BLOG: Do You Know What's in Your Steel? The Importance of Supply Chain Transparency
Unveiling the Steel Supply Chain
Steel and iron makes up approximately 65% of the average car, making it a prime target for automakers to progress toward their climate commitments. As a major consumer of steel, automakers have a unique opportunity to push steelmakers toward eliminating fossil fuels from their supply chain.
Unfortunately, some steelmakers charge a "green premium" for their products without offering transparency about the actual emissions released during manufacturing. This is where Environmental Product Declarations (EPDs) come into play.
Understanding EPDs: Your Steel’s Nutrition Label
Environmental Product Declarations (EPDs) are like a nutrition label for your steel, providing detailed information about a product’s environmental impact throughout its entire life cycle. EPDs are transparent and independently audited, ensuring they accurately reflect a product's environmental footprint.
By requesting or requiring EPDs, automakers can make apples-to-apples comparisons of the carbon footprints of different steel products, enabling more informed procurement decisions.
Why Supply Chain Transparency Matters
Reducing embodied carbon emissions is essential to meeting your company’s climate goals. By requesting EPDs from steel producers, automakers can begin to measure and lower the embodied emissions of their vehicles accurately.
Given that automakers are significant buyers of integrated steel in North America, they have an important role to play in encouraging steel companies—specifically Cleveland-Cliffs, U.S. Steel, ArcelorMittal, and Ternium—to invest in EPD development, benefiting the entire market.
Types of EPDs
There are several types of EPDs, with the most rigorous being the Type III EPD. These EPDs are verified by a third party against Product Category Rules developed under ISO standard 14025 or European standard EN 15084.
Type III EPDs enable direct comparisons between similar products, allowing customers to assess different products’ carbon footprints (measured in ton CO2e/ton steel).
Navigating Federal Support and Industry Challenges
Through the Inflation Reduction Act, the federal government is providing millions of dollars in direct grants and technical assistance to help infrastructure material producers, including steel companies, create EPDs for their products. Despite this, adoption has been slow, with no integrated steelmaking facilities having taken advantage of this funding yet.
Meanwhile, leading integrated steelmaker Cleveland-Cliffs charges customers, including automakers, a "green premium" for steel with no documented environmental benefit. This combination of funding availability and green upcharges with no third-party verification makes now the perfect time for automakers to request or require EPDs for steel.
EPDs: An Important Step in the Race to Green Steel
Requesting a Type III EPD is a relatively small action with a significant impact, as it sends a clear message to suppliers. By requiring or requesting Type III EPDs, automakers can access baseline and subsequent EPDs that demonstrate reduced carbon emissions, allowing them to measure progress toward their climate commitments and market the environmental advantages of makes and models that use lower-carbon steel. This transparency helps automakers understand the costs of decarbonization and, if desired, pass those costs on to customers.
Tips for Requesting EPDs:
Identify the Specific Product: Determine the specific product for which you want to procure an EPD Type III. This is especially recommended for primary steel (steel made from scratch).
Convey the Size of the Request: Identify the quantity of the product you intend to purchase to convey the size of the request.
Clarify Your Intentions: If you require an EPD, clarify your intention or policy of only using materials with Type III EPDs.
Issue an RFP: Issue a Request for Proposal (RFP) to your supplier(s) with a clear deadline to provide an EPD Type III.
Conclusion
Automakers’ path to greener steel and more transparent supply chains starts with requesting EPDs. By taking this step, you can ensure a more sustainable production process and set a precedent for the entire industry.
Do you have questions about how your organization can adopt lower-emissions steel? We’re eager to engage automakers and other buyers to get started in their green steel journey.
Connect with us at maricela@industriouslabs.org to learn more.
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