Carbon Emission Scopes 1-3 for Steel Purchasers

What the Scopes Mean and Why They Matter

Carbon emissions reporting is becoming increasingly important for all companies, especially those in emissions-heavy industries. To organize the reporting process, carbon emissions have been broken down into three separate categories, or “scopes”. Each scope covers a different set of processes that contribute to an organization’s total emissions. It is important to understand the difference between the scopes in order to identify which emissions can be attributed to a business.

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 technology to convert iron ore and other mined materials into new steel. Circular steelmaking – the method utilized by Nucor – uses modern electric arc furnace (EAF) technology to recycle scrap into new steel.

For extractive steelmakers, scope 1 emissions come from mining-related emissions, 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. Scope 1 emissions for circular steelmakers come from things like natural gas and iron inputs (e.g. direct reduced iron).

Scope 2

Scope 2 emissions come from purchased electricity. This includes electricity used to power facilities and offices, and any process electricity like that used by circular steelmakers 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 significantly lowers them.

As the grid continues to become greener, circular steelmakers – and their customers – will reap the benefits of greatly reduced scope 2 emissions. Currently, switching from extractive to circular steelmaking can reduce combined scope 1 and 2 emissions intensity by 80%, from 2.21 to 0.44 tons of CO2 per ton of steel produced.^*

Scope 3

Scope 3 emissions are everything else, including indirect emissions resulting from the creation and transportation of purchased materials. For circular steelmakers, most of these emissions are associated with the scrap 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. When you combine all three scopes, switching from extractive to circular steelmaking can reduce emissions intensity by 67%, from 2.32 to 0.76 tons of CO2 per ton of steel produced.^*

Why Scopes 1-3 Matter for Purchasers of Steel

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 falls into your scope 3 emissions. Switching from an extractive to a circular steel supplier can greatly reduce your scope 3 emissions and overall carbon footprint.

For example, the U.S. is expected to build 30 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 16.2 million tons of CO2 generated.

However, if the steel is made using the circular method, it will only produce 5.3 million tons of CO2 – a differential of 10.9 million tons of CO2!³

Many steel companies do not report their Scope 3 data, and some do not report any emissions data at all.

Offshore Wind Turbine

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

Want to reduce your scope 3 emissions?

* Worldsteel