The governments of the United Kingdom (UK), India, Germany and Canada, under the new Industrial Deep Decarbonization Initiative (IDDI), announced a pledge that sends a clear message to heavy industry – “If you make low-carbon steel and concrete, we’ll buy it”.
The group of countries announced its intention to buy low-carbon steel and concrete at the UN Climate Change Conference in Glasgow, with specific interim targets by 2030 expected to be revealed at the next meeting of the Clean Energy Ministerial (CEM) by mid-2022. Right now, the public procurement of steel and cement in the five countries represents 25 to 40 per cent of the domestic market for such materials.
“To decarbonize the sector, we need to create new demand for low-carbon materials, which will ensure the decarbonization of processes all along the supply chain. The Industrial Deep Decarbonization Initiative will align government action to create markets for low-carbon industrial products, via work on data, standards and procurement,” said Lord Callanan, the UK’s Minister for Business, Energy and Corporate Responsibility.
The governments participating in the IDDI want companies to feel confident about investing now to make low-carbon steel and concrete viable products in the future. The idea is to use governments’ purchasing power to ultimately trigger a thriving market for greener steel and concrete. To help achieve this, the pledge also includes requirements to disclose carbon embodied in public construction projects by 2025, and an agreement to align procurement plans with net zero 2050 targets.
“We welcome this move as a clear market signal from the public sector that, when they commission a building or a bridge, the embodied CO2 emissions of the project matter to them. With the right market conditions, I am confident that steel will not only achieve net zero, but we can accelerate the timescale by which it is achieved,” said Olivier Vassart, CEO of Steligence, global steel company ArcelorMittal’s sustainable construction business.
“No single organization can make it to net zero alone. We need unprecedented collaboration across sectors to get there faster. By building up green demand across our value chains, we can accelerate the transition to net zero together. Green public procurement and regulatory incentives are great catalysts on this journey. They help strengthen the business case for more investments in next generation technologies,” said Jan Jenisch, CEO of Holcim, the Swiss multinational company that manufactures building materials.
Steel and cement are the materials of our modern societies, and they are also among the most carbon-intensive industrial materials on the planet – producing them accounts for 14-16 per cent of global energy-related CO2 emissions. Decarbonizing the steel and cement industries will not only require new and more reliable technologies, companies will also need to transform whole production processes.
“Many of our heavy industry partners are already on this journey and assurances from governments are exactly what they need now to boost their efforts to ultimately make low-carbon steel and concrete the norm. We are committed to getting as many governments as possible onboard,” said Li Yong, Director General of the United Nations Industrial Development Organization (UNIDO).
Within the next three years, the IDDI aims to have at least 10 countries commit to purchasing low-carbon concrete and steel. The initiative is also helping countries to align their public procurement policies with their low-carbon steel and concrete purchasing pledges.
Urgent action is needed now as the demand for concrete and steel is booming at an unprecedented rate. The world is expected to build the equivalent of another New York City every month for the next 40 years.
“We welcome the enthusiasm of our member governments to take the lead in committing to procurement targets for green industrial products such as steel and cement. These industrial sectors have remained difficult to decarbonize, and we hope that this move will give confidence to the private sector and other key stakeholders,” said Dan Dorner, Head of the Secretariat of the Clean Energy Ministerial (CEM).
The CEM’s IDDI is coordinated by UNIDO and supported by a strong coalition of initiatives and organizations, including the Mission Possible Partnership, the Leadership Group for the Industry Transition, and the Climate Group. The IDDI will build on the work of these initiatives and create new market-enabling tools, such as global standards to define what low-carbon steel and cement are and how to measure embodied carbon.