Steel:

RMI collaborated with Tata Steel UK and Jaguar Land Rover (JLR) to pilot steel product-level greenhouse gas (GHG) data reporting, following RMI's Steel GHG Emissions Reporting Guidance (hereafter “Steel Guidance”).

The pilot focused on calculating and transferring product-level data for hot-dipped galvanized (HDG) steel coil. The aim was to test the feasibility of implementing the Steel Guidance with Tata Steel UK and explore how the reported data could be utilized by JLR to facilitate the procurement of low GHG emissions steel. The pilot served as a valuable engagement tool for both the parties and helped them better understand each other’s challenges when it comes to emissions data reporting. Throughout the pilot, discussions spanned various topics like reporting considerations for different end-use sectors and potential improvements to procurement practices through standardized data requests.

Approximately 12% of the 1.8 billion tons of total steel used in 2022 was by the automotive sector. Within the automotive industry there could be a considerable demand for green steel. However, due to the diverse range of automotive components that use steel and the lack of standardized data reporting, it can be difficult for automotive companies to know whether the steel contained in the automotive parts is made with low GHG emissions technologies. Additionally, steel companies often face the complexity of reporting different metrics to different end-use sectors like building and infrastructure, automotive manufacturing, and mechanical equipment manufacturing among others. The Steel Standards Principles, launched at COP 28 and endorsed by Tata Steel and RMI, advocated for common emissions measurement methodologies to expedite the industry's shift toward near-zero emissions. This context laid the foundation of this pilot test case study.

Tata Steel UK manufactures steel products for diverse applications in engineering, automotive, and construction sectors. Among these, HDG coils play a crucial role in various applications. As part of the pilot, Tata Steel UK calculated and reported the metrics for the benchmarking boundary (until the hot rolling process) and full boundary (until hot-dip galvanizing) for the HDG coil. These were intended to be used by its automotive sector clients (like JLR). But such reporting may have value for clients in other sectors as well (the construction sector for instance). The modular nature of the metrics in the Steel Guidance (i.e., separate reporting for benchmarking and full boundaries) could potentially be useful for emissions reporting in other contexts where product environmental information is disclosed (e.g., Environmental Product Declarations (EPDs)).

The collaborative process allowed pilot partners to understand the nuances of the reported emissions data. In this pilot, product-level emissions data was requested from sites supplying HDG coil to JLR. However, once it was identified that Tata Steel shared use of input materials, intermediate products, and recycled materials across several facilities it was determined that an accurate representation of the emissions profile for products supplied to JLR would be based on the total emissions inventory across these shared sites. Additionally, JLR also has a better knowledge of how emissions credits associated with by-products in the steel production process are incorporated in the various metrics in RMI’s Steel Guidance. This provided a more detailed view of the product-level emissions to JLR. The exchange of perspectives regarding emissions reporting throughout the pilot fostered a more informed partnership between the supplier and buyer.

In alignment with a 1.5°C climate scenario, JLR has set a target of 54% reduction in average vehicle value chain emissions by 2030. Furthermore, JLR aspires to achieve net zero carbon emissions in its supply chain, products, and operations by 2039. In pursuit of these goals, JLR is actively engaged in collecting product carbon footprint data from its suppliers. For this purpose, JLR has developed a sustainability questionnaire. The questions delve into various aspects of the material being supplied to JLR such as the type of steel, different recycled materials used in steelmaking, emissions intensity metrics, and more. However, there is a need for increased transparency to ensure the reliability of the collected data and to better showcase producers' abatement actions. As part of the pilot, RMI recommended incorporating metrics from the Steel Guidance such as “Abatement technology label” and “Primary Data Share” in the supplier questionnaire. Consequently, the metrics in RMI’s Steel Guidance could potentially form part of the decision-making criteria for supplier selection at JLR (see exhibit below).

While standards and methodologies for calculating steel product-level emissions are continuing to be updated and converging towards best-practices, some differences still exist (e.g. scope, boundaries, and the treatment of by-product credits). As a result, users of the guidance will need to be mindful of such differences when comparing data from different methods/standards.

In addition, there may be concerns about the capacity of certain suppliers, especially those with limited resources, to provide the requested data metrics outlined in the Steel Guidance. Additional training is needed to ensure proper implementation of the guidance.

On the buyer's side, there is a need for receiving verified data from suppliers. To address this, additional collaboration between suppliers and independent third party verifiers would be essential to support suppliers in sending validated metrics to buyers. There is also a need to increase the awareness of buyers regarding how the various metrics in the Steel Guidance could be interpreted. Moreover, different reporting standards and metrics increase the workload in processing and managing supplier data at a scale in a multi-tier supply chain. Embracing digital data collection systems that utilize interoperable data standards, as outlined in the Steel Guidance, has the potential to alleviate such challenges and can reduce administrative burdens associated with reporting and using the guidance metrics.

• Acknowledges the usefulness of reporting data in a standard digitized format across different end-use sectors. At the same time, Tata Steel UK also believes that any proposed standardized data format should be mindful of the existing methods of communicating data employed in various end-use sectors. Any efforts at standardized digital data transfer in various end-use sectors should build upon efforts already underway in those sectors.
• Understands and values the importance of engaging with buyers. The Steel Guidance could help producers showcase their decarbonization efforts and contributes towards assisting buyers in understanding how different metrics can effectively identify low emissions steel.
• Recognizes the complexities in reporting sustainability metrics including product carbon accounting and is supporting initiatives to build skills and capability in this area.

• Believes that standardization and harmonization of assessment methodologies and data exchange could support them in achieving their supply chain CO₂e reduction goals.
• Expects that standardized data reporting could reduce the administrative burden faced by automotive companies that receive carbon emissions information from numerous parts and materials suppliers across the globe. By adopting standardized data reporting practices, JLR can address the challenges it currently faces with suppliers using different methodological approaches for reporting metrics. The integration of the standardized metrics into Enterprise Resource Planning (ERP) software used in the automotive industry would also simplify the process of collecting data from multiple suppliers. This efficient collection of data would facilitate broader supply chain decarbonization for automotive companies like JLR.