Today, many people are familiar with the terms scope 1, scope 2 and scope 3 - different categories for direct and indirect climate emissions. In this article, we introduce a newer concept, scope 4, which covers how a company's services or products contribute to reducing or avoiding emissions throughout the value chain.
Reporting emissions and setting targets to reduce them has proven to be both environmentally and economically beneficial. However, it is only part of the solution if we are to achieve our climate goals. Companies can play an important role in developing and promoting products and services that avoid emissions - either by enabling emissions reductions or by offering lower-emission versions of existing products.
Avoided emissions are often referred to as scope 4. The state-owned climate investment company, Nysnø, defines scope 4 as a quantification of the greenhouse gas emissions that will not be released into the atmosphere, or removed from it, as a result of adopting a particular climate technology compared to the current solution. In other words, scope 4 quantifies the climate impact of greener products or services.
In the steel industry, new production technology can contribute to avoided emissions. The global average factor for stainless steel produced with current technology is 2.42 tons of CO2 per ton of steel (75 percent recycled steel) and up to 6.82 tons of CO2 per ton of steel (30 percent recycled steel) (Source: Worldstainless). With new climate technology, emissions can be significantly reduced and we can avoid millions of tons of CO2 annually.
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The use of green steel is an example of avoided emissions. The production of green steel is not emission-free, but compared to traditionally produced steel, the emissions of green steel throughout its life cycle are lower.
To illustrate the climate impact of green steel, we have calculated the potential avoided emissions in one of our projects. For the project in question, 220 tons of steel plates have been purchased. Based on the CO2 factor for stainless steel with 75 percent recycled content (2.42 tCO2/t steel), this represents a total of 523 tons of CO2 in material consumption alone for the project.
Nordic Steel was the first in Norway to enter into a partnership with Finnish steel producer Outokumpu, which produces the world's most sustainable stainless and acid-resistant steel: Circle Green. This steel has an emission factor of 0.5 tons of CO2 per ton of steel and can be used in projects for our customers.
Back to our project with 220 tons of steel plates. The figure below shows the emissions from the use of traditional steel, and what the emissions could have been if green steel from Outokumpu (with a CO2 factor of 0.5 tCO2/t steel) was used for the project in question. The avoided emissions (scope 4) from the project would then have been 413 tons of CO2, which represents a 78 percent reduction in climate emissions in a single project. In addition, the steel is produced under known working conditions, with full traceability and transparency in the supply chain.
The calculation of scope 4 is currently in an early development phase, and much work remains to be done before we have a common method and standard in the industry. Nevertheless, it is very useful to highlight the climate impact of greener alternatives, as the example above shows.
The steel industry accounts for eight percent of the world's global CO2 emissions. Increased demand for lower-emission steel is critical to the transition of the industry. To create such demand in the market, it is important that customers and end users understand the benefits of low-emission products and can trust that the climate impact is real.
