This new briefing from Sandbag explores approaches to labelling “green steel” products and proposes a methodology that would provide strong incentives for decarbonisation in the steel sector.
Steel is a major industrial sector — but its production is highly carbon-intensive. As policymakers seek to drive demand for “green steel,” the sliding scale approach has emerged as a candidate for low-carbon labelling, offering a simple framework based on emissions and recycled content. However, Sandbag’s latest technical brief finds that this approach risks distorting incentives, overlooking product diversity, and undermining circularity. We propose a more robust, product-specific alternative to ensure certification systems support real progress toward decarbonisation.
About the technical brief
This technical brief is published as the EU prepares its Industrial Accelerator Act (IAA), a flagship policy under the Clean Industrial Deal that is expected to introduce new product labelling for carbon-intensive materials such as steel and cement. As certification systems are developed to guide procurement and investment, the “sliding scale” approach is being widely debated. Sandbag’s brief unpacks the logic behind the sliding scale, highlights its risks, and sets out a more effective approach grounded in product-specific emissions benchmarks and circular economy principles.
Key findings
- Sliding scale methods distort incentives
By tying emissions thresholds to scrap content, the sliding scale can create perverse incentives — rewarding producers for using less scrap, even if this leads to higher total CO₂ emissions.
- Lack of product differentiation skews outcomes
The sliding scale applies uniform thresholds that do not reflect the diversity of steel products or production routes. Products requiring high-quality inputs, such as flat steel or high-strength steels, can be unfairly penalised.
- Circularity and transparency are undermined
The current system does not distinguish between pre-consumer and post-consumer scrap and may encourage downcycling. This obscures real emissions and discourages closed-loop recycling of high-quality materials.
- Sandbag proposes a product-specific certification model
The brief introduces a new system built on product-specific benchmarks, a multi-tiered rating structure, and a downcycling adjustment to fairly account for scrap type and use.
- A future-proof approach with broader sustainability potential
Sandbag’s model includes a sliding time factor, allowing benchmarks to evolve in line with global climate targets. It also proposes a global sustainability indicator to incorporate environmental, social, and labour metrics alongside emissions.
Photo by krzysztofdedek from Getty Images
Related publications
Towards a minimum recycled steel content in passenger cars: setting an initial target
The EU has around 286 million motor vehicles, and every year, 6.5 million of these are scrapped. If the steel scrap from these end-of-life vehicles (ELVs) is not managed well, valuable resources are lost, harming the environment. With the EU preparing its ELV Regulation, which could set targets for minimum recycled steel content for passenger cars : what should those targets be?
Feedback on the EU Commission’s draft methodology for low-carbon hydrogen
For ‘low carbon’ hydrogen to truly make a positive contribution to Europe’s transition to climate neutrality, the safeguards put in place must be meaningful. Unfortunately, this does not appear to be the case in this draft delegated act.
Metallurgical flexibility: Enabling the aluminium and steel sectors for demand response
Electrification and flexibility are critical to decarbonising both industrial and electricity systems. But what happens when we combine the two? Industrial flexibility will play an increasingly important role as industry moves towards electrification.