Conclusions regarding the Industrial Decarbonisation Agenda
In 2021, the UK G7 Presidency and the United States initiated the G7 Industrial
Decarbonisation Agenda (IDA), to unlock market potential through high-level G7
government coordination, including in the areas of market regulation, standards
development, investment flows, procurement strategies, and joint research related toindustrial decarbonisation. Last year, this work had been continued by the German G7
Presidency 2022, leading to the establishment of an open and cooperative international
Climate Club. The G7 Members drew conclusion on objectives and possible joint action,and recognized i) the toolbox of potential policy measures to accelerate industry
decarbonisation, especially in the sectors in which emissions are hard to abate ii) thedefinitions for near-zero emission products as a robust starting point for a commonunderstanding.
While industry is a major source of greenhouse gas emissions, industrial technologies,
products and services are key for realizing the necessary emissions reductions andachieving our climate goals. This year, we built on and expand the work of previous
achievements of IDA, contributing to other relevant fora, such as the Climate Club, andaimed to advance tangible action with the following two pillars as our priorities: A) Databased industrial decarbonisation and B) Appropriate evaluation of Avoided Emissions
towards net zero society.

Part A: Data-based industrial decarbonisation
The G7 Industrial Decarbonisation Agenda (IDA) group compiled a set of joint actions
for decarbonisation in the steel and cement sectors under the German G7 Presidency in2022. These actions included ‘[agreeing] on common measurement standards andreporting frameworks to use for evaluating the emissions intensity of production’ forsteel and cement. Robust data is necessary to advance the dialogues in this area. Under
Japan’s G7 Presidency in 2023, the IDA group has examined the topics of emissions
measurement methodologies and data collection frameworks, to advance the discussion
on definitions and procurement of near-zero emission materials, focusing on the ironand steel sector. These measurement methodologies are distinct from normative
standards that define specific thresholds. Measurement methodologies describe
procedures for data collection, measurement, and analysis.
In order to advance this discussion in a scientific and practical manner, Japan’s G7
Presidency commissioned the Organisation for Economic Cooperation and Development(OECD) and the International Energy Agency (IEA) to produce two reports. Each has been
peer-reviewed by G7 Member government representatives, steel industry associations,leading steel sector initiatives and members of the research community. The twoorganisations also hosted a joint workshop to summarise the draft findings of theirreports to these stakeholders.
The G7 IDA group welcomes both reports, which comprise a solid basis to begin thework of implementing processes for greater compatibility of standards andmeasurement methodologies, considering new measurement methodologies, andcollecting emissions intensity data for the steel industry. The G7 IDA group agrees tostart working on the implementation of the proposed new Global Data Collection
Framework for steel production and product emissions and to continue working on thedetails within the IDA framework of Japan’s 2023 G7 Presidency.
Below is a summary of actions stemming from the OECD and IEA reports respectively,and as a result of the discussions undertaken in the G7 IDA group in 2023:
1. Based on the OECD report “The Heterogeneity of Steel Decarbonisation Pathways”,
we recognise the need to take the heterogeneity of steel industry structures anddecarbonisation pathways into account, when developing emission measurementand data collection frameworks whilst upholding highest possible ambition ontransforming our industries towards climate neutrality.
2. Based on the IEA report “Emissions Measurement and Data Collection for a Net
Zero Steel Industry”:

a) we recognise the five existing methodologies in the IEA report to inform initial
work of emissions measurement methodologies on steel decarbonisation at theproduction-level and product-level;b) we recognise the “net zero emissions measurement principles” proposed in theIEA report as the guiding ambition for efforts to review and seek to promote
convergence toward best practice. We will engage actively in measurement
methodologies development, wherever possible;c) recognising the existing architecture identified by the IEA report and thetimeframe proposed in the IEA report, we begin implementing a Global Data
Collection Framework for steel production and product emissions, inaccordance with the “net zero data collection framework principles” proposedin the IEA report;d) to achieve alignment and fitness for purpose in the context of a net zero steel
industry and to minimise duplication and support efforts among a broader groupof countries, we will actively engage in the technical dialogues and co-ordination
activities for emission measurement methodologies and data collection, andanalysis for steel and other materials in relevant forums such as the IEA’sWorking Party on Industrial Decarbonisation and in consultation with otherinitiatives and organisations such as the Clean Energy Ministerial Industrial DeepDecarbonisation Initiative (IDDI);e) discussions on a Global Data Collection Framework should be extended beyond
the G7, in particular to the major steel-producing countries of the G20, withoutcomes and decision points that take industry viewpoints into account and areelevated to higher level dialogues (notably the Climate Club and the G20)
where necessary and plausible.
The below principles are summary versions of those contained within the IEA reportand are intended as guidelines for furthering this work.
Net zero measurement principles proposed in the IEA reportFacilitate like for like comparison between production from all facilities;
Produce coherent and interoperable results for both crude steel production
and steel products;
Have consistent and comprehensive emissions boundary and scope;
Apply accounting rules for credits and co-products that are compatible witha credible net zero pathway;
Incentivise the use of measured data, as opposed to generic emissions
factors.

Net zero data collection framework principles proposed in the IEA report
Facilitate maximum possible coverage, whether mandated or stronglyincentivised;
Facilitate the maximum possible degree of transparency;
Facilitate parallel reporting from multiple measurement methodologies,
with a system to combine into one unified dataset;
Accommodate the collection of highly granular data on GHG emissions,energy and material flows;
Accommodate frequent reporting with a maximum two-year lag;
Minimise the reporting burden to the extent possible.

Part B: Appropriate evaluation of avoided emissions towards net zerosociety
We stress the importance and recognize as priority continuous efforts by various
entities in immediate, rapid and sustained GHG emissions reductions for themselves andthroughout the value chains to keep a limit of 1.5 °C temperature rise within reach. Inorder to encourage more positive climate action, including in the private sector, andencourage entities to commit for themselves and throughout the value chains on theirpath to GHG net-zero emissions, there is also value in acknowledging the contributionof a certain entity to emission reductions of other entities by providing
decarbonisation solutions in a given system, in other words “avoided emissions”1.
The discussion of avoided emissions is already arising in the private sector, as apotential mechanism to facilitating innovation and scale-up investment in clean goods
and services, which are key for realizing the necessary emissions reductions andachieving our climate goals, but until now there has been no widely recognized
standardized method of calculation or reporting such as the GHG Protocol for themeasuring of SCOPE1-3 emissions. A shared, international standard for measuring
avoided emissions is recommended to enable a common understanding and reduce
the risk of inappropriate use of avoided emissions.
In this context, we note the World Business Council For Sustainable Development’s
first version of the guidance on avoided emissions in March as a private sector
contribution to the discussion on avoided emissions claims, which includes the eligibility
gates (climate action credibility, the latest climate science alignment and contribution
legitimacy) that companies must abide by to be able to claim avoided emissions.
We stress that claims on the environmental performance of various entities should bereliable, comparable, and verifiable to empower consumers, companies, and investors
to accelerate efficient emission reductions and reduce the risk of inappropriate use.
We underline the value of recognizing the following in sharing the importance ofdiffusing clean technologies, noting that a trusted mechanism for avoided emissions may
mobilize financial resources to accelerate the deployment of solutions.

avoided emission is defined in The Net Zero Guidelines (IWA 42)(https://www.iso.org/netzero)
3.2.6
avoided emission
avoided GHG emission
potential effect on greenhouse gas emission (3.2.2) that occurs outside the boundaries ofthe organization (3.4.1) but arising through the use of its products or services, outside
Scope 1 emissions (3.2.3), Scope 2 emissions (3.2.4) and Scope 3 emissions (3.2.5)
Note 1 to entry: Avoided emissions cannot be included in claims of progress towards
Scope 1, Scope 2, and Scope 3 targets.
1

In recognizing the potential value of avoided emissions, we acknowledge that this:[Differentiation]
1. is an additional perspective to encourage companies’ positive action towards net
zero society. Avoided emissions should not lead to discouraging companies toaccelerate reducing their own SCOPE1-3 emissions. Accelerating efforts to reduce
SCOPE1-3 emissions remains essential and indispensable.
Furthermore, avoided emissions should not be subtracted from SCOPE1-3 emissions,nor NDCs. It is not for creating or expanding a voluntary crediting mechanism nora crediting mechanism under Article 6 of the Paris Agreement.
[Usage]2. is expected to be used as an additional perspective to promote/facilitate/provide
recognition of the diffusion of clean goods and services needed globally to reachnet-zero. e.g.) Promoting investment from financial sectors by evaluating andunlocking the value from companies/solutions with high contribution to global
emission reductions. Financial sectors can make use of this information to assess thecompany’s climate-related opportunities and to formulate financial instruments forpromoting investment.
Furthermore, it can also be used as a key metric to support decision-making within
a company to prioritize and scale the deployment of solutions in markets with thegreatest decarbonisation potential.
[Criteria]
3. is not to be claimed by companies/solutions incompatible with keeping a limit of
1.5°C temperature rise within reach e.g.), i) the company has set and externallycommunicated a climate strategy consistent with the latest climate science toward
net-zero emissions by 2050 for their own SCOPE1-3 emissions, such as the Science
Based Targets Initiative, and has reliable track records on emissions reductions; ii)
the solution is compatible with scenarios achieving net-zero by 2050 at the latest andkeeping a limit of 1.5 °C temperature rise within reach such as the Intergovernmental
Panel on Climate Change Sixth Assessment Report Working Group III mitigation
options.
[Next Steps]
4. requires further discussion within the private sector for an agreed and common
international standard for sectoral calculation methods to be fully utilized. A robust
and reliable calculation methods is essential to allow for a fair and transparent
comparison between different companies/solutions, and to reduce the risk of
inappropriate use of avoided emissions. Enhanced collaboration across standards
bodies, business sectors including financial sectors when developing methodologies
for practical usage, and third-party certification will contribute to refined
methodologies and validated results.

As a first step, we acknowledge that calculations methods for the electricalengineering and electronic technology, including solar PV, wind turbine, electrolyser,
battery, and heat pumps, are to be encouraged as a priority. Taking account of thefull lifecycle emissions and supply chain security of various products/producers inthese technologies sectors is critical to ensure that irresponsible supply is notencouraged. We also acknowledge the contribution of non-technology based
solutions in emissions reductions.
[Inclusiveness]
5. is not designed to exclude small medium enterprises (SMEs) or start-ups, while
ensuring robust criteria and measurement standard for claiming avoided emissions.
Any proposed avoided emissions criteria and measurement standard will be
expected to develop with consideration of minimizing disproportionate impacts tosmall businesses.