GREEN STEELUPON THE APPLICATION OF

THE MASS BALANCE APPROACH
Mass Balance Approach

Allocate CO2 emission reductions from theproject with additionality to designated steel
products as environmental value

Green Steel

Steel products that help customers reduce
Scope 3 emissions

S applications and are indispensable inteel products are used in a wide range ofdemanding the supply of steel products withmodern society. Steel demand will steadily

increase as the world population and emerging

cation of the mass balance approach is theanswer to their demand. Steel manufacturers

economies grows. Steel scrap can be recovered
and recycled into new steel products, but this is

reduced emissions. Green Steel upon the appli-implement projects to reduce greenhouse gas
emissions, including CO2, at a cost that exceeds

not suﬃcient to meet demand.

economic rationality, and evaluate the reductions

iron ore, which emits large amounts of carbon

any steel product. Reducing CO2 emissions" inCurrent technology uses carbon (C) to reducewith third-party certiﬁcation, which is attached todioxide (CO2). Establishing carbon-free technolo-

the steel industry is crucial to the decarbonization

decarbonization in the steel industry is very chal-

long and diﬃcult decarbonization transition

gies will take time and cost. Although achieving
lenging, we are developing innovative technolo-

gies to achieve signiﬁcant emission reductions inthe future while continuing steady eﬀorts toreduce CO2 emissions.

Today, a wide range of customers, both

domestic and international, are increasinglyof not only Japan but the entire world. During theperiod of steel industry, Green Steel upon theapplication of mass balance approach is an

important solution to exchange emissions reduc-tions with economic value, enabling priority
supply of green steel to customers who appreciate the value of the reductions.

GREENSTEELU P O N T HE A P P L I C AT I O N O F

Concept: Steel mass balance approach
Accurate calculation of
CO2 emission before
and after implementing
the project

CO2
Steelplant

Emissions
reductions

CO2

Only CO2 reductions with'additionality', such as those involving
additional cost burdens, are pooled
and managed within steel companies.

Steelproducts

CO2Emissions
100%

CO2 Emission

Steelplant

Step 1Calculate CO2emissions intensity ofthe steel products

Step 2CO2Emissions
100%GREEN
STEEL

Scope 3 for customers

Contribute to customers
CO2 emission reductions

Emissions
Reductions
Allocation
100%

100% reduction of CO2 emissions

100%

Allocation
50%

50% reduction of CO2 emissions

50%

Allocation

Products with no allocation

0%Comply with ISO 20915 or JIS Q 20915 (Life cycle inventory calculation methodology for steel products
standard)
CO2 emissions calculated in Step 1 excludes reduction eﬀect of CO2 emission reduction projects

Identify CO2 emission
reduction project anddetermine CO2 emission
reduction amounts

Step 3

Allocate emission
reductions tosteel products(before implementation of the reduction project)

Reduction Projects

Scope 1 and 2 in steel industry

Steel company

CO2 emissions intensity
during product manufacturing

CO2Emissions
100%

THE MASS BALANCE APPROACH

credu

tions

sctionredu

Distribution
as usual

Transparency ensured
by the third party veriﬁcation

Comply with ISO 14064 (Greenhouse Gas)
CO2 emission reduction projects must be i) within the organization, ii) with additional cost burdenand iii) with calculable actual emission reductions
The requirements for the CO2 emission reduction projects is constantly veriﬁed

Issue reduction certiﬁcate
Supply steel productswith reduction certiﬁcate

Refer to the mass balance model in ISO 22095 (Chain of custody)
CO2 emissions reductions from reduction projects are provided to the customers in the form of emission reduction certiﬁcate along with the steel products. Emission reduction credits cannot be allocated, certiﬁed or issued inexcess of the total project reductions.
Customers who purchase a product with an emission reduction certiﬁcate can reduce their Scope 3 Category 1emission
The reduction certiﬁcates by themselves should not be distributed in the market

No double counting of emission reductions for EPD/CFP and reduction certiﬁcates

Mass balance approach is an important solution to enable supply of Green Steel to customers during the transition period toward carbon neutrality

Role of Green Steel upon the application of
the mass balance approach in the pathways toward carbon neutrality

J highest level of energy eﬃciency, but toworld capable of producing steel products that cansary to commercialize innovative technologies suchand commercialization is expected to ﬁnally becomeapan's steel industry has achieved the world'sachieve carbon neutrality by 2050, it will be necesas hydrogen-reduced ironmaking, high-grade steel

production using electric arc furnaces, and CCUS
(CO2 capture, utilization, and storage). Huge capital

investment will be required too.

Currently, there are no steel companies in theimmediately and signiﬁcantly reduce CO2 emissions,

possible around 2040. During the transitional period
until then, providing Green Steel upon the application of the mass balance approach is the only way
to meet the green material needs of customers.

CO2 emission reduction (images/examples)

CO2 emission intensity

20202030
・Energy saving and efficiency
improvement of existing
blast furnaces
・Ferro coke etc.

2040
・Reduction using on-site hydrogen(COURSE50)・Partial hydrogen direct reduction
etc.

2050
・Reduction with external hydrogen(Super COURSE50)
・CCUS
・Direct reduction by 100% hydrogen・High-grade steel by electricarc furnace etc.

Transition period
Source: JISF based on METI documents

Importance of Green Steel during the transition period

GREENSTEEL

Emission reductions in the steel industry require large capital investments and signiﬁcant increases in manufacturingcosts. As compensation for the environmental value provided by green steel, we think it is unavoidable to share thecost of emission reductions throughout the entire value chain and throughout society as a whole.
Major international and domestic steel companies such as Nippon Steel, JFE Steel, and Kobe Steel havealready branded their Green Steel based on the mass balance approach and begun selling some of them.
JISF members will promote CO2 emission reduction projects consistent with the roadmap established by theJapanese government, such as the "GX Promotion Strategy“.

Greenhouse gases (GHG) constitute a group of gases contributing to global warming and climate change. Scope 1, Scope 2, and Scope 3 emissions arecategories used to classify greenhouse gas emissions based on their sources.
Scope 1 Emissions: Direct emissions from sources
Scope 2 Emissions: Indirect emissions from the generation of purchased electricity, heating, and cooling consumed by the organization
Scope 3 Emissions: Indirect emissions from activities that occur outside the organization's own operations but are related to the organization's activities
Carbon Footprint (CFP) refers to the amount of greenhouse gases emitted throughout the lifecycle of products and services, from raw material procurement
to disposal and recycling.

Nov 2023