct emissions (from sources that are owned or controlled by the company) and another for indirect emissions (consequences of the company's actions, which occur at sources not owned or controlled by the company) (Vorrath 2020). Whereas, the pie chart, Fig. 1b, illustrates the proportion of direct and indirect emissions across different processes within the steel industry. Each sector represents the combined direct and indirect emissions for a given process. These charts serve as an example of how the steel industry might visualize its emissions inventory to identify areas where emissions are highest and to help prioritize efforts to reduce emissions (Fischedick et al. 2014).

Fig. 1
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a Direct vs. indirect emissions in steel production process and (b) distribution of combined GHG emissions by typical process in the steel industry

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2.2.1 Inputs

At the inputs stage, companies must account for direct emissions from coal mining, such as methane (CH4) releases, and CO2 resulting from energy consumption during extraction processes (Table 2). It is estimated that methane emissions can range from 1.0 to 2.0 kg per tonne of coal mined, significantly impacting the GHG profile of coal mining operations. CO2 emissions associated with energy consumption during extraction are also substantial, with an average of 0.02 to 0.06 tonnes of CO2 per terajoule of energy used. Additionally, indirect emissions from power production need to be recorded, which often come from the combustion of imported fossil fuels. The average emissions for power production from fossil fuels can be quantified, with coal-fired power plants emitting approximately 0.9 to 1.2 tonnes of CO2 per gigawatt-hour of electricity produced, and natural gas plants emitting 0.4 to 0.6 tonnes of CO2 per gigawatt-hour (Hasanbeigi et al. 2014). The production of hydrogen or synthesis gas (syngas), commonly used as a reducing agent, also results in CO2 emissions, especially when produced from natural gas via steam methane reforming (Hasanbeigi et al. 2014).

2.2.2 Iron & steel making

The core processes of steel production, including coke making, sintering, and iron reduction in blast furnaces, are significant sources of CO2 emissions. Each sub-process, from the BOF to the EAF and secondary metallurgy, contributes both direct and indirect emissions (Table 3). The direct emissions largely result from the chemical reactions and combustion within the processes, while indirect emissions are associated with energy consumption, notably when the electricity is sourced from fossil fuels (Villalva 2023).

Table 3 Data collection and documentation requirements by primary and secondary process stage
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The EAF process is indeed a distinct method of steel production, separate from the traditional blast furnace-basic oxygen furnace (BF-BOF) route. The EAF process is predominantly used to recycle scrap steel, although it can also melt DRI or pig iron. Here are the key reasons why EAF might be listed as a sub-process in some contexts:

  • Comparison with traditional processes: Within the context of the entire steel production industry, EAF is often contrasted with the integrated steelmaking process that involves coke making, sintering, and reduction in blast furnaces followed by the BOF. The integrated route is sometimes considered the "primary" process, especially in texts that are referring to the historical development of the industry, while EAF, being newer and with a different feedstock, may be referred to as a "sub-process" or "alternative process."

  • Lifecycle analysis: In a lifecycle analysis or a study of the steel production industry as a whole, EAF might be grouped as a sub-process because it's a part of the broader steelmaking system. This system includes everything from raw material extraction to the final steel product, and various routes and processes are considered within this system.

  • Categorization in reporting: In reporting emissions or production statistics, industries often categorize processes into primary and secondary stages. "Primary" might refer to the initial production of steel from raw materials, while "secondary" could refer to processes that refine or recycle steel, such as EAF. Despite EAF being a complete process in itself, for the purpose of emissions accounting and reporting, it might still be listed as a part of a larger category.

  • Technological integration: Some steel plants have both BOF and EAF facilities. In such integrated operations, the EAF might be considered a sub-process or a parallel process, depending on the perspective of the operational flow (Devlin et al. 2023).

2.2.3 Downstream processing

Downstream processing such as hot and cold rolling, coating, and the treatment of steel involves both direct and indirect emissions (Zhang et al. 2012). Hot rolling, for instance, requires considerable amounts of heat, typically generated by burning fossil fuels, while cold rolling relies on electricity, translating to indirect CO2 emissions depending on the energy source (Table 4). Coating processes can emit volatile organic compounds (VOCs) in addition to CO2. Moreover, it is common for different facilities or different stages within the same facility to have separate emission monitoring systems. This is because each process or stage can have distinct environmental impacts and regulatory requirements for emissions reporting. Therefore, separate monitoring allows for more accurate tracking and management of emissions specific to each process.

Table 4 Data collection and documentation requirements by rolling and treatment stage
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2.2.4 Downstream value chain

The distribution and transportation of steel products add to the GHG inventory due to the combustion of fuels in transportation vehicles. Fabrication processes, which often occur at offsite facilities, contribute indirect emissions through their energy use (Table 5). Moreover, by-products such as power or materials like blast furnace slag, when exported, encompass indirect emissions related to their production and transport (Siitonen et al. 2010).

Table 5 Data collection and documentation requirements by downstream value chain
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2.2.5 Opportunities in emission reduction

In the context of GHG management within the steel production cycle, each stage presents distinct opportunities for emission reduction. The focus on direct emissions during the raw material input stage, especially methane from coal mining and CO2 from energy consumption, underscores the need for energy efficiency optimization and the adoption of cleaner energy sources. This stage presents an opportunity to significantly reduce methane leakage and improve resource utilization efficiency (Paltsev et al. 2021). During the iron and steel-making phase, the primary concern lies in the direct emissions from processes like coking, sintering, and iron reduction in blast furnaces. These emissions are predominantly due to chemical reactions and combustion activities. The opportunity here is to embrace more eco-friendly production technologies, such as the use of low-carbon burden materials and alternative reducing agents, thus reducing reliance on fossil fuels and enhancing process efficiency (Torrubia et al. 2023).

In the downstream processing stage, the focus shifts to the energy-intensive processes of hot and cold rolling and coating. Hot rolling's dependency on fossil fuel combustion and cold rolling's electricity requirements, along with VOC emissions from coating processes, are critical points. The adoption of renewable energy sources for electricity, process optimization to reduce energy demand, and effective control and recovery of VOC emissions represent key opportunities for GHG management (Arens et al. 2012). The downstream value chain stage, encompassing the distribution and transportation of steel products and offsite fabrication processes, highlights the significance of fuel combustion in transportation and energy use in manufacturing. Improving logistics and transportation efficiency, utilizing cleaner transportation methods, and collaborating with manufacturers who prioritize energy efficiency can significantly mitigate GHG emissions.

Current practices for managing these inventories are guided by standardized protocols, such as the Greenhouse Gas Protocol and ISO standards, which provide frameworks for calculating and reporting emissions. For the emission factors, companies should refer to recognized standards such as the Intergovernmental Panel on Climate Change (IPCC) guidelines, the Greenhouse Gas Protocol, or local environmental regulatory agencies that provide region-specific factors. Ensuring the assurance of the results requires a rigorous data management system, regular audits, third-party verification, and adherence to these standards. It's also essential to maintain a document control system that ensures all relevant evidence and documentation are up-to-date and readily available for reporting and verification purposes (Milford et al. 2011).

2.3 Challenges in accounting for direct and indirect emissions across the value chain

2.3.1 Direct emissions

Accounting for direct emissions presents challenges due to the variability in operational efficiency and the technology used across different plants and processes. Differences in ore quality, plant age, and maintenance can lead to significant variations in emissions, making standardization difficult. Additionally, capturing data on fugitive emissions, like methane leaks during coal mining or coking, is notoriously complex (Kazmi et al. 2023).

2.3.2 Indirect emissions

Indirect emissions pose a more considerable challenge, as they depend on the sources of purchased electricity and other energy forms. The variability of emission factors for electricity from national grids, the use of by-product gases as energy sources, and the allocation of emissions from cogeneration plants all complicate the GHG inventory process (Pardo and Moya 2013). Furthermore, accounting for emissions from the transportation of raw materials, intermediate products, and finished goods requires extensive data collection and management, which can be hindered by varying scopes of control and ownership across the value chain.

2.3.3 Value chain considerations

The value chain of steel production is expansive, stretching from the initial extraction of raw materials to the management of products at the end of their life. Within this spectrum, the complexity of Scope 3 emissions is notable, encompassing upstream activities such as the production and transportation of iron ore, coal, and the manufacturing of capital goods necessary for setting up steel production facilities. These emissions can vary, with raw material extraction and transportation contributing approximately 0.2 to 0.5 tonnes of CO2 equivalent per tonne of steel produced. However, emissions from capital goods are more challenging to quantify due to their one-off nature in the initial investment phase (Sjoberg and Wannheden 2017).

Directly related to the production of steel are the emissions from various processes like the BF-BOF method, EAF operation, and DRI techniques, each with its unique emissions profile ranging from 0.1 to over 2 tonnes of CO2 equivalent per tonne of steel. Downstream, the emissions narrative continues as the steel is utilized in various applications. For instance, the use-phase emissions for steel in construction include the energy consumption of steel-structured buildings. At the steel's end-of-life, recycling can significantly reduce emissions to as low as 0.4 to 0.6 tonnes CO2e per tonne, highlighting the importance of efficient recycling processes.

Transportation and distribution also play a pivotal role, with emissions depending heavily on the distance and transport method, potentially adding an additional 0.02 to 0.04 tonnes CO2e per tonne of steel for every thousand kilometers transported by sea. Although less significant, operational waste treatment, business travel, employee commuting, and the use of leased assets still contribute to the total emissions footprint and are increasingly scrutinized as companies aim for comprehensive emissions accounting.

To navigate these complexities and enhance emissions tracking, the steel industry is moving towards more robust methodologies and a commitment to transparency. This includes life cycle assessments to evaluate environmental impacts across all stages of a product's life and the development of Environmental Product Declarations that provide transparent environmental impact data. Additionally, there is an increasing trend of engaging with suppliers to address emissions in raw material production and improving product design to ensure that steel products are durable, reusable, and recyclable, thus minimizing end-of-life emissions. These concerted efforts are crucial as the industry progresses towards its sustainability targets and contributes to the global endeavor to mitigate climate change (Fischedick et al. 2014).

3 Transitioning to green steel: reduction projects

3.1 Analysis of carbon-intensive processes and alternative technologies

The traditional route for steel production, represented by the BF-BOF process, is classified under the ‘Primary Production’ category due to its use of raw materials like iron ore and coke. With an average GHG emission range of 1.85 – 2.2 tonnes CO2e per tonne of steel, this process is the most carbon-intensive due to its reliance on coal and coke as the primary energy source. The scalability of this technology is high due to its established nature and the infrastructure already in place globally, leading to relatively low-cost implications. However, its environmental impact makes it less sustainable in the long term. In Table 6, "Category" indicates whether the technology is "Traditional," "Transitional," or "Green," and "Process Stage" refers to whether the technology is involved in primary production (extracting and processing raw materials), secondary production (using recycled materials), or a combination thereof. This distinction is essential for clarity on how each technology fits into the broader context of steel manufacturing and its potential impact on GHG emissions. Transitional technologies such as BF-BOF with carbon capture, utilization, and storage (CCUS) offer a reduction in emissions (1.2 – 1.7 tonnes CO2e/t-steel), providing a bridge between traditional and green processes (Bellona et al. 2023). While this technology reduces the carbon footprint, it does so at a significant cost due to the need for additional infrastructure and the complexities of storing or utilizing captured carbon. Its scalability is moderate, indicating challenges in widespread adoption due to technical and financial constraints (Sittonen et al. 2010).

Table 6 Enhanced GHG emissions comparison between traditional and green steel production technologies
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The trend chart in Fig. 2 visualizes the shift in steel production methods over time. The traditional BF-BOF method is indicated by the red bars, which show a gradual decline, suggesting that the industry is moving away from this carbon-intensive technology (Gielen and Moriguchi 2002). Transitional technologies, such as those incorporating carbon capture, utilization, and storage (CCUS), are marked by orange bars, and show a steady rise, reflecting initial steps towards reducing the steel industry's carbon footprint. The green bars represent the adoption of EAF technology, which is typically used in conjunction with scrap steel recycling and shows a notable upward trend. If there is a separate line for DRI, its color and trend should be described distinctly. The chart, therefore, encapsulates the industry's progressive shift towards more sustainable and environmentally friendly production methods over time (Paltsev et al. 2021).

Fig. 2
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The adoption of different steel production technologies over time

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3.2 Case studies on design and implementation of reduction projects

3.2.1 Direct reduced iron (DRI) and electric arc furnace (EAF) technology in ArcelorMittal

ArcelorMittal is pursuing a multi-faceted approach to reduce GHG emissions within the framework of its sustainable development goals, particularly focusing on the iron and steel core sustainable development analysis (SDA) boundary (Fischedick et al. 2014; Kazmi et al. 2023). Two notable projects within this initiative are the use of DRI and smart carbon technologies:

Direct Reduced Iron (DRI) and Electric Arc Furnace (EAF) Technology

ArcelorMittal has committed to reducing its global carbon emissions intensity by 25% by 2030, targeting a significant reduction in both Scope 1 and Scope 2 emissions. For instance, in Europe, the company aims to reduce emissions intensity from 1.7 to 1.11 t CO2e as shown in Fig. 3. The company is developing DRI-EAF technology as a pathway towards net-zero steelmaking. A key project includes a hydrogenpowered DRI unit in Gijón, Spain, alongside a new hybrid EAF, expected to cut emissions in Spain by 50%. The DRI produced will be used as feedstock in two EAFs in Sestao, Spain, which is anticipated to be the world’s first full-scale zero carbon-emissions steel plant by 2025 (Australian Steel Institute 2018). Another significant case involving the integration of DRI and EAF technologies is at ArcelorMittal ‘s Dofasco plant in Hamilton, Ontario, Canada. Valued at 1.4 billion USD and expected to reduce carbon emissions by 3 million tonnes, the project is a key part of ArcelorMittal's strategy to reduce carbon emissions and transition away from traditional coal-based steelmaking processes. The new DRI furnace at the plant will have a capacity of 2.5 million tonnes. It is designed to initially operate on natural gas but will be hydrogen-ready, allowing for a future shift to green hydrogen as an energy source (Vorrath 2020).

Fig. 3
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ArcelorMittal's emissions intensity reduction

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Smart carbon technologies

Furthermore, the Smart Carbon technologies initiative encapsulates a variety of innovative approaches:

  • Torero Project: the Torero project is designed to convert biomass, specifically waste wood, into biocoal through a process called torrefaction. This involves heating the biomass in the absence of oxygen, which drives off volatile compounds and leaves behind a product similar to coal but with a much lower carbon footprint. The torrefaction process is expected to be highly scalable, with the potential to convert up to 60,000 tonnes of waste wood into biocoal annually at the initial plant. This biocoal can then be used to produce DRI for steelmaking, potentially reducing CO2 emissions by as much as 20% compared to coal-based processes.

  • Carbalyst® Project: the Carbalyst® facility captures waste carbon gases from the blast furnace and chemically converts them into bioethanol, which can be used as a fuel or chemical feedstock. This innovative process can convert up to 78% of the carbon monoxide and CO2 from the offgases into ethanol, with the first commercial-scale plant aiming to produce up to 80 million liters of bioethanol annually, which equates to a reduction of about 225,000 tonnes of CO2 emissions each year.

  • IGAR Project: the Innovative Gas Recovery (IGAR) process is a technology designed to capture waste CO2 from blast furnaces and transform it into a synthetic gas composed of hydrogen and carbon monoxide. This synthetic gas can then be used as a reducing agent in the production of DRI. The pilot project for IGAR has the potential to reduce CO2 emissions by up to 170 kg per tonne of steel produced.

ArcelorMittal is also exploring the potential of circular carbon economy concepts by recycling carbon from waste materials like wood or plastics to replace coal in the steelmaking process, which is a holistic approach to managing carbon. By recycling carbon-rich waste materials, the company aims to replace fossil fuels like coal in the steelmaking process. This strategy not only reduces the need for virgin materials but also minimizes waste and emissions. The use of plastics and waste wood as feedstock in the steelmaking process could potentially lead to a significant reduction in the company's overall carbon footprint, though exact numbers will depend on the scale and efficiency of these recycling processes (Li et al. 2019).

In addition to these specific projects, ArcelorMittal is also investing in clean power strategies. For instance, the company is increasing the use of electricity from renewable sources to produce hydrogen, which is essential for DRI production. Furthermore, ArcelorMittal is exploring the use of direct electrolysis for iron ore reduction, which has the potential to produce steel with zero carbon emissions if the electricity used is sourced from renewable energy (Australian Steel Institute 2018). The Carbon Value and Northern Lights projects represent ArcelorMittal's commitment to CCS as a critical component of its decarbonization strategy. The Northern Lights project, in particular, is part of a larger initiative to create a value chain for carbon capture and storage in the North Sea, which could become a hub for European CCS efforts. It aims to capture and store up to 1.5 million tonnes of CO2 annually once fully operational. Through these Smart Carbon technologies and projects, ArcelorMittal is not only advancing its own sustainability goals but also contributing to the global effort to reduce GHG emissions and combat climate change (Gielen and Moriguchi 2002; Li et al. 2019). The company's approach demonstrates the feasibility of integrating innovative carbon–neutral and carbon-reducing technologies into traditional industrial processes.

3.2.2 POSCO's commitment to decarbonizing steel production

POSCO, a leading South Korean steel manufacturer, has embarked on a transformative journey toward a sustainable future by radically shifting to hydrogen-based steelmaking technology. This groundbreaking transition moves away from the conventional coal reliance, which has been a staple in the industry due to its role in reducing iron ore. POSCO is not only redefining its own production processes but also setting a precedent that could reshape industry standards globally. The company's vision to eliminate CO2 emissions leverages the potential of hydrogen as a reductant, a clean alternative that could result in water being the only byproduct. This vision is particularly revolutionary considering POSCO's status as a major national emitter, accounting for a significant 10% of South Korea's total emissions. POSCO's initiative is not just about altering its production methodology but also aligns with the nation's broader objective to substantially reduce emissions by 30 percent from a business-as-usual scenario by 2020. In the pursuit of this vision, POSCO is investigating the production of hydrogen gas through nuclear reactors, with a focus on the newer, compact modular designs. This innovative approach could provide a consistent supply of hydrogen to fuel the steelmaking process, positioning POSCO at the forefront of an industrial evolution (Pardo and Moya 2013). The company's GHG reduction initiatives are multifaceted:

  • In the short term, efforts have been concentrated on process efficiency enhancements, which serve as immediate measures to lower emissions. These improvements are crucial steppingstones toward more significant, long-term goals.

  • For the mid-term, POSCO has planned the introduction of ground-breaking technologies for carbon dioxide reduction. This includes a substantial investment of 2.714 billion USD to convert coal to synthetic natural gas, chemicals, and liquids. These initiatives are part of a strategic pivot into low-carbon green growth areas such as stationary fuel cells.

  • In terms of its long-term strategy, POSCO has laid out a vision for a net-zero carbon footprint by 2050. This vision is supported by a methodical approach to business reorganization and setting specific GHG reduction goals. The company has taken a systematic stance, aligning its operations with the ambitious 1.5 °C climate scenario.

The commitment to this transition is evident in POSCO's governance and strategic planning. The company has integrated its carbon reduction goals into its core decision-making processes, involving the highest levels of management. This includes the formation of a specialized carbon–neutral organization, the net-zero carbon Energy Group, tasked with overseeing and executing the company's carbon neutrality strategies. Furthermore, POSCO has actively engaged in international collaborations and industry partnerships, understanding that the climate crisis is a global challenge requiring a united front. The company's participation in the Ministry of Environment’s K-EV100 project and other significant initiatives demonstrates its commitment to collective climate action. POSCO's industry leadership in this transition has been acknowledged by entities such as Climate Action 100 + , which highlights the company's comprehensive implementation of a net-zero strategy. Lastly, POSCO has been diligent in aligning with global ESG disclosure standards. The company's reporting on sustainability practices is comprehensive, following guidelines set by the International Sustainability Standards Board under the IFRS framework. This commitment to transparency is further exemplified in POSCO's systematic identification and management of climate-related risks, solidifying its role as an environmental steward in the steel industry (Py et al. 2013).

4 Enhanced credibility through third-party assurance and rigorous verification in the steel industry

4.1 Third-party assurance

The steel industry's commitment to environmental stewardship is increasingly demonstrated through meticulous GHG inventory processes. The robust verification and validation mechanisms in place are integral to ensuring the accuracy and reliability of reported emissions. This commitment is vital in fostering trust among stakeholders—investors, regulators, and the general public. Third-party assurance plays a pivotal role in the steel industry's GHG reporting. Independent review by third-party verifiers ensures that emissions data is consistent with the stringent standards of ISO 14064–3. ISO 14064–3 is part of the ISO 14064 series of standards that provide guidelines for organizations to quantify and report their GHG emissions and removals. Specifically, ISO 14064–3 is critical in providing stakeholders with confidence in the industry's transparent reporting and its integrity in environmental reporting.

4.2 Methodologies for verification and validation

In the steel industry, verification and validation methodologies are both intricate and critical. As per ISO 14064–3, verification is a systematic, independent, and documented process for evaluating a GHG assertion against agreed verification criteria. Validation, while similar, assesses the systems and methodologies of a GHG inventory before implementation, acting as a preventive measure to ensure that the inventory design can produce quality, accurate, and relevant data. The process in the steel industry unfolds in several stages, each with specific documents and actions:

  • Initiation: the process begins with a GHG application form and a proposal contract to establish the scope and parameters of the verification.

  • Planning: a notice of verification and a verification plan summary set the verification's approach, timeline, and criteria.

  • Execution: during this phase, an action list and participant List are used to track activities, a site visit plan is implemented, and a verifier note is documented.

  • Reporting: this final stage involves developing an authorization to release, a technical review checklist, and a verification report template to summarize findings and recommendations.

Throughout the verification and validation stages in the steel industry, adherence to various resources and guidelines is imperative. The carbon pricing regulation and MRV guidelines are among the primary references that verifiers consult to ensure that every step of the process conforms to established protocols and international standards. These documents provide a framework that guides the assessment of GHG emissions and the subsequent reporting, ensuring that the reported data is not only accurate but also meets the regulatory requirements that govern climate-related disclosures (Paltsev et al. 2021).

4.3 Challenges and considerations

4.3.1 Complex emissions sources and activity data management

The challenges encountered during the verification process are multifaceted and require a comprehensive approach. The complexity of emissions sources in steel production demands robust and sophisticated quantification methodologies. Given the range of processes from raw material handling to final product delivery, the quantification of emissions is a detailed and technical task. It requires a deep understanding of chemical processes, combustion calculations, and the nuances of emissions at different production stages. Data management systems play a crucial role in this context. They must be equipped to handle the intricacies of the production process, capturing every relevant piece of information that impacts GHG emissions data. This includes not only emissions from the production itself but also indirect emissions related to energy procurement and usage. Additionally, legal and regulatory concerns must be meticulously considered (Devlin et al. 2023; Wang er al. 2023). The verification process is often governed by a complex web of national and international regulations that require careful navigation to ensure compliance.

4.3.2 Schedule, timelines, and resource allocation

The timing of the verification is another critical aspect that requires careful planning and coordination. The schedule for verification must be established in concert with the client, allowing for a comprehensive review that is both thorough and timely. The planning phase considers the complexity of the GHG inventory and the scope of verification to determine the required person-days for on-site activities. The allocation of resources is then adjusted accordingly, taking into account the technical skills required, geographical considerations, and the need for technical reviewers (Belloma et al. 2023).

4.3.3 Risk-based approach—accuracy of greenhouse gas (GHG) data reporting

A risk-based approach underpins the entire verification scope, categorizing activities based on the level of assurance required. This approach assesses the size of emissions, the complexity of the processes involved, and the potential for significant data quality issues as follows:

  • Size of emissions: this approach assesses the magnitude of GHG emissions produced by the steel industry. Larger emissions are associated with a higher risk of inaccuracies in reporting. The larger the emissions, the more significant the potential environmental impact, making accurate reporting crucial.

  • Complexity of processes: the complexity of processes involved in the steel industry can introduce opportunities for errors or inaccuracies in data collection and reporting. Complex processes may have more variables and potential sources of emissions, which can increase the risk of data quality issues.

  • Data quality issues: the potential for significant data quality issues is a key consideration in the risk-based approach. This includes factors such as data gaps, incomplete records, measurement uncertainties, and other sources of potential errors in the GHG emissions data. If there is a higher likelihood of such issues, it represents a higher risk to data accuracy.

By categorizing activities and assessments based on these factors, the risk-based approach helps organizations allocate verification resources more efficiently. It ensures that the verification efforts are proportionate to the risks identified. In other words, organizations focus their verification efforts more intensively on areas where the potential for data inaccuracies is greater. This approach helps to prioritize resources and streamline the verification process, making it more targeted and cost-effective. In the context of the steel industry's commitment to accurate and reliable GHG reporting, this risk-based approach is crucial. It demonstrates a systematic and methodical approach to addressing potential data accuracy risks, thereby enhancing the industry's credibility and transparency in its environmental governance and its contribution to global efforts to combat climate change (Paltsev et al. 2021). It's a way of ensuring that the industry's reporting aligns with international standards like ISO 14064, which are designed to improve data accuracy and accountability in GHG reporting.

5 Enhancing assurance and materiality

To enhance the assurance and materiality of verification and validation processes within the steel industry, a multi-faceted approach is required. This approach should leverage the best practices outlined in international standards while also embracing technological advancements. At the heart of improving these processes lies the adoption and implementation of rigorous standards and certifications. "ResponsibleSteel" leads the way as the first global multi-stakeholder standard and certification initiative in the steel industry, dedicated to promoting responsible production and sourcing of steel as summarized in Table 7. This initiative establishes a multi-stakeholder platform, fostering trust and consensus among different parties. Its primary aim is to elevate the standards of responsible sourcing, production, utilization, and recycling of steel. It achieves this by developing and implementing comprehensive standards, robust certification processes, and a suite of related tools designed to facilitate sustainable practices across the steel value chain (Kazmi et al. 2023).

Table 7 Responsible steel principle 10 climate change and GHG emissions
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The integration of real-time monitoring technologies presents another opportunity to improve the verification and validation processes. Real-time sensors and monitoring systems can track emissions output instantaneously, providing a continuous flow of data that is far more granular and current than periodic manual data collection methods. This immediacy enables organizations to detect anomalies quickly, take corrective action, and adjust their processes to optimize GHG management. Advanced data analytics can complement real-time monitoring by analyzing large datasets to identify patterns, trends, and insights that might otherwise remain hidden (Yao et al. 2021). Through the application of machine learning algorithms and predictive analytics, companies can forecast future emissions based on historical data, production rates, and other relevant variables. These insights allow for more informed decision-making and strategic planning, leading to more effective emission reduction strategies (Li et al. 2024; Zhou et al. 2023].

The current trend in the steel industry regarding GHG emissions reporting and reduction is aligned with broader environmental, social, and governance (ESG) goals. This alignment is reflective of several core elements as depicted in Fig. 4, which also enhances the original writing on the subject.

  • Require more disclosure of non-financial information: the steel industry is increasingly required to disclose not only financial information but also non-financial information, such as GHG emissions data. This trend is driven by stakeholders' demands for greater transparency and accountability regarding environmental impact.

  • Increase the credibility of disclosure to prevent greenwashing: as the original writing suggests, the application of real-time monitoring and analytics in GHG emissions must be credible. There is a growing emphasis on avoiding greenwashing—misleading claims about environmental practices—by ensuring that the data is accurate and relevant, and reflects the true environmental impact of the steel industry.

  • Further consolidation and alignment between instruments: the steel industry is seeing consolidation and alignment between different reporting standards and instruments. The integration of advanced technologies, as mentioned, must comply with these emerging standards to enhance the verification and validation processes of GHG reporting.

  • Direct capital towards sustainable activities: investment is increasingly being channeled into sustainable practices within the steel industry. This trend towards funding green technology and innovations can help reduce the industry's carbon footprint and facilitate a transition to low-carbon operations.

  • Different materiality approaches define the main characteristics: the materiality of GHG emissions data is paramount. The original text emphasizes the necessity of using data that is material to GHG assertions, a principle that is in line with the industry's move towards considering different materiality approaches that define what is significant to report and act upon.

  • Thematic and industry-specific guidance continues to evolve: the guidance on how to report and reduce GHG emissions is becoming more nuanced and tailored to the steel industry. By adopting thematic and industry-specific guidelines, companies can ensure that their GHG inventories are compliant with the highest standards and that their environmental impacts are reported accurately.

Fig. 4
figure 4

Sustainable reporting and investment framework for the steel industry

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By combining these elements with the original writing, it can be observed that the steel industry is under increasing pressure to report GHG emissions thoroughly and accurately. It must leverage advanced technologies and expertise to ensure that data is meaningful and that it contributes to a more accurate representation of its environmental impact. This holistic approach to GHG reporting and reduction is indicative of a wider trend towards sustainability in the steel industry, which aims for enhanced accountability and a more sustainable future (Hasanbeigi et al. 2010).

6 Conclusion

This paper has outlined the critical role of GHG inventory management and reduction strategies in the steel industry. The shift towards green steel production, characterized by the adoption of low-carbon technologies and renewable energy sources, is gaining momentum. However, the transition is complex and requires concerted efforts from all industry stakeholders. Industry-wide collaboration and policy support are imperative to facilitate this transition. Governments, industry bodies, and corporations must work in tandem to create an enabling environment for investment in green technologies and the development of supportive infrastructure. Looking ahead, the steel industry's approach to GHG management is poised to evolve significantly. With advancements in technology, the increased prevalence of standards, and a growing commitment to sustainability, the industry is well-positioned to make a substantial impact on global carbon reduction efforts.