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1、Demand and Supply Measures for the Steel and Cement TransitionThe case for international co-ordinationThe IEA examines the full spectrum of energy issues including oil,gas and coal supply and demand,renewable energy technologies,electricity markets,energy efficiency,access to energy,demand side mana

2、gement and much more.Through its work,the IEA advocates policies that will enhance the reliability,affordability and sustainability of energy in its 32 Member countries,13 Association countries and beyond.This publication and any map included herein are without prejudice to the status of or sovereig

3、nty over any territory,to the delimitation of international frontiers and boundaries and to the name of any territory,city or area.Source:IEA.International Energy Agency Website:www.iea.orgIEA Member countries:AustraliaAustriaBelgiumCanadaCzech Republic DenmarkEstoniaFinlandFranceGermanyGreeceHungar

4、yIrelandItalyJapanKoreaLatviaLithuania Luxembourg Mexico NetherlandsNew Zealand NorwayPolandPortugalSlovak Republic SpainSweden Switzerland Republic of Trkiye United Kingdom United StatesThe European Commission also participates in the work of the IEAIEA Association countries:Argentina BrazilChinaEg

5、yptIndia Indonesia Kenya Morocco Senegal Singapore South Africa Thailand UkraineINTERNATIONAL ENERGYAGENCYDemand and Supply Measures for the Steel and Cement Transition Abstract The case for international co-ordination PAGE|3 I EA.CC BY 4.0.Abstract A massive scale-up of markets for transformative n

6、ear-zero emissions steel and cement is needed to achieve internationally agreed net zero goals.Yet early movers on both the supply-and demand-side that is,material producers and consumers face substantial barriers related to high costs and risks,among other factors.This has led to relatively slow ma

7、rket growth for near-zero emissions materials,at a moment when reinvesting in long-lived high-emissions production could have repercussions for governments to achieve their stated climate goals.Policy makers have the opportunity to play a decisive role in unlocking markets for near-zero emissions ma

8、terials.Governments are well-positioned to reduce risk during market formation,and targeted policy measures can provide the certainty that is currently lacking in markets.Furthermore,international collaboration will be vital to make the transition faster and less costly,given the international natur

9、e of markets for industrial products,the need for large and capital-intensive technology demonstrations for near-zero emission production,and the larger demand signals that can be created by pooling commitments across borders.This report produced at the request of the Climate Club yet generally appl

10、icable to policy discussions for industrial decarbonisation offers considerations and options for governments to scale up markets for near-zero and low-emissions steel and cement,while concurrently reducing reliance on high-emissions materials.It makes the case for why both demand-side and supply-si

11、de measures are important to kick-start markets for near-zero emissions materials,summarising progress to date and highlighting gaps that rationalise government action.Key policy options are outlined,illustrating the variety of measures available to governments as they implement strategies tailored

12、to their particular circumstances.The value of international co-ordination on such measures is discussed,and an initial illustrative proposal is elaborated for those governments that may wish to consider coming together around a collective pledge for scaling up the market share of near-zero emission

13、s materials.Demand and Supply Measures for the Steel and Cement Transition Acknowledgements The case for international co-ordination PAGE|4 I EA.CC BY 4.0.Acknowledgements Demand and supply measures for the steel and cement transition:The case for international co-ordination was prepared by the Ener

14、gy Technology Policy(ETP)Division of the Directorate of Sustainability,Technology and Outlooks(STO)of the International Energy Agency(IEA).The project was designed and directed by Timur Gl,IEA Chief Energy Technology Officer.Araceli Fernandez Pales,Head of the Technology Innovation Unit,provided str

15、ategic guidance throughout the development of the project.The principal IEA authors were:Andrew Ruttinger,Tiffany Vass,and Isabel Geppert.The development of this report also benefitted from contributions from other IEA colleagues(in alphabetical order):Yasmine Arsalane,Leonardo Collina,Mathilde Faja

16、rdy,Alexandre Gouy,Pol Guardia Calsina,Martin Kueppers,Peter Levi,Antonella Pasetto,Nicholas Salmon,and Richard Simon.Per-Anders Widell provided essential support throughout the process.Lizzie Sayer edited the manuscript.Thanks also to Curtis Brainard,Poeli Bojorquez,Astrid Dumond,Grace Gordon,Jethr

17、o Mullen,Isabelle Nonain-Semelin,and Lucile Wall of the Communications and Digital Office.This report has been prepared as a deliverable under the Climate Club Work Programme.The work benefited from collaboration with Ramboll and Climate Group on a questionnaire to steel and concrete buyers conducte

18、d in July 2024.The work could not have been achieved without the financial support provided by the Government of Germany.Peer reviewers provided essential feedback and input to improve the quality of the report.They include:Rachel Ahrens,Malte Bornkamm,Michael Bchl,Benedikt Dengler,Stela Ivanova,Joh

19、anna Wehkamp(Government of Germany),Jelena Aleksic and Daniel Boero Vargas(World Economic Forum),Hiroyuki Anzai,Naoki Aoki,Daisuke Ichimura,and Yoshito Izumi(Japan Cement Association),Jasmine Bascombe,Adam Cohen,and Lorenza Micaletti(Government of the United Kingdom),Chris Bataille(IDDRI),Eleanor Ba

20、tilliet,Helen Rolfing,and Aylin Shawkat(Agora Industry),Francesca Bazzocchi(Government of Italy),Nikolas Black and Nick Gillard(Government of New Zealand),Agnes Borg and Jesper Kansbod(SSAB),Edward Boyd,Elliot Mari,and Marc Moutinho(Mission Possible Demand and Supply Measures for the Steel and Cemen

21、t Transition Acknowledgements The case for international co-ordination PAGE|5 I EA.CC BY 4.0.Partnership),Clare Broadbent and Asa Ekdahl(World Steel Association),Jen Carson(Climate Group),Joseph Cordonnier,Stephan Raes,and Deger Saygin(Organisation for Economic Co-operation and Development),Walker D

22、arke,Peter Hemingway,Andreea Nicoleta Miu,Sarbojit Pal,Soledad Reeve,Fiona Skinner,and Hugo Thomas Salamanca Dejour(UNIDO),Tuba Dinba(Government of Trkiye),John Dulac(Saint-Gobain),Taghareed Elgoweily(Government of Egypt),Leah Ellis(Sublime Systems),Jakob Embacher and Sophie Praniess(Government of A

23、ustria),Gerhard Endemann(WV Stahl),Samuel Flckiger(Thyssenkrupp),Christina Gamboa(World Green Buildings Council),Javier Garca Monge and Ambrosio Yobnolo(Government of Chile),Rossana Gresia(Government of Belgium),Vinja Grgasovi and Mirna Maravi(Government of Croatia),Will Hall(Pooled fund on Internat

24、ional Energy),Shivakumar Kuppuswamy(ResponsibleSteel),Boyoung Kang(Government of Korea),Johanna Lehne,Pallavi Singh,and Julia Skorupska(E3G),Yinghao Liu(Baosteel),Paul Pulickal Mathew(Climate Investment Funds),Andrew Minson(Global Cement and Concrete Association),Alan Monaghan(Net Zero Industries Mi

25、ssion),Joe Morrisroe(S-Curve Economics),Fabio Passaro(Climate Bonds Initiative),Nazareth Rojas(Government of Costa Rica),Anil Sawhney(Royal Institution of Chartered Surveyors),Markus Steinhusler(Voestalpine),and Emily Walport(Arup).The individuals and organisations that contributed to this study are

26、 not responsible for any opinions or judgements it contains.The work reflects the views of the IEA Secretariat but does not necessarily reflect those of individual IEA member countries,Climate Club members,the Climate Club Secretariat,or of any particular funder or collaborator.All errors and omissi

27、ons are solely the responsibility of the IEA.Demand and Supply Measures for the Steel and Cement Transition Table of contents The case for international co-ordination PAGE|6 I EA.CC BY 4.0.Table of contents Executive summary.7 Introduction.14 Achieving net zero emissions by mid-century in cement and

28、 steel sectors.14 Rationale to consider international co-ordination on demand-and supply-side measures.16 Demand-side measures.21 The rationale for demand-side measures.21 Progress to date and lessons learned.30 Policy options to accelerate progress.38 Supply-side measures.43 The rationale for suppl

29、y-side measures.43 Progress to date and lessons learned.56 Policy options to accelerate progress.62 Potential role of a collective pledge in decarbonising industry.67 Opportunities for a collective industry pledge on demand and supply under the Climate Club.71 Illustrative pledge proposal for discus

30、sion.73 Considerations around a collective pledge.74 Developing policies to implement pledges.77 Annex.80 Abbreviations and acronyms.80 Units of measures.80 Demand and Supply Measures for the Steel and Cement Transition Executive summary The case for international co-ordination PAGE|7 I EA.CC BY 4.0

31、.Executive summary The seeds for producing and using near-zero emissions materials have been planted,but acceleration is needed The industry sector requires a massive scale-up of markets for transformative near-zero emissions materials to contribute to the achievement of internationally-agreed gover

32、nment objectives for net zero emissions.Such scale-up requires the production and use of these materials to grow from essentially zero today to capture nearly the entire market within the next few decades,shifting away from high-emissions conventional production and demand.The steel and cement secto

33、rs account for 14%of global energy and process-related emissions on a direct basis,making them central to the decarbonisation challenge.First mover producers of near-zero emissions materials are beginning to position themselves to compete in such markets,including through the development of definiti

34、ons,certification and labelling systems for near-zero emissions steel and cement in some cases through collaboration with government like the Low Emissions Steel Standard initiated in Germany,the voluntary CO2 standard of the China Iron and Steel Association,and the Global Cement and Concrete Associ

35、ations definitions proposal.Yet,while progress is underway,it has not yet advanced at the speed and scale needed:announced capacity for near-zero emissions iron-based steel production and cement production by 2030 amounts to only about 10 Mt and 35 Mt,respectively,equivalent to 10%of that required i

36、n the same year on a pathway to net zero emissions by mid-century.On the demand-side,some material-consuming companies like auto manufacturers and construction companies are already committed to procure near-zero emissions products,indicating a willingness from some buyers to pay a price premium.The

37、 quantities are so far quite small offtake agreements for near-zero emissions steel for which quantities are publicly disclosed account for only a little under 2 Mt per year of demand by 2030.Material purchasers have announced a willingness to purchase an additional 3 Mt through the First Movers Coa

38、lition Near-Zero Steel 2030 Demand Challenge and the RMI Sustainable Steel Buyers Platform,although this demand has not yet been met.Together,this nearly 5 Mt of demand is estimated to have a combined value of roughly USD 3.5 billion.Further demand that has not yet been fulfilled may already be much

39、 larger but is difficult to quantify outside of such initiatives.Nevertheless,offtake agreements so far lack regional diversity and remain too small to provide the certainty needed for a sufficient number of producers to take on the risk of early deployment.Demand and Supply Measures for the Steel a

40、nd Cement Transition Executive summary The case for international co-ordination PAGE|8 I EA.CC BY 4.0.Despite relatively modest beginnings,markets have the potential to grow substantially in the coming years.By way of example,the global market value of near-zero emissions steel alone would reach clo

41、se to USD 300 billion(about 20%of todays total steel industry global market value)by 2035 if markets grow at a pace commensurate with government climate pledges.By 2035,this market value would reach close to USD 550 billion on a pathway compatible with reaching net zero emissions by mid-century.The

42、market value for near-zero emissions cement could reach up to USD 100 billion by 2035,depending on the policy settings.Policy action is vital to establish international markets for near-zero emissions material production and use Early adoption of near-zero emissions materials and production technolo

43、gies requires overcoming a number of barriers,most notably cost.Early offerings of near-zero emissions steel and cement carry a price premium resulting from an estimated 10%to 125%higher production cost compared to conventional production,depending on regional and technological factors.The internati

44、onal nature of industrial markets,which means that producers are trade-exposed,further accentuates the risks for the first private sector investors.Against this backdrop,targeted demand and supply policy measures implemented by governments globally could help push markets for near-zero emissions ste

45、el and cement over important thresholds.For example,past experience suggests that at around 1%of market share,technologies typically have sufficient maturity to have a tangible effect on supply chains.This makes wider adoption afterwards more straightforward due to the experience from early projects

46、 and economies of scale in production that help lower cost.Reaching these thresholds can take up to several decades,especially for large and site-tailored technologies typical of industry.As industry players look for new ways to secure a competitive advantage in the currently challenging market cont

47、ext and with mid-century only one investment cycle away for long-lived industrial plants government support could make the difference in spurring growth for near-zero emissions materials.Demand-side measures are critical to provide certainty given the higher costs and risk of early deployment Govern

48、ment measures have a particularly important role to play in the near term for scaling up markets:well-designed targeted demand-side measures can create early lead markets for near-zero emissions materials,paving the way to more widespread market opportunities thereafter.Governments are well-position

49、ed to help buffer the higher risk through targeted policies during market formation,until other dynamics may be able to take over in the longer term.Policies to support innovation and early deployment can help shrink the price premium through Demand and Supply Measures for the Steel and Cement Trans

50、ition Executive summary The case for international co-ordination PAGE|9 I EA.CC BY 4.0.technological learning and economies of scale.Moreover,the price premium on final products like cars and houses is likely to be relatively small up to 5%,but often less given that steel and cement make up a relati

51、vely small portion of overall costs.Yet in the short-term,supply chain complexities can make it difficult to pass through additional costs to final consumers policies may be able to help bring markets to the point where cost pass-through could be more feasible.Over the longer term,increasing stringe

52、ncy and global coverage of broader policy measures like carbon pricing would raise the cost of high-emissions materials and may help enable near-zero emissions materials to eventually reach price parity.The approach taken to provide critical early demand-side support can be tailored to each governme

53、nts circumstances and preferences.Targeted measures could include policies aiming to cover the price premium,like contracts for difference and public procurement of near-zero and low-emissions materials.They could also include mandatory regulations that require a growing market share of near-zero em

54、issions materials or establish compulsory emission intensity performance levels.These can be supplemented by measures that target end-products,like policies that set embodied carbon limits on buildings or vehicles,or product design codes that consider lifecycle emissions.Government involvement to en

55、sure clear,consistent and verifiable labelling and certification can underpin these policies and facilitate demand by providing transparency and reducing complexity.Supply-side measures can work hand-in-hand with demand-side policies to help drive a shift in capacity Investment decisions made today

56、directly impact the stock of facilities operating mid-century.For a trajectory compatible with internationally agreed government objectives,near-zero emissions production needs to be scaled up rapidly while high-emissions production is reduced in an orderly manner.Yet the window is narrowing to brin

57、g near-zero emissions technologies to market:15%of the global steel production fleet around 2035 and 40%for cement around 2030 will face a reinvestment decision.These figures increase to 50%and nearly 100%for Climate Club members.New investments will require careful consideration:at present,over 200

58、 Mt of high-emissions conventional steelmaking capacity is either planned or set to come online in the next years,virtually all in emerging economies.Meanwhile,achieving net zero emissions by mid-century requires that production eventually transition away from high-emissions conventional production.

59、This means that new capacity additions would be constructed to be near-zero emissions“capable”,if not fully near-zero emissions,with clear plans and technical capabilities for conversion to near-zero emissions production prior to mid-century.In some jurisdictions,this may also entail the retrofit or

60、 replacement of high-emissions existing assets with near-zero emissions technologies during the upcoming investment cycle.Demand and Supply Measures for the Steel and Cement Transition Executive summary The case for international co-ordination PAGE|10 I EA.CC BY 4.0.Governments can make use of a var

61、iety of targeted supply-side measures to design a strategy for their industry transition.Economy-wide measures such as carbon pricing can help backstop policy strategies and improve the cost-competitiveness of near-zero emissions materials,but are most effective when coupled with targeted measures.T

62、hese include incentives such as grants,contracts for difference,tax credits,or other financing that can support technology demonstrations,commercial-scale early deployment,and operating costs for clean energy technologies.Policies targeted at supporting and co-ordinating scale-up of enabling infrast

63、ructure including for low-emissions hydrogen and electricity production,transmission and distribution,and CO2 transportation and storage can facilitate more rapid roll-out of near-zero emission technologies.Meanwhile,regulatory measures like retrofit-ready or near-zero“capable”requirements,moratoriu

64、ms on new builds of high-emissions capacity,or targets to reduce production and use of emissions-intensive materials can be ways to ensure assets are decarbonised sufficiently quickly,while also reducing excess capacity that contributes to depressed market prices that make it harder for industry pla

65、yers to invest in decarbonisation.Collaboration across borders on demand and supply would bring multiple benefits The international nature of markets for industrial products along with the need for large and capital-intensive technology demonstrations for near-zero emission production means that int

66、ernational collaboration is vital to make the industry transition faster and less costly;weak international co-operation could delay the transition to net zero by decades.Investments in supply of near-zero emissions materials tend to be large and lumpy that is,a new million-tonne steel or cement pla

67、nt is a major investment that will supply many buyers over decades.International co-operation on demand commitments can send larger signals to markets,thereby helping to de-risk such investments.Aggregating demand from multiple public and private sector buyers,as well as across borders,can increase

68、certainty and help secure a business case for producers.Such efforts are already underway;for example,ten governments are collaborating on public procurement of low-emissions materials under the Industrial Deep Decarbonisation Initiative(IDDI),of which five have committed to a Green Public Procureme

69、nt Pledge.Together,they procure over 30 Mt of steel and 55 Mt of cement per year.Such efforts need to be widened to a larger number of governments,and ambition needs to be raised overall,to achieve critical mass.On the supply side,international knowledge-sharing and collaboration can help speed-up t

70、echnology development and cost reductions.International finance can also help accelerate deployment in multiple regional contexts,helping to achieve economies of scale on technologies across more regions and with increased pace.Demand and Supply Measures for the Steel and Cement Transition Executive

71、 summary The case for international co-ordination PAGE|11 I EA.CC BY 4.0.Co-ordination is also needed to address challenges that are fundamentally global in their nature,such as excess global industrial capacity that has implications across international markets.Co-ordinating policy ambition across

72、governments can be a central part of co-operation efforts.Raising policy ambition and setting similar paces of decarbonisation across multiple countries can help mitigate carbon leakage as markets for near-zero emissions materials grow.It can also help share the policy burden,in that larger internat

73、ional markets for near-zero and low-emissions goods would reduce the extent to which individual governments may need to provide export subsidies for early producers.For market actors,this co-ordination can also provide the predictability and transparency needed to accelerate market growth.Collaborat

74、ion among governments on policy ambition can take different forms and levels.At a higher level,collective international pledges can spur dialogue on ambition and send powerful early signals to markets.At the more granular level,governments may choose to discuss possibilities for co-ordination and al

75、ignment of specific policy measures.These could include similar rates of subsidies under contracts for difference,comparable carbon prices,aligned emissions thresholds used in emissions intensity regulations,co-ordinated requirements within public procurement policies for near-zero and low-emissions

76、 materials,or similar timelines for reducing reliance on high-emissions production.Climate Club members have an opportunity to become collective first movers and shape future markets Across various areas of the energy system,co-ordinated pledges have emerged in recent years as a rallying point for i

77、ncreasing global ambition and policy efforts,while sending important global market signals.Governments around the world came together around global pledges at COP29 to scale up to 1 500 GW of energy storage and 25 million kilometres of electricity grids,at COP28 to triple renewables and double the p

78、ace of improvement on energy efficiency,and at COP26 to reduce methane emissions by at least 30%.Meanwhile,initiatives like the Beyond Oil and Gas Alliance and the Powering Past Coal Alliance target reductions in emission-intensive technologies and processes.In the case of the latter alliance,its me

79、mbers retired 35 GW of coal power capacity from 2018-23 and plan to retire well over 100 GW of further capacity by 2030.A comparable,easily communicable global rallying point for the industry transition has not yet gained widespread traction.Pledges that have emerged recently among smaller coalition

80、s of governments,such as the IDDIs Green Public Procurement Pledge and a collaborative call to action launched at COP29 by several governments on scaling international assistance for the industry transition,could provide seeds and learnings for a broader international collective pledge.Demand and Su

81、pply Measures for the Steel and Cement Transition Executive summary The case for international co-ordination PAGE|12 I EA.CC BY 4.0.As a high-level co-operative initiative for increasing ambition on industrial decarbonisation,the Climate Club has the opportunity to provide a forum to discuss collabo

82、rative action and explore the possibility of a broader collective pledge for the industrial transition.Accounting for just over 25%of global production and demand for steel,and around 20%for cement,Climate Club members could act as collective first-mover and have a major impact on global markets.Mea

83、nwhile,parallel discussions in other workstreams of the Climate Club on international assistance and finance will be critical to help all members consider ambitious participation in such a pledge.An international pledge on industrial decarbonisation could send an important market signal In this repo

84、rt,at the request of the Climate Club,the IEA has developed an illustrative proposal for a collective pledge that could serve as a starting point for consideration and discussion by Climate Club members.It aims to address demand-and supply-side challenges faced by global near-zero emissions steel an

85、d cement markets,as well as the transition away from high-emissions conventional materials.These are areas where international collaboration is deemed particularly valuable;complementary measures by members to advance other industrial decarbonisation strategies such as material efficiency and circul

86、arity would be useful in parallel.At the centre of the pledge proposal are simple-to-communicate,tangible,quantitative,and time-bound targets for the market shares of near-zero emissions steel and cement,in line with the ambition of the Net Zero Emissions by 2050 Scenario.These provide a starting po

87、int for discussion.The target for steel is higher than that for cement,as a considerable portion of the steel target could likely be met with fully scrap-based production.Supporting the proposal are four categories of actions that governments could consider committing to implement in order to realis

88、e the pledge,including through domestic policy implementation,as well as international co-operation,assistance and finance.In considering such a pledge,Climate Club members could explore how to ensure commitment to the pledge can be formulated in a way that takes into account different countries cir

89、cumstances,and how international assistance can bolster possibilities for raised ambition.Additionally,to be effective,such a pledge would need to be followed through with implementation plans by signatories.This includes,in particular,the design and adoption of a robust portfolio of demand and supp

90、ly-side measures tailored to the unique circumstances,budgetary considerations,competitive advantages,and policy objectives of each signatory.Demand and Supply Measures for the Steel and Cement Transition Executive summary The case for international co-ordination PAGE|13 I EA.CC BY 4.0.An illustrati

91、ve pledge on industrial decarbonisation The illustrative pledge example for discussion,and its supporting actions(which are detailed in the report,along with considerations for discussion)are as follows:Climate Club members could pledge to work together and develop supporting policies to contribute

92、to reaching a share of 35%near-zero emissions steel and 25%near-zero emissions cement globally by 2035.To bolster the high-level pledge,members could pledge to take further concrete actions,for which it would be for Climate Club members to decide together if the pledge implies committing to work on

93、all of these actions collectively,or rather whether members would choose which of these supporting actions to commit to individually.Key areas of concrete action could include the following:Creating near-zero emissions material demand:including through setting ambitious targets for public procuremen

94、t of near-zero emissions materials,and aggregating signals internationally,e.g.through signing up to or increasing ambition within the IDDI Green Public Procurement pledge;and through developing policy mechanisms to support increased private sector purchases.Scaling-up of near-zero emissions materia

95、l production:including through finance mechanisms to enable first-of-a-kind“lighthouse”projects;policies to facilitate broader early commercial deployment;and supporting development of enabling infrastructure.This may include international co-operation such as targeted international financing and te

96、chnical support in emerging markets and developing economies(EMDEs);sharing RD&D costs and learnings among governments for a portfolio of technology demonstrations;and international partnerships along value chains.Encouraging new capacity additions to be near-zero emissions capable:including through

97、 policies requiring that all projects built after a particular date,inclusive of those based on conventional technologies,have clear plans and technical capabilities for transitioning production to near-zero emissions without requiring a major reinvestment(if they are not already near-zero emissions

98、 from the start);and through ending international public finance of high-emissions production not related to the implementation of transition plans aligned with achieving net zero emissions by 2050.Reducing production and use of high-emissions materials:including through financial incentives or regu

99、latory policies that facilitate the replacement or retrofit of existing high-emissions conventional facilities towards near-zero emissions technologies at the end of planned investment cycles;through developing a clear and ambitious schedule to reduce high-emissions production;removal of subsidies f

100、or emissions-intensive production;engaging in international discussions on possible collaborative actions to reduce overcapacity;or,on the demand-side,setting a date after which purchases of high-emissions steel and cement are no longer permitted.Demand and Supply Measures for the Steel and Cement T

101、ransition Introduction The case for international co-ordination PAGE|14 I EA.CC BY 4.0.Introduction Achieving net zero emissions by mid-century in cement and steel sectors Key message:The steel and cement sectors account for a large share of global emissions,and meeting internationally agreed govern

102、ment objectives for net zero by mid-century requires their decarbonisation.This would entail a rapid scale-up of near-zero emissions technologies and their supply chains,including a transition away from high-emissions conventional material production and use,facilitated by government support.Limitin

103、g global temperature rise to levels consistent with internationally agreed government objectives requires a massive transformation of the global energy system to one that is consistent with achieving net zero emissions by mid-century,and all sectors must contribute.Global energy system emissions hav

104、e not yet plateaued,reaching nearly 38 billion tonnes of CO2 in 2023.Of this,the industrial sector is the second highest-emitting sector,producing both energy and industrial process emissions that account for nearly one-quarter of global emissions on a direct basis,and 40%if indirect emissions are a

105、lso included.Meeting national and international net zero commitments requires that industrial emissions decline rapidly.The steel and cement sectors have an important role to play in clean energy and industry transitions,being the two most emissive industrial sub-sectors.Together,their production ma

106、kes up just over half of global industrial emissions(14%of global energy-related emissions on a direct basis).In the IEAs Net Zero Emissions by 2050 Scenario(NZE Scenario),emissions in these sectors decrease by over 20%by 2030,nearly 50%by 2035,and more than 90%by 2050 compared to current levels.How

107、ever,in such a scenario,global steel and cement production volumes remain at similar levels in 2050 as today,sitting at just under 2 Gt per year of crude steel and roughly 4 Gt per year of cement.These levels are sustained primarily by growing demand from emerging markets and developing economies(EM

108、DEs),despite an increasing focus on material efficiency and circularity.Furthermore,these materials serve as critical inputs for infrastructure and consumer goods and Demand and Supply Measures for the Steel and Cement Transition Introduction The case for international co-ordination PAGE|15 I EA.CC

109、BY 4.0.lack scalable alternatives.Significant efforts are therefore needed to transform current production processes to those compatible with net zero emissions.Governments around the world have identified the opportunity to expand their clean energy manufacturing capacity,unlocking socio-economic b

110、enefits from building secure and resilient global supply chains that leverage regional advantages and enable participation in global markets that will increasingly prioritise clean energy.The steel and cement sectors are particularly difficult to decarbonise due to the nature of their emissions,whic

111、h result from high-temperature heat requirements and the inherent industrial processes used in conventional production.These emissions are largely generated during iron and clinker production,which are the most emissions-intensive steps for steel and cement production,respectively.Material efficienc

112、y and circularity,energy efficiency improvements,and switching to lower emissions fuels within conventional production routes,while necessary strategies,are incremental and insufficient on their own to fully decarbonise these sectors.While these strategies help lower energy and emissions intensity,t

113、hey are unable to eliminate industrial process emissions nor provide globally scalable solutions for fully decarbonising high-temperature heat.Moreover,given that demand for steel and cement is expected to be robust for many decades to come,global availability of steel scrap and conventional supplem

114、entary cementitious materials will not be sufficient to wholly substitute iron and clinker.Ultimately,“near-zero emissions”production routes that use transformational clean hydrogen-based processes,carbon capture and storage(CCS),direct electrification,and alternative raw materials must progressivel

115、y replace emissions-intensive iron and clinker production.Such technologies are characterised by emissions intensities that are compatible with an energy system at net zero emissions.According to the IEAs definitions,for steel,near-zero emissions production represents an emissions intensity of 50-40

116、0 kg CO2-eq per tonne of crude steel,varying according to scrap share of metallic inputs;for cement,it represents 40-125 kg CO2-eq per tonne of cement,varying according to the clinker-to-cement ratio.As a complement to this,“low-emissions”production that does not meet these thresholds but still prov

117、ides meaningful emissions reductions can serve as a key interim measure.In some cases,low-emissions production can serve as an important step to develop and invest in transformational technologies,and ideally would incorporate technical capabilities to be converted to near-zero emissions in the futu

118、re.If aligning with the ambition of the NZE Scenario,near-zero emissions steel and cement would reach approximately 35%and 25%of their respective total market shares in 2035,and over 90%in 2050,up from essentially zero market share Demand and Supply Measures for the Steel and Cement Transition Intro

119、duction The case for international co-ordination PAGE|16 I EA.CC BY 4.0.today.For steel this includes contributions from both iron-based and scrap-based steel.The transformation in market share would be driven not only by a scale-up of near-zero emissions technologies and their supply chains at an u

120、nprecedented pace,but also by a co-ordinated shift away from conventional production and continued efforts to deploy transformational low-emissions technologies.Such a concerted global transition would necessitate buy-in from all stakeholders,and complementary action across sectors can reinforce pro

121、gress to bring solutions to scale.However,it is governments that play the critical role in providing the necessary enabling conditions and steering the industry transition along a trajectory for net zero emissions by mid-century.Rationale to consider international co-ordination on demand-and supply-

122、side measures Key message:Targeted government support can help to overcome the multiple and complex challenges involved in scaling up near-zero emissions materials and reducing use of high-emissions materials.International co-ordination would allow governments to collectively send a stronger signal

123、of their ambition for the industry transition to global markets than any country can do alone,while setting the basis for policy action and making progress easier to achieve for all.If a coalition of governments,such as the Climate Club,took on this challenge,it could act as a collective first-mover

124、 and drive progress to tear down market barriers for all actors,bringing benefits in terms of both climate progress and new economic opportunities.The industry transition requires a transformational shift across its value chains,centred around a massive investment in near-zero emissions technologies

125、 that have not yet reached commercial scale,concurrent with reduced reliance on high-emissions production.An orderly transition across global fleets of steel and cement plants will be challenging,not least because in most settings near-zero emissions production will cost more than high-emissions con

126、ventional production.Furthermore,critical innovation gaps need to be closed.In the NZE Scenario,35%of total emission reductions come from technologies that,while known,are not yet commercially available on the market.For heavy industry,this share is 50%.To ensure these technologies are ready for wid

127、espread deployment from 2030 onwards,accelerated efforts are urgently needed to demonstrate them at scale,bolstered by deployment of transformational low-emissions technologies.Demand and Supply Measures for the Steel and Cement Transition Introduction The case for international co-ordination PAGE|1

128、7 I EA.CC BY 4.0.Being among the first to shift to near-zero emissions production comes with significant risk,which exacerbates already high costs,causing the private sector and governments alike to hesitate on investments.The challenge is further accentuated by the international nature of industria

129、l markets that leaves producers trade-exposed.Meanwhile,current challenges related to global excess industrial capacity are depressing market prices,creating challenging financial conditions for industrial producers and making it even more difficult to invest in near-zero emissions technologies.Desp

130、ite this,some producers are taking steps to position themselves to compete in markets for near-zero and low-emissions materials.Early movers are starting to mobilise finance:the first facilities are set to come online beginning in 2025 and there are early signs of market formation with initial offta

131、ke agreements.Some industry associations are also developing definitions,certification and labelling systems for near-zero emissions steel and cement in some cases through collaboration with government like the Low Emissions Steel Standard initiated in Germany,the voluntary CO2 standard of the China

132、 Iron and Steel Association,and the Global Cement and Concrete Associations definitions proposal.However,these first steps alone do not create a strong enough market signal to drive the level of investment needed to significantly grow the market share of near-zero emissions production.Ultimately,pol

133、icy supports are needed to de-risk investments in early deployment of near-zero emissions production at a commercial scale.While broader government policies,such as carbon pricing,are being implemented in some regions and can help send the right signal to markets for emissions reductions,current pri

134、ce levels are insufficient to make near-zero emissions production competitive with conventional production,nor is global coverage broad enough at this stage.Consequently,carbon prices alone do not provide the assurance necessary to create a robust business case for investment in higher-cost early de

135、ployments.Likewise,development of industry transition strategies can provide a high-level framework to guide policy development,and emerging common ground among proposals for standards and definitions can serve as a critical enabler of policy measures,but neither on their own are intended to directl

136、y incentivise near-zero emissions technologies.To this end,targeted demand-and supply-side government policy measures are critical to provide first movers with the necessary market security and price certainty to drive market creation for near-zero emissions materials,while increasingly shifting awa

137、y from high-emissions production.In fact,major industry players have begun calling on governments to implement such policies,for example through the open letter to government leaders co-ordinated by the Industrial Transition Accelerator and the call to action for governments and policymakers from th

138、e Global Cement and Concrete Association,both launched Demand and Supply Measures for the Steel and Cement Transition Introduction The case for international co-ordination PAGE|18 I EA.CC BY 4.0.at COP29.According to the Business Breakthrough Barometer,90%of leading businesses would invest more in c

139、lean technologies if stronger policies were in place.Calls from industry to strengthen policies suggest that despite the challenges,industrial producers also see opportunities brought by the emerging clean energy economy.Near-zero emissions materials,in particular,can be a major economic opportunity

140、.For near-zero emissions steel,the global market value would reach close to USD 300 billion(about 20%of todays total steel industry global market value)by 2035 if countries follow through with their climate pledges,with opportunities for advanced economies and EMDEs alike.The market would be even la

141、rger on a path to net zero by 2050,reaching close to USD 550 billion by 2035 and over USD 1 400 billion by 2050.For near-zero emissions cement,the global market could reach up to USD 100 billion by 2035 and up to approximately USD 400 billion by 2050,depending on the policy settings.Working together

142、 internationally would increase the likelihood of realising these opportunities and create possibilities of new competitive advantages for industrial players that may be facing challenges in the current market environment.Global market size of near-zero emissions and conventional steel and cement by

143、 scenario,2023-50 IEA.CC BY 4.0.Notes:Assumed materials prices are derived using the evolution of levelised cost of production and demand in each scenario.Near-zero emissions steel includes both iron-based and scrap-based production.Policy efforts will be stronger and more effective if multiple gove

144、rnments act together.Co-ordination and,where possible,alignment in policy ambition across jurisdictions can be an effective tool for reducing risks of international spillovers from mitigation policies such as carbon leakage and competitiveness concerns.This can help prevent situations in which a red

145、uction in high-emissions production in one jurisdiction is neutralised by an equivalent addition of high-emissions production elsewhere.Meanwhile,co-operation can help create positive spillovers and help the transition advance more quickly.Analysis by the IEA found that weak Demand and Supply Measur

146、es for the Steel and Cement Transition Introduction The case for international co-ordination PAGE|19 I EA.CC BY 4.0.international co-operation would delay the transition to net zero by decades.Heavy industry was identified as the sector most affected by low international co-operation,given its high

147、exposure to international markets,as well as the need for large and capital-intensive technology demonstrations.In addition,low co-operation limits potential benefits from sharing of technology learnings to help reduce production costs and from strong market pull to accelerate decarbonisation.These

148、factors can result in considerably slower demonstration and diffusion of technologies with limited co-operation.Consequently,in such a hypothetical case,heavy industry becomes the largest emitter by 2050,with 6 Gt of direct emissions remaining,equal to 40%of the global total emissions in that year.S

149、hared global markets and the large innovation challenge make co-operation critical for industry.A key component of co-operation for the industry transition is creation of larger international demand signals.When pooled together across borders,demand commitments can achieve a greater market scale to

150、de-risk investments in supply.Investments in supply of near-zero emissions materials tend to be large and lumpy;that is,building a new million-tonne steel or cement plant is a large investment,that will likely supply many buyers over decade-long timespans.As such,aggregating demand from many buyers

151、including both public sector and private buyers increases certainty and helps secure a business base for producers.Such efforts have started already,for example with governments collaborating on public procurement of near-zero and low-emissions materials under the IDDI.Still,progress needs to be wid

152、ened to a larger number of countries and ambition needs to be raised overall in order to reach critical mass.On the supply side,international knowledge-sharing on innovative technologies and collaboration on project development can help speed technology development and reduce costs.Historical experi

153、ence on energy technologies including solar,wind and electric vehicles has shown international co-operation to be instrumental in reaching economies of scale on deployment more quickly,which has been key to cost reductions.International finance can facilitate accelerated deployment in multiple regio

154、nal contexts,helping to achieve economies of scale on technologies across more regions and with increased speed.Policy co-ordination can also help share the policy burden,in that larger international markets for near-zero and low-emissions goods would reduce the extent to which individual government

155、s may need to provide export subsidies for early producers.Meanwhile,co-ordination is needed to find solutions to challenges that are fundamentally global in their nature,such as how to address global excess high-emissions industrial capacity that has implications across international markets.Valuab

156、le collaboration among governments on policy ambition can range from the high level to the detailed.At the high level,a collective international pledge can Demand and Supply Measures for the Steel and Cement Transition Introduction The case for international co-ordination PAGE|20 I EA.CC BY 4.0.spur

157、 dialogue on raising ambition and already send powerful aggregated signals to markets.A collective pledge in this context refers to a joint statement made voluntarily by a group of governments at an international level,characterised by an ambitious shared goal that is quantitative and time-bound whe

158、re possible and recommended supporting actions,ideally backed by plans for implementation through adequate policies and enabling conditions.At the more granular level,governments may choose to discuss possibilities for co-ordination and alignment of specific policy measures.These could include,among

159、 others,similar rates of subsidies under contracts for difference,comparable carbon prices,aligned emissions thresholds used in emissions intensity regulations,co-ordinated requirements within public procurement policies for near-zero and low-emissions materials,co-ordination of innovation funding t

160、o cover a balanced portfolio of projects,similar timelines for reducing reliance on and subsidies for high-emissions production,and co-ordinated trade policies for low-emission and/or high-emissions products.The Climate Club whose mission includes supporting effective implementation of the Paris Agr

161、eement and keeping 1.5 C within reach could consider taking the opportunity to lead in creating a strong collective market signal for the industry transition.Building on experiences made in other sectors,a first step could be to develop a collective pledge that aggregates the ambitions of members.Th

162、is could be then actioned by implementation of demand-and supply-side policy measures,with the possibility to explore co-ordination among members.Collectively,the 46 Climate Club members(as of mid-March 2025)account for just over 25%of global production,and a slightly higher share for demand,in the

163、steel sector;for the cement sector,they account for roughly 20%of production and demand.As such,they could play a crucial role as global first movers.This report aims to provide evidence to help identify where government support could be useful for scaling up both demand and supply of near-zero emis

164、sions materials,to facilitate dialogue on international co-ordination around such measures,and to explore the possibility of a collective government pledge.Governments have numerous policy options at their disposal to help accelerate the industrial transition.Strong policy frameworks are likely to b

165、e those that diversify means of support by using a combination of different demand-and supply-side measures.As each government tailors their policy approach to their own country contexts,governments could together create larger,shared markets through co-operation and alignment of policy measures.Ide

166、as and recommendations shared here are intended for consideration by Climate Club members as a starting point for discussions on collective ambition and co-ordinated action.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PA

167、GE|21 I EA.CC BY 4.0.Demand-side measures The rationale for demand-side measures Diverse market barriers exist for buyers Key message:Multiple barriers have emerged as buyers try to advance ambitions to procure near-zero and low-emissions materials and to meet supply chain emissions reductions targe

168、ts.Cost is one of the largest barriers.The lack of cost-competitiveness of near-zero and low-emissions materials in most cases means that public sector aid is important for inducing demand and establishing markets.Globally,momentum for the industry transition continues to build,with many governments

169、 and companies declaring targets for achieving net zero emissions at a national,subnational,or organisational level by mid-century.While direct and indirect electricity-related(Scope 1 and 2)emissions are receiving the most attention in global dialogue,there is a growing awareness among purchasers o

170、f the need to address their broader supply chain(Scope 3)emissions.This is particularly true for buyers of emissions-intensive materials like steel and cement.In the public sector,efforts are progressing,with many governments undertaking measures to address emissions from government operations and p

171、rocurement,including reducing embodied emissions from steel and cement used in publicly funded construction works.This includes international co-ordination and experience-sharing through initiatives such as the Net Zero Government Initiative,Greening Government Initiative,First Movers Coalition,and

172、Industrial Deep Decarbonisation Initiative.This momentum is also evidenced in the private sector through growing membership of platforms like the Science-Based Targets initiative(SBTi),through which companies can set targets for Scope 3 emissions reductions.1 Of the over 10 000 companies using SBTi(

173、as of March 2025),approximately 2 900 are from sectors that are primary buyers of steel and/or cement,30%of whom have set 1 SBTi works with companies to develop voluntary emissions reduction pathways and uses science-based evidence to verify the compatibility of a corporations climate target with th

174、e goals of the Paris Agreement.It also encourages reporting and tracking of company-wide emissions.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|22 I EA.CC BY 4.0.targets for Scope 3 emissions reductions.Other initia

175、tives such as the ResponsibleSteel Standard require that companies measure and report their Scope 3 emissions.Despite the growing number of climate commitments,these governments and companies often face various unique barriers to adopting near-zero emissions materials.Such barriers often apply to lo

176、w-emissions materials as well,albeit to a lesser extent.Therefore,while the following discussion references near-zero emissions materials,it is also relevant to low-emissions materials.Organisations seeking to reduce their emissions and looking to buy near-zero emissions materials or the resulting e

177、nd-products are often confronted with a higher price tag compared to conventional materials or products.This price uplift,known as the price premium(and sometimes called the“green premium”),can prove difficult for organisations to justify,even under a growing push to reduce emissions and emerging op

178、portunities to establish early market presence.For instance,companies face continued pressure to minimise expenses and deliver larger profits,especially in publicly traded companies with obligations to shareholders,industries with narrow profit margins,and trade-exposed sectors subject to highly com

179、petitive global markets.This creates a competitive environment where buyers are incentivised to procure the lowest-cost materials.While not focused on profits,governments still face their own challenges.Competing budgetary priorities,fiscal spending constraints,accountability to the public,and oblig

180、ations for the cost-efficient delivery of programmes and services all make public procurement of near-zero emissions materials difficult.At the same time,there are practical limitations related to near-term availability of near-zero emissions materials and derived offerings of specialised products(f

181、or example,certain components of wind turbines),which can impede buyers who would otherwise be willing to adopt these materials.Lack of regulatory clarity around the industry transition can be a hindrance for buyers who are looking to limit their exposure to legislative risk,and in some cases can pr

182、eclude the use of innovative materials,especially in construction and other industries where codes and standards are generally conservative.In addition,certain industries often those that are highly regulated tend to be risk-averse due to the potential for liability,which results in a slower rate of

183、 adoption for innovative materials for which performance may not be well-established.While more transparency related to environmental performance can support uptake,inconsistent data quality in emission-reporting schemes and a proliferation of labelling and certification schemes that can sometimes b

184、e difficult to understand can lead to further hesitancy from buyers.On an organisational level,there may be competing priorities that limit ability to procure near-zero emissions materials,especially in cases where there are limited financial resources.Demand and Supply Measures for the Steel and Ce

185、ment Transition Demand-side measures The case for international co-ordination PAGE|23 I EA.CC BY 4.0.Key barriers to purchase of near-zero emissions steel and cement Consideration Description of barrier Purchase cost Near-zero emissions materials typically carry a price premium compared to conventio

186、nal materials,making their use less attractive to buyers who may not prioritise reducing supply chain emissions or who may need to respond to other stakeholder priorities.This is especially true for publicly traded companies that have a fiduciary responsibility to their shareholders,and governments

187、which are accountable to the public.In industries with tight margins and/or trade-exposure,buyers may have limited ability to pay for higher-price materials or goods.Availability of materials Buyers may be willing to purchase near-zero emissions materials,even at price premiums compared to conventio

188、nal materials,but are unable to do so due to insufficient availability on the market.Regulatory environment Buyers may be hesitant to commit to offtake agreements with suppliers due to regulatory uncertainty and exposure to risk from legislative changes around climate policy.This could be due to ris

189、k of repealing existing regulations due to shifts in domestic policy,lack of clear targets for near-zero emissions materials in regulations,or lack of sufficient regulations for the industry transition altogether.Familiarity with materials Buyers may be hesitant to adopt near-zero emissions material

190、s due to lack of familiarity with their performance,supply chains and/or suppliers,especially for cement and concrete,due to the sectors diverse offerings of materials.This is despite,in many cases,equivalent performance of near-zero emissions and conventional materials.Some buyers may be unaware of

191、 these materials altogether.Industry practices Certain industries tend to follow conservative practices due to significant regulation,liability risk,capital intensity,and the high-stake nature of projects,which discourage the adoption of certain near-zero emissions materials,particularly those that

192、have a different composition and/or higher cost.Common in public agencies,use of tendering practices where contracts are offered to the lowest bid can also make it difficult to procure higher-cost,near-zero emissions materials.Existing design codes and standards Existing design codes and standards m

193、ay hinder or even preclude the use of near-zero emissions materials in certain applications,especially the use of cement in construction,in instances where the materials are of a different composition(and can potentially result in different performance)compared to more conventional compositions.Stan

194、dards and definitions for emissions intensity thresholds Despite progress made by key initiatives,uncertainty and inconsistency around definitions of emissions intensity thresholds for what constitutes near-zero emissions materials may result in slower uptake from buyers who want a recognised level

195、of environmental performance in exchange for paying a price premium.This includes uncertainty on the underlying emissions measurement and reporting methodologies,as well as a lack of a common or interoperable certification system.Quality and credibility of data from suppliers Due to difficulties in

196、tracking and reporting emissions intensity data for materials,buyers may be unable to verify the accuracy or credibility of a materials performance.Further,they may face difficulty comparing materials using different standards or certifications,especially if there is a lack of transparency on the un

197、derlying data or poor data availability.Organisational objectives Some organisations might not yet include procurement of near-zero emissions materials in their operational strategy or may prioritise other goals instead.In some cases,organisations may want to procure these materials but are limited

198、by internal policies or budgetary restrictions.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|24 I EA.CC BY 4.0.While all the aforementioned barriers contribute to reluctance from buyers,the price premium is often the

199、 biggest perceived impediment.Data from the 2024 Buyer Questionnaire(see box below)revealed that nearly 85%of respondents felt that higher cost was a key barrier to adoption of lower-emissions materials.In addition,a related 2024 survey of the construction sector by the Royal Institution of Chartere

200、d Surveyors(RICS)observed a similar emphasis on high costs.The result of this reluctance is a weakened demand signal to suppliers,who consequently are slow to invest in production facilities without the assurance of a guaranteed market.Targeting buyer uncertainty and finding ways to bridge the price

201、 premium,is therefore critical to inducing demand and kick-starting lead markets.2024 Buyer Questionnaire In July 2024,Ramboll and Climate Group conducted an online survey of global steel and concrete users,referenced in this report as the“2024 Buyer Questionnaire”.Survey questions were developed in

202、 collaboration with the IEA with the aim to better understand the market demand and outlook for near-zero and low-emissions steel and concrete.These included questions related to willingness to pay a price premium,as well as barriers and enabling factors to procuring lower-emissions steel and concre

203、te.In total,the survey received 259 responses across 42 countries and 21 sectors,with an over-representation of Europe-based organisations and more specifically,United Kingdom-based organisations.Of these responses,18 self-reported as public authorities.The survey was voluntary and shared through Ra

204、mboll,Climate Group,and IEA networks,limiting the number of organisations that may have been aware of the survey and completed it.Consequently,findings from this survey are referenced as indicative insights throughout this work but are not intended to be taken as a representative data set of global

205、lower-emissions steel and concrete buyers.Ramboll and Climate Group provide further findings through their joint study published on the topic.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|25 I EA.CC BY 4.0.Higher pri

206、ces,in particular,restrict purchases Key message:The elevated price of near-zero emissions materials is a result of higher capital investment,lending risk and production costs.The IEA estimates that costs of near-zero emissions production are higher than conventional production by 10%to 75%for steel

207、,and 30%to 125%for cement,depending on the region and technology choice,driving the price premium encountered by early movers.While there is a willingness from some steel and cement buyers to pay a higher price to support decarbonisation,this is only up to a certain extent and not among all buyers.T

208、he price premium,or price uplift,for materials produced using near-zero emissions technologies is partially a result of their early stage of development:there has not yet been sufficient time to establish robust supply chains and real-world operational experience necessary to optimise project develo

209、pment and technical performance.This high cost to producers a product of the capital investment,contingency to account for high project and lending risk,and operating expenses necessitates a market price well above that of conventional materials in order for producers to recuperate their investment.

210、Policies like carbon pricing can help bridge the gap,as discussed further below,but are unlikely to be sufficient on their own at current carbon price levels,particularly for early deployments.Furthermore,while near-zero emission technology costs are likely to fall over time thanks to technology lea

211、rning and economies of scale,higher costs relative to conventional technologies are likely to persist in many cases,even in the long-term for both capital expenses(e.g.use of CCS requires additional equipment,the purchase and resulting cost of which is simply avoided for production not using that eq

212、uipment)and operating expenses(e.g.use of CCS necessitates additional energy consumption),and thus would require sufficiently strong policies to bridge the gap.Low-emissions materials carry a more moderate price premium and can facilitate market entry,but are ultimately interim measures.The IEA esti

213、mates that in the absence of policy support(e.g.carbon pricing,subsidies),the production cost of near-zero emissions crude steel will typically carry a 10%to 75%premium compared to todays conventional crude steel production cost,varying with technology type and regional factors like energy and labou

214、r costs.On average across global regions and key technology options,this translates to a premium of approximately USD 225 per tonne of crude steel in 2030 40%higher than current conventional crude steel.Seller mark-up is not considered,meaning final price uplifts could be higher.Demand and Supply Me

215、asures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|26 I EA.CC BY 4.0.Although steel producers have yet to share price premiums for crude steel specifically,public announcements for steel end-products are indicative of general alignment with

216、IEA estimates.In 2023,Stegra(formerly H2 Green Steel)stated that their steel will have a premium of 25%,while SSAB estimates they will charge a premium of EUR 300(USD 315)per tonne of its SSAB Zero steel,which encompasses the costs of carbon pricing,production and value-added by the product.For crud

217、e steel,similar analyses from Mission Possible Partnership,World Economic Forum,and IEAGHG report comparable figures to IEA estimates.Similarly,the IEA estimates that the production cost of near-zero emissions cement will typically carry a premium of 30%to 125%compared to current conventional cement

218、 production cost,depending on regional and technological factors.Globally,this would add an average premium of USD 60 per tonne of cement 75%higher than current conventional cement(without consideration of seller mark-up).For concrete,the premium is expected to be smaller since cement accounts for o

219、nly a portion of concrete production costs;however,it is still significant,with Mission Possible Partnership estimating a 15%to 40%premium for low-emissions concrete.Producers have yet to announce price premiums for their near-zero emissions cement or concrete,although available company estimates of

220、 achievable production costs could be indicative.For example,an analysis from Leilac estimated a cost increase of EUR 54(USD 57)per tonne of CO2 avoided for their innovative CCS technology applied to cement,or roughly USD 30-45 per tonne of cement(which would imply a roughly 35-50%premium).Analyses

221、from Mission Possible Partnership,World Economic Forum,and RMI report similar premiums.Despite this price premium,some buyers are still indicating a willingness to purchase near-zero emissions materials.Data from the 2024 Buyer Questionnaire reveals deeper insight here.For deep decarbonisation of st

222、eel and concrete to levels compatible with near-zero emissions,just over half of buyers overall indicated they would be willing to pay up to 25%more compared to conventional materials.This willingness differs regionally,with roughly twice the share of buyers in Europe being willing to pay up to a 25

223、%premium for near-zero emissions steel compared to non-European buyers.For near-zero emissions concrete there is a similar trend,although the disparity is not as large.For both steel and concrete,across all regions,there were fewer willing buyers for these materials as premiums increase,with only on

224、e-fifth of buyers willing to pay up to 50%more and less than one-tenth willing to pay 75%more.Another survey by McKinsey arrived at similar conclusions,while also noting sectoral trends like the willingness from the automotive sector to pay a higher price premium.Consistently higher premiums in Euro

225、pe were also reported,underscoring the effect of regional factors.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|27 I EA.CC BY 4.0.These early-mover buyers are key to seeding demand that can help build momentum in mar

226、kets for near-zero emissions materials,especially in sectors and regions where willingness is higher.However,these buyers lack the scale to send a sufficient demand signal and alone are unable to take on the full risk needed to form robust lead markets.Moreover,certain buyers may have the budgetary

227、tolerance to only partially cover the price premium,meaning the remainder must be covered through other means.Indicative levelised cost of production for conventional in 2023 and near-zero emissions steel and cement in 2030 in the Net Zero Emissions by 2050 Scenario IEA.CC BY 4.0.Notes:tcs=tonne of

228、crude steel.Levelised cost of production(LCOP)for 2023 conventional production and 2030 near-zero emission production.Estimates are based on regional averages and cover various technologies.Costs do not include any policy supports,e.g.carbon pricing or subsidies.The box represents the range of expec

229、ted typical LCOP values,while the whiskers include the average LCOP in higher-or lower-cost regions.The cost difference represents the cost differential between the average global LCOP for near-zero emissions production in 2030 and conventional production in 2023.Market formation requires bridging l

230、arger near-term gaps Key message:In the near term,targeted demand-side measures need to be introduced to overcome initial barriers and kick-start formation of lead markets for near-zero emissions steel and cement.Governments could play a crucial role here.Once strong demand and strong supply chain l

231、inkages are established,it may be possible for steel and cement buyers to pass through higher costs to customers with minimal impact on end price,helping to share risk across the supply chain.Eventually,in the NZE Scenario,the price gap between near-zero emissions and conventional materials is close

232、d as the market matures and policies scale up to bridge the remaining gap in the long-term.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|28 I EA.CC BY 4.0.Carbon pricing can be an effective tool for reducing the pric

233、e premium,putting a price on pollution and making more emissions-intensive production less cost-competitive.This is especially true as carbon prices rise over time,and as learning effects simultaneously lower the cost of transformational technologies,which can even be further reinforced and accelera

234、ted by mechanisms such as revenue recycling targeting technology innovation.In the NZE Scenario,carbon prices(and/or other policies with implicit carbon prices)are assumed to increasingly help close the price gap between near-zero and emissions-intensive production,largely by increasing the cost of

235、conventional,higher emitting production.Regional variability in carbon pricing means that the price premium is addressed to differing degrees in different regions in the medium-term.With carbon pricing assumed to continue increasing in all regions,and to expand in regional coverage over time in the

236、NZE Scenario,it can provide an increasingly level playing field for near-zero emissions and low-emissions materials to start emerging as the preferred business case.In the interim,one approach to help address the price premium is for buyers of steel and cement to pass through the additional cost of

237、materials to customers of end-products like cars and houses.This is possible particularly because the knock-on effect of the price premium for steel and cement on consumer end-prices is generally small,given that materials account for a relatively small share of total costs for end-products.Furtherm

238、ore,a survey of consumers conducted by Boston Consulting Group revealed that there is a willingness to pay a price premium on end-products,to an extent.In 2030 in the NZE Scenario,the cost of typical clean energy technologies such as electric cars,heat pumps,wind turbines,and solar photovoltaics inc

239、reases just 0.2-5.5%,due to fully switching to use of near-zero emissions steel and cement.Similarly,residential housing sees an increase of only 0.7-2.6%.Other analyses have found similar results for buildings,cars,ships and white goods.2 True cost pass-through may be slightly higher as successive

240、companies in a supply chain raise prices to maintain cost markups,but this effect is unlikely to be substantial.Cost pass-through may be easiest to do in sectors with many companies offering differentiated products,such as the automotive and home appliance manufacturing sectors.These markets tend to

241、 have companies with strong consumer brand loyalty and that offer products with competitive advantages beyond cost alone,allowing them to retain their market share in cases of modest 2 European Federation for Transport and Environment(2024),Cleaning up steel in cars:why and how?;Transition Asia(2024

242、),Green Steel Economics;IEAGHG(2024),Clean steel and environmental and technoeconomic outlook of a disruptive technology;Mission Possible Partnership(2023),Making Net-Zero Concrete and Cement Possible;Mission Possible Partnership(2022),Making Net-Zero Steel Possible;World Economic Forum(2024),Net-Ze

243、ro Industry Tracker 2024.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|29 I EA.CC BY 4.0.price increases.They may even gain market share from sustainability-minded purchasers who may allocate a portion of their discr

244、etionary income to these products.Meanwhile,cost pass-through can also be possible for other sectors where the product involves large labour costs and high overall investments,as is the case with construction.For these reasons,the added premium from the material costs of near-zero emissions steel an

245、d cement can,in many cases,fall well within the typical tolerance for cost variability.In addition,one survey suggests that buildings with sustainability features are already attracting higher valuations and rent premiums compared to less sustainable buildings,allowing companies to offset any higher

246、 material costs.Cost increase of selected clean energy products from passed-through production cost as a result of switching from conventional to near-zero emissions materials,and the effect of carbon pricing and subsidies on cost pass-through in the Net Zero Emissions by 2050 Scenario,2030 IEA.CC B

247、Y 4.0.Notes:Capital costs in 2030 for clean technologies follow the reductions of the Net Zero Emissions by 2050 Scenario,and are based on 2021 capital costs of typical products,which are USD 36 000 for an electric car,USD 11 000 for a heat pump,USD 2 860 per kilowatt(kW)of offshore wind power,USD 8

248、80 per kW of solar PV power,and USD 300 000 for the construction of a single-family home.The assumed material intensities are global averages and constant over time.Capital cost increases are derived from the difference in production cost between near-zero emissions and conventional steel and cement

249、,following the methodology provided in the figure presented in the previous section.The bar represents the global average cost increase,while the lines account for the average cost increase in higher-or lower-cost regions.For each clean technology,the left panel represents the cost increase without

250、inclusion of any policy support(e.g.carbon pricing or subsidies)and the right panel represents the cost increase with inclusion of policy support.Carbon price is based on the global average in the Net Zero Emissions by 2050 Scenario.Other supply chain considerations could help reduce the price premi

251、um in these end-products,making the cost pass-through more palatable to customers.Especially in the near term,limited availability of near-zero emissions materials will likely lead to only partial substitution of conventional steel and cement,resulting in lower cost pass-through,at least initially.F

252、urthermore,sharing the Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|30 I EA.CC BY 4.0.price premium across the supply chain could reduce the premium faced by consumers,but would require companies to forego a portion

253、 of revenue.Mechanisms such as better supply chain co-ordination and/or agreements may be needed to make sharing the cost pass-through feasible,given that there would still be a price uplift at the various points of intermediate product sale along the supply chain,but this should not be an insurmoun

254、table problem.Regions with strong carbon pricing and innovation support could see even lower price premiums.In 2030 in the NZE Scenario,when accounting for the effect of carbon pricing,the cost pass-through for the applications previously noted is on average halved globally and even drops to zero in

255、 certain regions where carbon pricing is high.Finally,end-users of products derived from steel and cement can employ best-available design and material efficiency measures to lower overall costs,potentially increasing their capacity to absorb this cost pass-through.At present,however,steel and cemen

256、t buyers,in many cases,face difficulties in bearing the costs and risks that underlie the price premiums on near-zero emissions materials.This is due,among other reasons,to uncertainties during the market formation stage around how the premium is shared across complex supply chains and how end-custo

257、mers would respond to higher prices.This is in addition to other demand-side barriers that hamper market formation,as noted earlier.To get markets moving,government-led measures can target these barriers to alleviate some of the risk and cost burden faced by early movers,and help start making strong

258、er collaborations across supply chains,until such time that other policies and market dynamics take over and steel and cement markets reach a new equilibrium.Progress to date and lessons learned First-mover offtakes show promise but are not yet sufficient Key message:Private sector offtake agreement

259、s from first movers are emerging and serve as key models for prospective buyers of near-zero emission materials.However,they are not able to offer demand at the scale needed for the industry transition.These agreements reveal regional gaps,with Europe accounting for most of the global demand,and sho

260、w that demand for near-zero and low-emissions cement lags steel.Despite this relatively slow and uneven growth,there are indications that additional and more regionally diverse underlying demand exists for both steel and cement,for which policy could help overcome barriers that are currently prevent

261、ing it from being realised.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|31 I EA.CC BY 4.0.Some individual first-mover buyers in the private sector have shown willingness to purchase early offers of near-zero emissio

262、ns materials on the market.The private-sector offtake agreements now emerging can help serve as templates of purchasing strategies for near-zero and low-emissions materials.For near-zero emissions steel,there are now over 70 private sector commitments from 47 companies,of which 49 are publicly annou

263、nced offtake agreements.However,over 80%of these agreements have been made with just three producers:Stegra,SSAB,and Salzgitter.Furthermore,just one-third of the offtake agreements disclose information on quantities or values of steel,which together account for approximately 1.5 Mt per year of steel

264、 offtake by 2030.3 This falls well short of the approximately 110 Mt of near-zero emissions iron-based steel in 2030 in the NZE Scenario.Demand to date has also shown uneven growth globally:roughly half of the announced offtake agreements come from the automotive sector or suppliers within its suppl

265、y chain.Furthermore,nearly all offtakes are from buyers located in Europe.This is corroborated by the observed higher willingness of European steel buyers to pay a price premium in the 2024 Buyer Questionnaire and perhaps to an extent the regional availability of near-zero emissions steel(discussed

266、later in the report).Progress in the cement sector has been slower compared to steel.Just two commitments for cement that is likely to qualify as near-zero emissions have been publicly announced to date,with no stated quantities,coming from one supplier with relatively small production volume:Sublim

267、e Systems.Factors likely contributing to this include a comparatively smaller number of projects that would meet near-zero emissions thresholds and are sufficiently advanced,as well as supply chain complexities(e.g.cement is less traded globally).In some cases,lack of full confidence on the quality

268、and comparability of emissions data may hinder connections between potentially interested supply and demand actors.Unlike steel,some near-zero emissions cements could have differences in chemical composition,which may raise uncertainties around performance,particularly for first adopters,which may a

269、lso be driving slower adoption.Progress has been stronger for low-emissions materials when compared to near-zero emissions.Low-emissions materials are important in the industry transition as they enable partial emission reductions and,in some cases,are a step along a path to develop transformational

270、 technologies,facilities and value chains that could later transition to near-zero emissions.There are a growing number of offtake agreements for low-emissions steel and cement,which features a larger 3 Some offtake agreements are made for a given value of steel rather than a quantity;for these,an e

271、stimate was made on the value per tonne of near-zero emissions steel to convert to a quantity.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|32 I EA.CC BY 4.0.share of buyers from outside Europe compared to those for

272、near-zero emissions materials.While some of these include already existing lower-emissions technologies,others support development of transformational technologies.One notable example of the latter comes from Heidelberg Materials,who has launched their evoZero marked cement that employs CCS.This pro

273、duct will initially be produced in the Brevik project(Norway),where CCS reduces about half of the cements emissions,meaning it would therefore be considered low-emissions.The brand will likely later be expanded to other CCS-enabled facilities,and at that stage may also include fully near-zero emissi

274、ons cement.There is evidence that underlying demand already exists,even in regions and sectors that are under-represented by announced offtake agreements.Responses to the 2024 Buyer Questionnaire reveal that Asian buyers generally have the same level of ambition as European buyers for procuring stee

275、l and concrete that have lower embodied emissions than conventional materials.Moreover,similar rates of buyers in Europe and Asia roughly one in every seven target deep emission reductions when procuring lower-emission steel and concrete.These trends may exist in other regions as well,particularly N

276、orth America,but there was insufficient data to draw meaningful conclusions.This underlying demand may not yet be realised due to the various barriers discussed previously,which targeted government efforts could help overcome.Alternative chain of custody models in which the physical product is parti

277、ally or fully disconnected from its emissions-related attributes are emerging as a potential route to facilitate increased demand and connections to supply for near-zero and low-emissions materials.One such model is book-and-claim,which would enable the emissions attributes of near-zero or low-emiss

278、ions materials produced in one part of the world to be sold to an interested buyer in another part of the world.This model may be particularly useful for cement,since it is less frequently traded,and could open new opportunities for international support of projects in EMDEs.Another model is the use

279、 of emissions reduction certificates,also sometimes referred to as a mass balance approach,which aggregate partial emission reductions and then label a subset of their production as lower emission.Such alternative chain of custody approaches can be useful in certain instances to spur markets for low

280、-emissions materials and even support the development of transformational technologies.However,they should be used judiciously,include robust third-party verification systems,and be communicated transparently,particularly in terms of whether the resulting product comes from conventional or transform

281、ational production methods.Otherwise,there may be a risk of diverting attention and investment away from transformational technologies that can achieve near-zero emissions,as well as the double-claiming of emissions reductions.Governments may want to consider such approaches carefully and set guardr

282、ails on their use.Ultimately,near-zero emissions materials and not only Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|33 I EA.CC BY 4.0.low-emissions materials are critical for attaining an industry sector consistent

283、 with net zero emissions by mid-century.Private sector demand aggregation initiatives continue to expand Key message:Private sector demand aggregation initiatives have helped to reveal underlying demand for near-zero and low-emissions materials,while simultaneously sending larger market signals to s

284、uppliers to support market formation.Membership for these voluntary commitments has seen strong growth since inception,but they have resulted in a lower number of offtake agreements than expected and still have some regional and sectoral gaps in membership.Revealing underlying demand can play an imp

285、ortant role in accelerating market growth,and efforts have already commenced through private sector-led initiatives.In the First Movers Coalition(FMC),members can make commitments to procurement targets that align with near-zero emissions steel and low-emissions cement or concrete.Through the SteelZ

286、ero and ConcreteZero initiatives,members can commit to procurement targets that align with low-emissions materials in the near term and near-zero emissions materials in the long-term.Importantly,these demand aggregation coalitions help to amplify the market signal sent to suppliers.Membership in the

287、se initiatives has grown substantially since their launches in the early 2020s.A total of 68 companies have taken up steel commitments through these initiatives:28 through FMC and 45 through SteelZero(with 5 companies taking up both).Meanwhile,commitments for cement and concrete now reach 43 compani

288、es in total:7 with FMC and 36 through ConcreteZero.In addition to these coalitions,supporting activities to help spur private sector demand scale-up are also underway.Schemes such as the FMCs First Suppliers Hub and RMIs Sustainable Steel Buyers Platform(SSBP)provide platforms to connect suppliers w

289、ith buyers and bring attention to supply of near-zero emissions materials and value chain projects,facilitating partnerships for market growth.This includes potentially bringing together multiple buyers to support an offer by one steel producer,which could be a helpful aggregation,given that one buy

290、er alone may be unlikely to cover all demand of a steel production facility.For example,as part of a recently launched request for proposals,SSBP members are seeking bids to meet their demand of 1 Mt of near-zero emissions steel starting in 2028.Another initiative,the FMC Near-Zero Steel 2030 Demand

291、 Challenge,aims to Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|34 I EA.CC BY 4.0.surface demand for near-zero emissions steel by collecting expressions of interest for its purchases.By January 2024,the challenge re

292、ported submissions representing an aggregated volume of 2.3 Mt.The expressed demand from these two initiatives,as well as the already committed 1.5 Mt of demand from offtake agreements mentioned above,amounts to as much as nearly 5 Mt of quantifiable demand,which is estimated to have a combined valu

293、e of roughly USD 3.5 billion.Another option that has been proposed to facilitate demand scale-up are“Green Market Makers”intermediary actors that help overcome early market failures to facilitate supplier-buyer connections.Industry sector applications of this option could potentially draw learnings

294、from models in other sectors such as the H2Global mechanism for hydrogen.Number of companies committed to purchase near-zero or low-emissions steel,cement or concrete,and announced demand for near-zero emissions materials by 2030 IEA.CC BY 4.0.Notes:FMC=First Movers Coalition.Based on announced figu

295、res as of March 2025.For the steel commitment,FMC members commit to purchase near-zero emission steel by 2030.For the cement and concrete commitment,FMC members commit to purchase low-emissions cement or concrete by 2030.SteelZero members commit to purchase lower-emissions steel by 2030 and net zero

296、 steel by 2050.ConcreteZero members commit to purchase lower-emissions concrete by 2025 and 2030,and net zero concrete by 2050.Individual company commitments include publicly announced commitments of the purchase of near-zero emissions steel by 2030,including letters of intent,memoranda of understan

297、ding,and offtake agreements.Companies are only counted once,regardless of membership in multiple initiatives or number of purchase commitments.Confirmed demand includes announced quantities of near-zero emissions steel and cement.Some offtake agreements are made for a given value of steel or cement

298、rather than a quantity;for these,an estimate was made on the value per tonne of near-zero emissions steel and cement to convert to a quantity.Identifying and matching potential supply and demand is an important step,but it does not constitute a committed offtake agreement,for which progress remains

299、sluggish.Only 9 of the 95 companies who have joined either FMC,SteelZero or ConcreteZero have signed public offtake agreements for near-zero emissions materials.Together,they account for just 20%of publicly announced offtake agreements for near-zero emissions materials,constituting less than half th

300、e total volume of publicly committed demand.The rest of these offtakes come from Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|35 I EA.CC BY panies not committed to these initiatives(discussed in the previous section

301、).Despite this,more notable progress through these initiatives may emerge later this decade,as members advance towards the 2030 targets for these commitments.These initiatives also require support to enhance their regional and sectoral representation:nearly 80%of companies come from Europe and over

302、half represent the construction and engineering sector.As these initiatives continue to grow and reach a broader audience,member diversity should expand.Still,it is unclear if they alone will be able to fully encourage global participation at the pace and scale needed for the industry transition.Gov

303、ernments are starting to develop various demand-creation measures Key message:Governments are well-positioned to help buffer the risks associated with earlier stages of market formation.Targeted public demand-side measures are ultimately needed to stimulate global demand and support lead market crea

304、tion by offering large market signals for near-zero emissions materials.Although many measures are still at early stages of implementation,there are clear examples to build upon.To ramp up substantial demand for near-zero emissions materials globally,targeted public support measures are ultimately n

305、eeded to fill in gaps that the private sector alone cannot address.First suppliers are looking for buyer certainty through long-term offtake agreements,but elevated and volatile costs amplify buyer risk during market formation.Governments are well-positioned and,at least in some cases,already ready

306、to take on this risk:in the 2024 Buyer Questionnaire,public authorities,mainly European,exhibited a higher willingness to pay a price premium,with well over three-quarters willing to pay up to 25%more compared to conventional materials(in comparison to about half among private sector respondents).De

307、mand-side policy measures are already being introduced around the world and selected examples are explored below in the context of lead market creation.Targeted measures for stimulating demand for near-zero emissions materials are necessary to increase market share,especially in the near term when c

308、onventional materials are still the dominant market offering.Public procurement can serve as a considerable market signal by leveraging the substantial purchasing power of governments and by providing the private sector with a proof-of-concept for procuring near-zero and low-emissions materials.Acco

309、rding to the Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case for international co-ordination PAGE|36 I EA.CC BY 4.0.Clean Energy Ministerial Industrial Deep Decarbonisation Initiative(IDDI),the public sector accounts for 25%of steel and 40%of concrete dem

310、and globally,although demand varies significantly by country.To date,public procurement policies have been a major focus of government demand-creation efforts.While some existing public procurement policies already target materials with better-than-average emissions intensity,most only provide sugge

311、sted thresholds or lack targets for steel,cement,and/or concrete altogether.Momentum is growing for inclusion of mandatory emissions intensity thresholds in public procurement,but there is still a lack of targeted support for near-zero emissions materials.Instead,policies legislated to date are larg

312、ely aiming for overall reductions in embodied emissions or thresholds for“lower”emission materials.This tends to drive the use of scrap and clinker substitutes rather than transformational near-zero emissions steel and cement,respectively.Clear plans to increase threshold stringency and integrate sp

313、ecific measures for procuring near-zero emissions materials would help provide a stronger demand signal to markets for deeper emissions reductions.Beyond mandatory thresholds,near-zero emissions materials could be also targeted using other public procurement mechanisms such as discounted tender pric

314、es for projects that use these materials.Significant work is being done by the IDDI here.This international coalition,currently with ten member countries,works to stimulate demand for near-zero and low-emissions materials while helping governments navigate key considerations around implementing publ

315、ic procurement policies that target these materials.For example,procurement rules are often complex and procedural,making it challenging to introduce sustainability elements into existing frameworks.Updates to these rules require careful co-ordination of internal procedures across agencies and polic

316、ies,while maintaining alignment with international treaty requirements.International experience sharing in the IDDI is helping address these challenges.Further details and discussion on the progress made in the IDDI is provided later in this report.A variety of policy levers which include but are no

317、t limited to those related to public procurement could be used to support demand creation.Some examples of existing policies are listed below,including those that target either or both of near-zero and low-emissions materials,and each type of policy measure is further detailed in the next section,al

318、ong with their advantages and disadvantages:Public procurement policies with defined emissions intensity thresholds for near-zero and low-emissions materials,either mandatory or voluntary,include Thailands Green Public Procurement and Green Label Scheme and Trkiyes Communiqu on the Promotion of the

319、Use of Green Cement with Low Carbon Emission in Public Procurement Contracts.Similarly,Australias Environmentally Sustainable Procurement Policy and Reporting Framework requires disclosure of emissions for embodied carbon in public procurement.Demand and Supply Measures for the Steel and Cement Tran

320、sition Demand-side measures The case for international co-ordination PAGE|37 I EA.CC BY 4.0.Contracts for difference schemes can be designed to directly address the price premium.For example,Germanys Carbon Contracts for Difference(CCfD)programme subsidises production facilities to enable the materi

321、als they produce to be sold at market value(see more details on this policy in the box below).Regulatory measures are also gaining prominence,such as Denmarks National Strategy for Sustainable Construction,Finlands Building Act,Frances RE2020 environmental regulation,and the European Unions Ecodesig

322、n for Sustainable Product Regulation and revised Energy Performance of Buildings Directive.These policies either set,or look into establishing,emissions intensity thresholds on materials or end-products.Such policies are typically designed with a clear schedule for increasing threshold stringency to

323、 incentivise continued emissions reductions without excluding use of low-emissions materials in the near term.Labelling and certification schemes for steel,cement and concrete,while often industry-led,have also been supported by governments in some instances.The Low Emission Steel Standard(LESS)labe

324、lling and certification system for steel was developed in partnership between the German government and industry through a broad consultation process.Other national schemes include China Iron and Steel Associations Low-Carbon Emission Steel Evaluation Method and Indias Taxonomy of Green Steel.Incent

325、ives to promote private procurement are an emerging policy type,with Japan recently announcing a new subsidy for clean energy vehicles built with low-emission steel.Pre-commercial public procurement programmes that target innovative materials can help to provide a proof-of-concept.One key example is

326、 the European Unions Horizon Europe funding for innovation procurement.Materials produced from pre-commercial technologies can also be supported through mechanisms that allow advanced market commitments,such as the United States proposed IMPACT 2.0 Act introduced as a bill in 2024.Material circulari

327、ty measures,despite providing much weaker support for near-zero emissions materials,can promote market demand for materials with better-than-average emissions intensities.Examples include Indias Steel Scrap Recycling Policy that promotes use of scrap steel,and the United Arab Emirates Ministerial De

328、cree No.21 of 2019,which promotes the use of recycled materials from construction and demolition waste.Alongside targeted policies to kick-start demand,economy-wide measures can provide a complementary broader market signal for emissions reductions and help shift the competitive landscape towards co

329、st-effective near-zero emissions materials in the longer term.In addition,they offer a solid foundation for countries to build industrial decarbonisation strategies.Carbon pricing,for example,had been implemented across 93 national and subnational jurisdictions as of February 2025.In some cases,carb

330、on pricing schemes can provide more targeted support for industry,with schemes such as the New Zealand Emissions Trading Scheme(ETS),Koreas ETS,or the EU ETS targeting large emitting industrial facilities.Demand and Supply Measures for the Steel and Cement Transition Demand-side measures The case fo

331、r international co-ordination PAGE|38 I EA.CC BY 4.0.More recently,the Peoples Republic of China(hereafter“China”)has announced plans to expand sectoral coverage of its national ETS to cement and steel.With proper scope and stringency,carbon pricing can shrink the cost gap to conventional materials

332、and make near-zero emissions materials the default business case in mature markets.Carbon pricing can be supplemented with measures that aim to minimise spillover effects and carbon leakage that could slow the industry transition.The most prominent example of this to date is the European Unions Carb

333、on Border Adjustment Mechanism.Discussions on this type of policy have also arisen in other regions such as Australia,Canada,and the United Kingdom.At present,the impacts and effectiveness of these policies on global markets and trade are not yet fully understood,meaning international co-operation is important during implementation of such policies to help maintain and foster trade relationships i