The steel industry is one of the largest sources of industrial emissions in China, and reducing these emissions is essential for the country’s carbon-peaking and carbon-neutrality goals. As a foundational industrial material used across the economy, steel is deeply embedded in downstream value chains, making its low-carbon transition imperative for achieving climate targets in end-use sectors.

Demand-side companies are emerging as key catalysts in this transition. By procuring low-carbon steel, downstream industries can significantly reduce the carbon footprint of their products while encouraging steelmakers to accelerate the deployment of green technologies.

This report uses the automotive sector as a representative case study, offering in-depth insights into the opportunities, challenges, and practical pathways for low-carbon steel procurement. It highlights how coordinated action between steelmakers and downstream sectors can drive meaningful emissions reductions across the value chain.

Unifying definitions and standards

Today’s low-carbon steel standards remain fragmented across global markets, with inconsistent definitions and accounting methods. Terms are often used interchangeably, and variations exist in system boundaries, greenhouse gas coverage, offset rules, and certification mechanisms. To address this, the report offers actionable recommendations, including establishing internationally recognized evaluation standards and certification mechanisms for low-carbon steel, and advancing joint development of supply chain carbon footprint accounting guidelines.

Realizing low-carbon value

Cost remains a central challenge for scaling low-carbon steel procurement. Drawing on cost premiums and carbon reduction ratios of different technical routes, the report maps these routes to the carbon-efficiency levels defined in the widely adopted domestic standard, the Evaluation Method of China Decarbonized Ecological Future-oriented Steel (C2F Steel). It provides an analysis of cost profiles, driving factors, and evolving trends across these levels.

The report recommends strengthening collaboration across the steel value chain, with the demand side playing a more proactive role in driving decarbonization. By integrating procurement mechanisms such as demand aggregation and long-term contracting, it proposes exploring steel–automotive partnerships as pilot practices. These early collaborations can help shape a scalable, sustainable model to coordinated carbon reduction across the industrial chain.