The Scale and Impact of Green Public Procurement of Steel and Cement in Canada, Germany, the UK, and the US

Canada
Canada is producing 12.1 million tonnes (Mt) of steel and 15 Mt of cement annually. Public procurement accounts for 25% of steel and 26% of cement demand, representing a significant portion of the Canadian market. Under the IDDI GPP Pledge framework, adopting low-emission procurement policies could drastically reduce emissions. Under IDDI Level 3, public steel procurement emissions could decrease from 4.5 Mt CO2/year in 2022 to 0.8 Mt/year CO₂ by 2050 (81% reduction), and cement procurement emissions could drop to 0.3 Mt CO₂ by 2050 (85% reduction). Achieving GPP Pledge Level 4—which requires near-zero emissions materials—will result in even lower emissions in 2050. This necessitates significant investment in technologies like hydrogen-based direct reduced iron (H2-DRI) steelmaking and CCUS for cement.

Germany
Germany, Europe’s largest steel producer and a major cement consumer, presents a different scenario. Public procurement in Germany accounts for a smaller share—5% for steel and 23% for cement—due to a high private sector demand and relatively low public infrastructure investment. By adhering to GPP Pledge Level 3, the country could reduce public steel procurement emissions from 2.3 Mt CO₂ in 2022 to 0.4 Mt CO₂ by 2050 (83% reduction). Similarly, cement procurement emissions could drop from 3.8 Mt CO₂ in 2022 to 0.6 Mt CO₂ by 2050 (84% reduction). The GPP Pledge Level 4 would bring both industries closer to zero emissions by mid-century, although challenges related to technology deployment remain significant.

United Kingdom
The UK is a smaller producer, with 6 Mt of steel and 8.4 Mt of cement produced annually. Public procurement covers 9% of steel and 24% of cement demand. Implementing GPP Pledge Level 3 policies could reduce emissions from public steel procurement from 1.3 Mt CO₂ in 2022 to 0.2 Mt CO2/year by 2050 (83% reduction), while emissions from cement procurement could fall from 1.9 Mt CO₂ to 0.3 Mt CO2/year by 2050 (84% reduction). The GPP Pledge Level 4 would bring the emissions even lower, but similar to other countries, technological and market constraints need to be addressed.

United States
The US is one of the largest steel and cement markets globally and produced 80.5 Mt of steel and 93 Mt of cement in 2022. Public procurement represents 24% of steel demand and 35% of cement demand, making it a significant driver of decarbonization efforts. By adopting GPP Pledge Level 3, the US could lower public steel procurement emissions from 25 Mt CO₂ in 2022 to 4.7 Mt CO₂ by 2050 (81% reduction). Cement procurement emissions could also decrease from 30.6 Mt CO₂ in 2022 to 4.6 Mt CO₂ by 2050. Under GPP Pledge Level 4, both steel and cement could reach near-zero emissions by 2050 (85% reduction), but the transition will require accelerated investments in deep decarbonization technologies such as H2-DRI steelmaking and CCUS.

The combined CO2 emissions impact in four countries studied associated with the BAU, and IDDI GPP Pledge Levels 3 and 4 scenarios for steel and cement are shown in the Figure below. Implementing GPP Pledge Level 3 policies in these four countries could reduce emissions from public steel procurement from 33 Mt CO₂ in 2022 to 6 Mt CO2/year by 2050 (81% reduction), while emissions from cement procurement could fall from 39 Mt CO₂ to 6 Mt CO2/year by 2050 (85% reduction). The GPP Pledge Level 4 would bring the emissions to near zero.

Recommendations

1. Set Clear Procurement Targets: Governments should adopt clear, ambitious targets for low-carbon steel and cement procurement, aligning them with IDDI GPP pledges. These targets should reflect national circumstances while pushing the envelope toward decarbonization.

2. Invest in Low-Carbon Technologies: Meeting GPP Pledge Level 4 commitments will require substantial investment in technologies such as hydrogen-based steelmaking and CCUS for cement. Governments should allocate funds to incentivize the deployment of these technologies.

3. Develop Transparent Tracking Systems: Governments need to establish systems to track the embodied carbon in steel and cement used in public projects. Accurate, transparent tracking will ensure that procurement policies are having the desired effect on emissions.

4. Collaboration Across Sectors: Public-private partnerships will be essential to drive innovation and achieve economies of scale for low-carbon materials. Governments should foster collaboration between industries, policymakers, and technology developers to expedite the transition.

5. Harmonize Global Standards: Given the international nature of the steel and cement markets, countries should work together to harmonize standards and certifications for low-carbon materials, making it easier for producers to meet global demand.

Through targeted action in procurement, technology investment, and collaboration, these four countries can lead the way in reducing industrial emissions and meeting global climate targets. By embracing the IDDI GPP pledges and committing to long-term strategies, governments can unlock significant CO₂ reductions while driving the market for low-carbon steel and cement.

To read the full report and see complete results and analysis of this new study, Download the full report from the link above.

Don't forget to Follow us on LinkedIn, Facebook, and X to get the latest about our new blog posts, projects, and publications.