The World Trade Organization (WTO) Secretariat has published a new information note mapping the proliferation of standards for decarbonising the steel industry and outlining how the work of the WTO could support harmonisation efforts and help prevent trade frictions.
The note also underscores the importance of addressing developing countries’ needs with respect to decarbonisation standards. It is released ahead of the WTO’s global stakeholder event on steel decarbonisation standards to be held on 09 March 2023.
The Secretariat's information note titled “Decarbonization standards and the iron and steel sector: how can the WTO support greater coherence?” indicates that more than 20 different standards and initiatives exist to support steel decarbonisation efforts or are under development. This may create uncertainty for producers, increase transaction costs, and risk trade frictions. Further work is needed to enhance the alignment of standards, including by finding areas for further convergence on specific measurement methodologies, definitions and performance thresholds for decarbonisation, the note states. It is also crucial to ensure that developing countries' perspectives and challenges are considered and addressed.
At the United Nations Climate Change Conference (COP27) held last month in Sharm el-Sheikh, Egypt, the WTO Director-General called for greater international cooperation on trade-related climate policies, including decarbonisation standards. Achieving global net-zero targets will require consistent and comparable greenhouse gas emissions measurement.
However, the proliferation of divergent carbon standards and certifications across countries and sectors risks fragmentation, undermines environmental credibility and creates barriers to trade and investment.