Green steel, grey area: The definition vacuum fracturing a critical market

As the European green steel market matures, aligning definitions of “green” steel will become increasingly important. Industry bodies, the EU commission and individual companies are creating separate benchmarks, with the result an increasingly complex and fractured landscape.

Fragmentation is a risk for the market in the long run, as procurement decisions are more difficult for buyers, with confusion over what can be claimed for marketing purposes, and what can be accounted for in their carbon accounting. Suppliers also suffer, with a lack of clarity over what level of decarbonisation to pursue clouding investment decisions.

Producers and industry bodies have large variations in their “green” steel definitions

Within European green steel offerings alone, thresholds range from below 0.05 tCO₂/t to above 0.6 tCO₂/t, varying across different production methods and carbon accounting frameworks.

The four key differences explained

There are four key areas differentiating these low-emission steel claims: scope coverage, emissions threshold, embodied vs avoided emissions and chain of custody.

Scope coverage

Emissions from steelmaking are split into three categories: Scope 1 (direct plant emissions), Scope 2 (emissions from purchased energy) and Scope 3 (upstream inputs – iron ore, coking coal and transport).

Different plant types have different Scope 1,2 and 3 emission profiles, with integrated production having a large Scope 1 footprint, compared with standalone EAFs having higher Scope 3 emissions from imported pig iron and DRI. Scope 2 emissions can also be significantly larger for EAFs, as their primary energy source is grid electricity, although these can be mitigated through renewable energy agreements.  

However, Scope 3 inclusion is not aligned across products and standards. Thyssenkrupp’s Bluemint Pure steel neutralises its Scope 1 and 2 emissions, but leaves Scope 3 untouched. SSAB’s fossil-free steel in comparison, targets all three scopes for its 0.05 tCO₂e/t emissions threshold.

Emissions threshold

Even with scope boundaries fixed, the headline emissions intensity varies across producers and voluntary standards, with scrap input percentage further changing thresholds.

ResponsibleSteel and the Low Emission Steel Standard (LESS) have sliding scales based on scrap usage, with a high scrap share tightening the threshold, recognising the difficulty of decarbonising primary iron ore compared to recycled scrap. High grade scrap is a supply constrained resource, and as more EAFs come online there is a need to truly decarbonise primary steel.

Corporate definitions also differ significantly. SSAB’s 0.05tCO₂e/t threshold is over ten times lower than Thyssenkrupp’s 0.6tCO₂e/t Bluemint Pure product. Both products are “green” steel, an order of magnitude apart from each other.

Embodied vs avoided emissions

The third question is what the number is really measuring. Embodied emissions describe the actual carbon intensity of steel coming off the line – directly linking physical output and environmental footprint, allowing like-for-like comparisons across products.

Avoided emissions, by contrast, count emission reductions against a baseline “business-as-usual” level, usually blast furnace production. Voestalpine’s greentec steel is an example of this, with improvements in the production process, such as reducing coke inputs, being aggregated and allocated to specific output.

Whilst they can show meaningful decarbonisation progress as a facility or producer, the outcome depends almost entirely on the reference point chosen. A producer comparing against its own 2018 footprint, the industry average, or a worst-case blast furnace reference will arrive at three different “savings” numbers for the same tonne of steel.

Chain of custody: physical, certificate or mass balance?

The final question, centring much of the debate in the industry, is how the attribute travels through the supply chain.

Physical traceability keeps the green claim attached to the physical steel. The tonne that leaves the mill with a low emissions footprint is the tonne that arrives at the buyer. For example, if a steel producer produces a coil at 1.2 tCO₂e/t, that same coil arrives at the buyer with a footprint of 1.2tCO₂e/t.

Book-and-claim works differently. The environmental benefit of producing low-emission steel is packaged into a tradable Environmental Attribute Certificate (EAC), separating the steel from the emission claim.

Stegra has shown how this approach can work in practice. Microsoft has signed two separate agreements tied to Stegra’s Boden facility: one for physical delivery of near-zero emission steel for data centre construction, and a separate for EACs when physical delivery is not yet feasible. The steel itself is then sold without a premium into the market, with Thyssenkrupp Materials Services having recently signed an offtake for this non-prime and non CO₂ reduced product.

Mass balance sits between physical traceability and book-and-claim. Rather than separating certificates entirely, producers allocate emissions savings from lower-carbon inputs and improved efficiencies to a portion of their output, resulting in steel that has considerably “lower” emissions than the rest of the output. Thyssenkrupp’s Bluemint steel currently uses this approach.

Supporters argue that mass balance creates demand for lower-emission steel today and helps finance investments in technologies such as hydrogen DRI and electric arc furnaces. Critics counter that it allows green premiums and Scope 3 claims without requiring a physical transformation of every tonne sold as “green.”

EU policy vacuum, and the regulation that could change everything

The absence of a standardised regulatory definition reinforces this fragmentation. The draft of the Industrial Accelerator Act (IAA) proposed a minimum 25% “low-carbon” steel in public procurement and subsidy-backed projects but does not define the term itself.

The upcoming Ecodesign for Sustainable Products Regulation (ESPR) delegate act is referenced instead and is set to lay out the actual emissions thresholds and product classifications in 2026. Given the significance of the 25% mandate, this act may become the framework that existing standards align with.

However, concerns have been raised, especially by low-emission producer Stegra, over the lack of ambition of the draft regulation, with the proposed thresholds meaning that “all current European flats production will be considered low carbon”, rendering the mandate obsolete.

Fastmarkets’ approach: actual, embodied emissions

These definitional differences have direct consequences for pricing and market analysis. To navigate them, Fastmarkets classifies steel using real embodied emissions, rooted in actual production characteristics rather than baseline-relative claims.

In our European green steel forecasts and price assessments, hot-rolled coil is segmented into six emission buckets, ranging from less than 0.5tCO₂e/t to above 2.2tCO₂e/t, covering all three scopes, and is scrap agnostic.

Four of the six buckets map onto one of three price assessments published regularly, derived from actual market-transactions and reflecting live market conditions.

This approach offers a consistent, producer-agnostic basis for comparison that remains valid regardless of the voluntary certification standard applied by the supplier.