Scopes 1, 2 and 3 Emissions for Steel Purchasers: How to Reduce Your Carbon Footprint

WHAT SCOPES 1, 2 and 3 MEAN AND WHY THEY MATTER

Carbon emissions reporting, also known as greenhouse gas (GHG) reporting, is becoming increasingly important for all companies, especially those in emissions-intensive industries. To organize the reporting process, carbon emissions are divided into three separate categories, or “scopes.” Each scope covers a different set of processes/activities that contribute to an organization’s total emissions. To identify which emissions can be attributed to a business, companies must understand the difference between the scopes and how they can improve reporting.

Scope 1

Scope 1 emissions include direct emissions from business activity. For steel producers, these emissions come from any carbon emitted during the steelmaking process and depend largely on how the steel is made. It is worth noting that there are two ways to make steel – extractive and circular. Extractive steelmaking, also known as integrated steelmaking, uses traditional blast furnace (BF) and basic oxygen furnace (BOF) technology to convert iron ore and other mined raw materials into new steel. Circular steelmaking – the method utilized by Nucor – is recycling-based and uses modern electric arc furnace (EAF) technology to melt recycled scrap and other inputs into new steel.

For extractive steelmakers, Scope 1 emissions come from mining-related emissions, if owned by the steel producer, as well as carbon-based process inputs like coke, a distilled version of coal. The carbon-intensive nature of the extractive process means Scope 1 emissions for these steelmakers are very high compared to circular steelmakers.

EAFs use of electricity means we can rely less on fossil fuel-based inputs like natural gas and coal, therefore reducing Scope 1 emissions.

Scope 2

Scope 2 emissions come from purchased electricity. This includes electricity used to power industrial facilities and offices. For circular steelmakers, Scope 2 emissions include electricity used to power an EAF. The impact of Scope 2 emissions is heavily reliant on the source of electricity on the grid.

Using electricity from a coal-fired power plant will result in high Scope 2 emissions, while electricity from renewable sources like hydro, wind and solar results in zero Scope 2 emissions.

As the grid continues to become greener, circular steelmakers – and their customers – will reap the benefits of greatly reduced Scope 2 emissions.

Scope 3

Scope 3 emissions are the result of all other downstream and upstream activities, including indirect emissions resulting from the creation and transportation of purchased materials.

For circular steelmakers, most of these emissions are associated with the scrap, iron inputs, and other materials purchased to melt in the EAF. It also includes emissions generated from the production of materials like direct reduced iron (DRI), EAF electrodes and injection gases, as well as outbound transportation of finished products. The use of electric trucks for transportation is an example of how steelmakers can reduce Scope 3 emissions.

WHAT IS THE CARBON FOOTPRINT OF STEEL?

Steelmaking by extractive or traditional BF/BOF produces 2.33 metric tons of CO2 per metric ton of steel produced for Scopes 1, 2 and 3, while Nucor’s circular EAF steelmaking produces 0.77 metric tons of CO2 per metric ton of steel produced. For combined CO2 emissions of Scopes 1, 2 and 3 in steelmaking, purchasing steel made from circular methods can reduce greenhouse gases (GHGs) by more than two thirds.

The U.S. has a long-term strategy to reach net zero by 2050, meaning government regulations will continue to increase to meet this goal. Nucor has also committed to net-zero, science-based greenhouse gas targets for 2050, which include Scopes 1, 2, and 3.

For example, the U.S. is expected to build 30 gigawatts (GW) of offshore wind energy by 2030, which will require an estimated 7 million tons of steel.

• If that steel is made using the extractive method, there will be 16.3 million tons of CO2 generated.
• However, if the steel is made using the circular method, it will only produce 5.4 million tons of CO2.
• This differential of 10.9 million tons of CO2 equates to a 67% decrease in steel-related CO2 emissions simply by utilizing circular steel.

WHY DO SCOPES 1, 2 AND 3 MATTER TO STEEL PURCHASERS?

Understanding the scopes is important for purchasers and downstream users of steel. As a steel customer, any emissions associated with the production of the steel you purchase fall into your Scope 3 emissions – so where you purchase matters.

Switching from an extractive (blast furnace and basic oxygen furnace) to a circular (electric arc furnace) steel supplier greatly reduces your Scope 3 emissions and overall carbon footprint.

Unfortunately, many steel companies do not report their Scope 3 data, and some do not report any emissions data at all. As a leader in industrial decarbonization, Nucor is committed to transparency about its carbon footprint – all three scopes – so that our customers and stakeholders can make informed choices about the steel they use. We are committed to helping our customers meet their sustainability goals through circular, sustainable steel and Econiq™, the world’s first net-zero carbon steel at scale and a certified low-embodied carbon steel solution for Scopes 1, 2 and 3.

Nucor’s emissions data is publicly available in our corporate sustainability report as well as our growing portfolio of environmental product declarations (EPDs).

Interested in reducing your Scope 3 emissions?