To speed up the transition towards a more sustainable steel industry, we’re introducing environmental attribute certificates (EACs) for steel, also referred to as commodity certificates in climate standards.
Everything we produce is green
At Stegra, all the steel that we will produce will be near-zero emission steel, made using green hydrogen, green iron and renewable electricity at our plant in Boden, northern Sweden. Our innovative process cuts CO₂ emissions by up to 95% compared with conventional steel production in Europe. That’s what creates the green value associated with our steel, which is what our customers pay for when they buy our steel. This value can also be transferred separately through an EAC.
What is an EAC?
An environmental attribute certificate (EAC) is a market instrument that represents the environmental attributes of an underlying product or service. In climate standards such as SBTi, these instruments are often referred to as commodity certificates.
In our case, an EAC represents the green value linked to steel produced with the aim of achieving near-zero emissions. Through EACs, this value is transferred separately from the physical steel and sold on its own, while the underlying physical steel is sold as conventional steel, without any green claim attached to it. One EAC represents the green value of one tonne of near-zero steel produced at our site in Boden.
Not all can access green steel today
Global availability of near-zero emission steel is limited
Steel produced using conventional methods generates massive CO₂ emissions. At the same time, the global availability of near-zero emission steel is limited. Steel from our plant in Boden will only be delivered to customers within the EU. Steel users outside Europe are also looking for ways to decarbonize their value chains and would like to source steel produced with lower emissions. However, shipping steel over long distances does not always make sense.
Complex supply chains add another barrier
Access is not only about geography. Companies with climate targets that want to benefit from near-zero emission steel are not always the ones that purchase it directly, but instead it comes as purchased equipment, components or other products. This limits their ability to influence where the steel in their supply chain comes from, how it is produced and the environmental impact associated with it. As a result, even companies committed to reducing their carbon footprint and willing to pay the premium for near-zero steel, may find it difficult to access near-zero emission steel for their products.
EACs help bridge the gap
EACs are a way to expand the market for green steel, by giving customers the right to claim the green value separately from the physical steel. They give more steel users a way to benefit from green steel production, even when physical delivery is not possible or practical. They also give green steel producers a way to secure a premium for a greater share of their production. As that market grows, it can help support more green steel projects, catalyzing the decarbonization of the steel industry, which is good for the climate. Clear and robust EAC rules also help ensure that the green value is only claimed once.
How we apply EACs
Our main ambition is always to sell the physical steel and its green value together. But in some cases, supplying the steel is not possible or practical, for example because of geography, technical requirements or how value chains work. In those cases, one option is to sell the green value separately to customers through EACs.
At the same time, it can be difficult for steel producers investing in decarbonization to secure a green premium for 100 % of the green products they produce, even if they are produced using the same green process. As in all steel mills, a small share of our steel will not meet the original product specifications. This share is called non-prime steel. Non-prime steel is still a usable product and is sold for applications with lower performance requirements, such as fencing and flooring. These volumes are produced in the same way as the rest of our steel, but the non-prime market is highly cost-driven and there is often limited willingness to pay a green premium.
That is why we are applying EACs to our non-prime steel volumes. In this way, the green value can still be transferred separately, helping us and other green steel producers support further investment in green steel production. Since our entire production is green, we will never concentrate attributes on a smaller set of products to overstate outcomes. All emission performance is applied proportionally across our production output.
How it works
Steps
Steel is produced
The green value is separated
The physical steel is delivered
EACs are issued
EACs are sold and applied
01Steel is produced
At our steel plant in Boden, we aim to produce near-zero emission steel that will meet precise technical and performance requirements. As described above, a small share of our production is non-prime steel.
Our non-prime steel will be different from conventional non-prime steel on the market: it's produced using green hydrogen, renewable electricity and green iron, with near-zero emissions, and therefore carries a green value.
02The green value is separated
At this step, the green value is separated from the physical steel. This green value is based on the actual CO₂ footprint of the production process. The physical steel is then treated as conventional steel for commercial and reporting purposes, while the green value is kept separate and later transferred through an EAC.
03The physical steel is delivered
Once the green value has been separated, the physical steel is sold and delivered through the established non-prime market. As described in the previous step, the steel is handled as conventional steel for all purposes, including company reporting, product declarations and reselling.
The buyer of the physical steel commits not to make any green claims related to that steel. We work with independent third parties to help ensure transparency and traceability throughout the entire process.
04EACs are issued
Once the physical steel has been delivered, we issue the environmental attribute certificate (EAC). Each EAC represents the verified green value linked to the delivered volume. It includes a transparent declaration of emissions performance and relevant production parameters, ensuring credible use in reporting.
05EACs are sold and applied
With the EACs now issued, the next step is to put that green value to use. The EACs are sold, separately from the physical steel to customers worldwide who have climate targets but are unable to access green steel directly.
Through an EAC, customers purchase the right to claim that green value on the steel they use or purchase. At the same time, customers of the EACs increase demand for green steel in total volume and in new geographies.
For EACs to work, it must be clear where the green value comes from, who owns it and when it is used. That is why the EAC system follows a certified book-and-claim chain-of-custody model. Every EAC is tracked from issuance to final use, and independent external auditors verify each transaction and calculation. To support credible use of the green value in GHG reporting by the buyers of the EACs, the verification process also considers the difference in emissions compared with conventional production. This is what makes the system traceable and credible in companies’ greenhouse gas reporting.
To ensure the highest degree of credibility and robustness, we are developing the methodology together with NGOs, customers, standard setters and industry associations, drawing on experience from similar book-and-claim systems in other sectors.
Accelerating the green transition
The EAC system supports the green transition by extending demand for green steel beyond the geographies and value chains that can currently be served through physical delivery. In this way, EACs can help increase demand for green steel in more markets and across greater volumes, while physical access to green steel is still limited. By helping more steel users support lower-emission steel production, EACs can contribute to the decarbonization of the steel industry.
Similar certificate-based systems already exist in other industries, such as renewable energy and sustainable aviation fuels, where they have helped scale supply and reduce costs over time. This is the first time the model is being applied to steel. EACs are intended as a transitional mechanism. As green steel becomes more widely available within buyers’ supply chains, EACs are expected to phase out and be replaced by physical green steel at the same or a faster pace.
FAQ about EAC
Articles
First in steel: Microsoft buys EACs
In addition to an agreement that covers physical steel, Stegra and Microsoft have also signed an agreement for environmental attribute certificates. This is a model that Microsoft has worked with in other industries, and the first time a similar approach is being implemented in the steel industry.
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