CSRD and the Steel Supply Chain: What U.S. Distributors, Fabricators, and Logistics Providers Need to Know

Three key takeaways:

The European Union’s Corporate Sustainability Reporting Directive (CSRD) is often described as a European disclosure rule. In reality, it is rapidly becoming a global supply chain transparency requirement — particularly for emissions-intensive industries like steel.

Recent updates under the EU’s “Omnibus” simplification package raised reporting thresholds and adjusted assurance requirements. However, large European automotive OEMs, steel producers, and industrial manufacturers remain firmly in scope. These companies must disclose consolidated sustainability data covering their global operations and material value chain impacts.

That includes upstream emissions from purchased goods and services — commonly referred to as Scope 3 emissions.

For U.S. companies involved in steel distribution, fabrication, processing, warehousing, and transportation, this shift is significant.

How CSRD Reaches Beyond Europe

CSRD applies at the group level for qualifying EU companies. If a European steel producer or automotive manufacturer operates facilities in the United States, those U.S. operations are included in consolidated reporting.

More importantly, independent U.S. suppliers are indirectly pulled into the reporting perimeter. When a U.S. distributor sells steel into a European OEM supply chain, the emissions associated with that steel become part of the customer’s Scope 3 disclosure. The same applies to fabricated components, toll processing services, and logistics providers transporting finished steel products.

In practical terms, your emissions data becomes part of your customer’s regulatory reporting obligation.

What Metals and Logistics Companies Should Expect

CSRD-aligned reporting frameworks require companies to disclose climate risks, emissions intensity, transition plans, and material environmental impacts across their value chain. As a result, supplier data requests are becoming more structured and more detailed.

Steel distributors and fabricators should anticipate requests for:

Logistics providers and 3PLs supporting steel supply chains should expect scrutiny of:

Transportation emissions are often a material Scope 3 category in steel-heavy industries. Logistics providers will not be exempt from disclosure pressure.

Timing: The Market Is Moving Early

Formal reporting waves extend through 2026–2029 depending on company size. However, the market is already ahead of regulation. Many European manufacturers have begun gathering supplier emissions data to prepare for compliance cycles.

Over the next 12–24 months, sustainability data will increasingly be embedded into procurement processes and supplier scorecards. By 2027, emissions transparency is likely to be a normalized component of commercial relationships with large EU buyers.

Waiting for a formal request is not a strategy. By the time it arrives, timelines will be compressed and expectations will be defined by others.

Commercial Risk — and Opportunity

There is real competitive risk for companies that cannot provide credible, defensible emissions data. In the absence of supplier-specific information, customers may apply conservative default emissions factors. That can make products appear artificially carbon-intensive and weaken competitive positioning.

Preferred supplier status, access to low-carbon procurement programs, and long-term contracts may increasingly hinge on transparency.

At the same time, there is meaningful upside. Companies that can demonstrate lower emissions intensity, high recycled content, efficient logistics, and digital traceability will stand out in procurement evaluations.

Steel is at the center of global decarbonization policy. Carbon intensity is becoming a commercial variable.

The Bottom Line

CSRD is not simply a European reporting exercise. It is a structural shift toward supply chain carbon transparency that will affect U.S. steel distributors, fabricators, and logistics providers serving European customers.

The question is not whether data requests will come. They are already here.

Companies that invest now in emissions measurement, product-level carbon visibility, and digital data infrastructure will maintain leverage. Those that delay risk being defined — and priced — by default assumptions.

In the evolving steel marketplace, transparency is becoming part of the product.

U.S. Green Steel Developments 2025 Year End Update

Reality Check

The U.S. green steel landscape in 2025 is no longer about aspirational megaprojects. It is now clearly bifurcated:

This 2025 update reflects cancellations, continuations, emerging technologies, and the continued development of green steel products being made available for the market.

I. Status of Major U.S. Decarbonization Pathways

1. Hydrogen-Based Primary Steelmaking

Cancelled / Dormant Projects

What this means: Full hydrogen DRI is not dead—but it is clearly not commercially deployable in the U.S. at scale this decade without massive green hydrogen production and long-term policy certainty.

2. Blast Furnace Decarbonization (Incremental)

Continuing

Reality: This pathway offers single-digit to low-double-digit CO₂ reductions, not green steel, but it extends asset life and buys time.

3. Carbon Capture & Storage (CCS)

Active and Advancing

Assessment: CCS is emerging as the most viable near-term decarbonization lever for gas-based DRI in the U.S., especially where geology and tax credits align. The tax credits associated with this project are favorable under the new administration and passage of the OBBBA.

4. Biocarbon Developments

Emerging / Early Commercial

Reality: Biocarbon is not a silver bullet, but it represents a practical, near-term decarbonization tool, particularly for EAF operations and for transitional use in ironmaking where fossil carbon remains structurally required.

II. Emerging Steelmaking Technologies (Beyond Hydrogen DRI)

1. Boston Metal – Molten Oxide Electrolysis (MOE)

2. Hertha Metals – Hydrogen Plasma Smelting Reduction (HPSR / Flex-HERS™)

Electra – Low-Temperature Electrochemical Ironmaking

4. NEMO – Refined DRI-to-Pig Iron Pathway

Strategic importance: NEMO should be viewed as an optimization pathway within the existing DRI–EAF ecosystem, not a disruptive green steel technology.

Bottom line on technology: These are optionality plays, not supply-chain solutions this decade.

III. Green Steel Products Available Today (Market Reality)

While primary ironmaking transitions struggle, product-level green steel is already being sold. This is where decarbonization is actually happening.

1. SSAB Zero™

2. Nucor ECONIQ™

3. JSW Steel USA – GreenEdge™

4. Other Market Offerings (Emerging)

IV. Strategic Takeaways

  1. Hydrogen-first strategies have overreached current infrastructure and policy reality.
  2. EAF + scrap + clean power + CCS is the dominant U.S. decarbonization pathway for the 2020s.
  3. Green steel is increasingly a product, not a plant—buyers care about verified carbon intensity, not process purity.
  4. Technology bets matter—but they will not materially decarbonize U.S. steel before 2030.
  5. Expect widening gaps between:
    • Marketing claims vs. actual emissions reductions
    • Pilot announcements vs. delivered tonnage

V. What to Watch Next

Bottom line: Green steel in the U.S. has entered its pragmatic phase. The hype cycle is ending. Execution, data, and product-level credibility now matter more than ambition.

From Free Trade to Trusted Trade

2026 Sustainability Initiatives for Metals and Manufacturing Supply Chains

For decades, metals and manufacturing supply chains operated on a simple assumption: if a product met technical specs and cleared customs, it could compete. That assumption is breaking down.

Progressing into 2026, market access will increasingly be governed by trust, not just trade rules. Governments, customers, and financiers are demanding proof of how products are made, what emissions they carry, and whether claims can withstand scrutiny. Sustainability is no longer a messaging exercise; it is becoming a gatekeeping mechanism.

This shift is structural, global, and already underway.

CBAM Signals the New Reality

The EU’s Carbon Border Adjustment Mechanism (CBAM) is often described as a carbon tariff. That description understates its importance.

CBAM is better understood as a supply-chain architecture reset. As it enters its definitive phase, steel, aluminum, and other covered products must carry verified, product-level emissions data to access EU markets. Default values are punitive by design. Data gaps are treated as risk, not inconvenience.

More importantly, the European Commission has been explicit: CBAM is expected to expand downstream by 2028. Fabricated products, components, and semi-finished goods are likely next. This means CBAM will no longer stop at primary metals, it will follow value creation deeper into manufacturing supply chains.

For exporters and manufacturers, the message is clear: facility-level averages are no longer enough. Embedded emissions must be understood, allocated, and defended at the product level.

Digital Product Passports Are Coming

Running in parallel with CBAM is the EU’s push for Digital Product Passports (DPPs). These passports are intended to carry standardized information on material composition, emissions, and sustainability attributes across a product’s lifecycle.

DPPs turn sustainability data into a transactional requirement, not a standalone report. Emissions data must live in operational systems, ERP, MES, procurement platforms, and not in slide decks or spreadsheets.

Companies that delay building this infrastructure risk being locked out of regulated markets or relegated to price-taker status.

California Shows How This Spreads Domestically

In the U.S., California’s SB 253 and SB 261 laws illustrate how trusted trade expectations migrate inward. While legal challenges are ongoing and outcomes remain uncertain, the direction of travel is unmistakable.

Large companies doing business in California are being pushed toward emissions disclosure and climate risk transparency. Even if timelines shift or requirements narrow, customer expectations will not rewind. Once major buyers ask for emissions data, they rarely stop.

California is not the endpoint; it is the proving ground. And expect other states to follow absent federal level initiatives.

Frameworks Define the Language of Trust

As requirements multiply, global frameworks are emerging as the common language of credibility.

These frameworks are converging in structure, even if enforcement differs. Companies capable of meeting ESRS-level rigor are generally prepared for ISSB, CBAM, customer audits, and digital product reporting. Those that are not will face repeated, costly reinvention.

Framework alignment is no longer about compliance optics; it is about being recognized as a low-risk trading partner.

Energy Transition Cuts Both Ways

Energy remains a double-edged sword. Electricity price volatility and grid constraints are real cost risks for manufacturers. At the same time, grid expansion, transmission upgrades, renewable energy, and storage are driving durable, steel-intensive demand.

The winners will be companies that manage energy as both:

The Strategic Shift Leaders Need to Make

The defining change of the next decade is this:

Free trade is giving way to trusted trade.

In trusted trade systems:

For metals and manufacturing leaders, the strategic question is no longer whether to act, but how deliberately.

Companies that invest now in product-level emissions accounting, digital reporting infrastructure, and framework-aligned disclosure preserve optionality. Those that wait will find their options narrowed by customers, regulators, and markets acting faster than internal systems can adapt.

A breakthrough partnership delivering verified data, transparency, and sustainability for steel and metals manufacturers.

Driving Change in a Data-Driven Industry

The metals supply chain is entering a period of rapid transformation. As global markets demand verifiable sustainability data and regulators introduce new carbon reporting rules, traditional systems of paper certificates and disconnected databases no longer suffice.

At Greenway Steel, we’ve built our business around helping manufacturers and distributors navigate developing Sustainability related initiatives. Now, in partnership with S1Seven, a leading European provider of blockchain-based digital infrastructure, we’re taking the next step, delivering digital material passports (DMPs) that bring trusted, verifiable data to every link in the steel value chain.

This collaboration gives our customers a practical, future-ready solution for traceability, carbon accountability, and compliance, all powered by a secure, interoperable digital backbone.

The Industry Challenge

Steel and metals producers generate a massive amount of data, from chemical composition and mechanical properties to energy use and emissions. This data, employing latest technology, can be shared more efficiently and consistently across the value chain.

Mill test certificates, quality records, and sustainability declarations typically move through email, PDFs, or spreadsheets, formats that can be lost, duplicated, or even altered. Environmental metrics such as embedded CO2 often get trapped in isolated systems, making it difficult to comply with frameworks like the EU Carbon Border Adjustment Mechanism (CBAM) or emerging Digital Product Passport (DPP) requirements.

The result? Bottlenecks, redundant work, and uncertainty over what’s “true.” The metals industry needs a way to exchange data that is verifiable, standardized, and trusted across organizations.

The Solution: Digital Material Passports

S1Seven’s blockchain-based platform enables exactly that.

A digital material passport (DMP) acts as a living digital record of a product or batch of steel. It contains key information such as composition, performance, and environmental footprint; data that can be securely updated via ledger accounting as the material moves from producer to processor to OEM.

Each record is cryptographically signed and stored on blockchain, ensuring that data integrity is guaranteed and that all participants in the chain have access to the same verified information.

“The metals industry doesn’t need more paperwork. It needs verified digital data that everyone can trust.”

— Randy Charles, Founder, Greenway Steel

How the Partnership Works

In the Greenway–S1Seven model, every participant in the supply chain contributes verified data to the DMP:

  1. Steel Producer: Uploads batch-level production and emissions data.
  2. Processor, Fabricator or Service Center: Adds processing information (cutting, coating, fabrication) while preserving the chain of custody.
  3. OEM: Accesses verified, structured data for LCA or CBAM reporting.
  4. Reporting Entity: Uses the DMP for integrated ESG or compliance submissions.

The DMP becomes a single source of truth, reducing redundancy, human error, and audit time across the entire value chain.

Tangible Benefits for Industry Stakeholders

Looking Ahead

Greenway Steel’s collaboration with S1Seven is more than a technology deployment, it’s a strategic step toward digital sustainability leadership in the metals sector.

By demonstrating how verified data can move securely across the steel lifecycle, we’re enabling our partners to meet emerging global standards while improving operational efficiency and transparency.

Our goal is simple: to ensure that when it comes to carbon and compliance data, our customers are ahead of regulation and not chasing it.

About Greenway Steel

Greenway Steel helps metals and manufacturing companies advance sustainability and compliance through data-driven initiatives and trusted partnerships.

About S1Seven

S1Seven provides blockchain-based infrastructure for digital material passports, enabling secure, interoperable, and verifiable data exchange across industrial supply chains.

For more information, contact info@greenwaysteel.com.

Jurisdiction Coverage of Steel Requirements Timeline/Status
California (BCCA) Structural steel (hot-rolled sections, plate, HSS) and reinforcing steel Facility-specific EPDs required; maximum GWP limits set and periodically updated by CA Dept. of General Services Active since 2021; GWP thresholds enforced and under periodic review
Colorado (BCCO) Steel, concrete, glass, asphalt EPDs required for public projects; no binding GWP caps yet Enacted (2021); agencies currently collecting steel EPDs
Oregon Includes steel in lifecycle assessments for infrastructure materials Requires LCAs/EPDs for covered materials; working toward benchmarks Enacted (2022); early implementation, data gathering stage
Washington (Buy Clean, Buy Fair Act) Steel, concrete, and wood in state-owned buildings Embodied carbon reporting; state database to track EPDs; eventual procurement guidance linked to reporting Enacted (2024); reporting tools and rules under development
Maryland (Buy Clean Maryland Act) Steel not covered(concrete only) Cement/concrete only; framework could expand to steel later Enacted (2023); concrete GWP limits due by 2026
Minnesota (Buy Clean, Buy Fair Act) Steel explicitly within scope Task Force to set procurement standards; EPDs and possible GWP limits under discussion Enacted (2023); Task Force active, rules not finalized
Federal – GSA Structural steel and rebar for federal building projects Requires EPDs and compliance with low-embodied carbon procurement standards (dual standard with interim GWP benchmarks) Active since 2023; enforceable in federal procurement
Federal – FHWA Steel in highways/bridges (guardrails, rebar, etc.) Buy Clean rule proposed but on hold; would require EPDs and GWP thresholds Pending; uncertain timeline

Takeaway:

Dairy Renewable Natural Gas: A Scalable Solution for Decarbonizing Steel Production

Introduction

Steelmaking is one of the world’s most carbon-intensive industries. Traditional processes fueled by fossil natural gas generate significant Scope 1 emissions, creating both regulatory and
reputational challenges for producers. To date, few scalable solutions have been available to reduce these emissions without costly infrastructure overhauls. Dairy renewable natural gas
(RNG) offers an immediate, commercially viable pathway.

Produced through anaerobic digestion of manure, upgraded to pipeline quality, and injected into the U.S. gas grid, dairy RNG is chemically identical to fossil natural gas yet uniquely carbon
negative. This makes it one of the few fuels capable of not just offsetting but reversing greenhouse gas (GHG) emissions.

The Case for Dairy RNG

Unlike fossil natural gas, which carries a carbon intensity (CI) of roughly +62 gCO2e/MJ, dairy RNG has an average CI of about -250 gCO2e/MJ. This negative score reflects the avoided methane emissions from manure lagoons, where methane is 28 times more potent than CO2.

For steelmakers, this is transformative. One MMBtu of dairy RNG offsets emissions equivalent to almost four MMBtus of fossil gas. In practice, this means blending even a small percentage of
dairy RNG into a steel plant’s fuel supply can yield disproportionate carbon reductions, pushing the facility toward its net-zero goals faster and at lower cost.

Application in Steel Production

Consider a steel facility producing 500,000 tons of steel annually. It consumes nearly 1.9 million MMBtus of natural gas each year, resulting in more than 120,000 tons of CO2e emissions. Substituting just 2% of that gas with dairy RNG reduces emissions by 10%. Achieving the same reduction with landfill RNG would require blending nearly 30%. The cost impact is equally stark: dairy RNG achieves the reduction for ~$1.6 million in incremental energy spend per year, compared to more than $8 million with landfill RNG.

For an industry seeking practical decarbonization strategies that do not disrupt operations or require large capital retrofits, dairy RNG stands out as a cost-effective, high-impact solution.

Environmental Attribute Efficiency: Pipeline vs. Physical
Delivery

A central advantage of RNG lies in how its environmental benefits are transferred. Unlike liquid fuels that must be physically consumed at the point of use, RNG is fully fungible with fossil gas.
Once injected into the natural gas grid, its environmental attributes can be contractually allocated to end users through environmental attribute credits (EACs).

This displacement model provides clear benefits:

Importantly, the contractual use of EACs is conceptually like renewable energy certificates under power purchase agreements (PPAs) and virtual PPAs (VPPAs), mechanisms already widely accepted in the steel industry for decarbonizing electricity. Just as PPAs and VPPAs enable claims of renewable electricity without direct delivery of electrons, RNG EACs enable auditable, market-recognized claims of carbon reductions from gas consumption.

This stands in contrast to systems requiring “physical delivery” of RNG. Truck transport adds cost, emissions, and operational complexity. Pipeline injection ensures steelmakers can claim reductions seamlessly, leveraging the highly integrated U.S. gas network.

Comparative Advantage of Dairy RNG

Not all RNG sources offer equal decarbonization benefits. RNG derived from landfills or wastewater typically has positive CI scores, meaning it reduces emissions but cannot deliver true neutrality. Dairy RNG is the only major RNG category that is carbon negative.

For steel producers, this yields three advantages:

  1. Lower blend requirements – smaller volumes achieve targets.
  2. Reduced cost per ton of abatement – dairy RNG delivers deeper reductions at lower incremental spend.
  3. Enhanced ESG positioning – carbon-negative fuels differentiate producers in investor reporting and customer supply chains.

Scaling to Meet Industrial Demand

Novilla RNG is actively scaling to meet industrial demand. Across nine projects in the Midwest and Northeast, the company expects to produce nearly 1 million MMBtus annually by 2026, with an average CI of -230. This output equates to almost 950,000 short tons of fully decarbonized steel each year.

Projects such as Three Petals (WI), Red Leaf (MI), and West Branch (IA) are already injecting RNG into regional pipelines, with additional capacity from Bellevue (VT) and Moccasin Creek (SD) scheduled to come online by 2026. This growing supply base ensures dairy RNG can scale alongside industrial decarbonization commitments.

Conclusion

The decarbonization of steelmaking demands solutions that are immediate, scalable, and economically viable. Dairy RNG meets all three criteria. With a negative CI, it delivers carbon reductions more effectively and at lower cost than alternative RNG sources. Through pipeline injection and displacement, its environmental attributes are transferred seamlessly and like the way PPAs and VPPAs are already accepted in the industry for electricity decarbonization.

Using Sustainability Archetypes to Build Efficient Strategy

In today’s complex business environment, organizations face mounting pressure to advance sustainability goals amid political backlash, regulatory demands, and growing stakeholder scrutiny. To efficiently develop an organization
strategy for sustainability, while navigating these challenges, it can be helpful to consider archetypes. These archetypes represent distinct organizational mindsets toward sustainability and understanding which one best fits a company is key to designing an efficient, impactful sustainability strategy.

Examples of archetypes include:

Box Checker: Focused on meeting baseline expectations, this archetype treats sustainability as a compliance exercise. It avoids strategic integration and limits its actions to what is minimally required. While often seen as a laggard, the Box Checker can still play a useful role as a secondary archetype, allowing companies to prioritize what truly matters while maintaining basic expectations elsewhere.

Brand & Reputation Driven: These organizations use sustainability to enhance their image and public perception. This archetype aligns well with consumer-facing brands and those seeking to differentiate through values. Sustainability is deeply integrated into marketing and external communications, offering opportunities to create brand loyalty, attract talent, and enhance customer engagement.

Immediate Return Driven: This type prioritizes sustainability projects that deliver direct financial returns. It appeals to leadership teams focused on performance metrics and short-term ROI. Companies under this archetype leverage sustainability to cut costs, improve efficiency, and increase profitability—making it a practical entrym point for integrating sustainability into core business operations.

Impact & Purpose Focused: Companies under this archetype are driven by values and mission. Sustainability is an extension of who they are. They may pursue bold initiatives even in the absence of immediate returns, focusing on social or environmental impact. This can inspire innovation and employee engagement, though it may require additional effort to align financial outcomes with values-driven actions.

Innovation Driven: These organizations use sustainability as a lever to drive transformation—developing new products, processes, and business models that address environmental and societal challenges. They treat sustainability as an engine for growth and disruption. While resource- intensive, this archetype can position a company at the forefront of its industry’s evolution.

Risk Reduction Driven: Sustainability here serves to mitigate legal, operational, and reputational risks. Companies embrace standards, improve supply chain transparency, and build resilience. This archetype is especially effective in heavily regulated industries or sectors with high exposure to ESG risks.

Selecting and Applying the Right Archetype

Rather than attempting to be all things to all stakeholders, companies should identify one or two dominant archetypes that reflect their core business strategy, culture, and stakeholder expectations. Doing so helps clarify purpose, align leadership, and focus resources. For example, a manufacturer might adopt a Risk Reduction and Immediate Return blend, using sustainability to drive cost savings and regulatory compliance. A lifestyle brand may lean into Brand & Reputation with a secondary focus on Impact & Purpose.

Selecting the right archetype also shapes how companies define material issues, develop metrics, communicate externally, and engage internally. It enables them to prioritize high-impact initiatives and avoid wasteful, unfocused efforts. Ultimately, this clarity makes sustainability strategy more actionable, credible, and efficient, and transforms it from a burden into a business advantage.

Greenway was introduced to these archetypes by sustainability consultants Steve Rochlin and Jeff Senne of Impact ROI and Sandbar Solutions with their recent report on Sustainability Strategy in 2025: Thriving in an Era of Impact and Backlash. These ideas make a lot of sense to us

The Big Picture: A Metals Industry Transformation

The recently passed $5.7 trillion federal budget reconciliation bill represents a watershed moment for the U.S. metals industry. Far more than a traditional infrastructure bill, it initiates a broad-based shift toward domestic production capabilities across defense, infrastructure, and advanced technologies—setting the stage for sustained metals demand through 2029 and beyond.

Steel: $475.3 Billion in New Demand

Steel is the biggest beneficiary, with nearly half a trillion in projected demand driven by:

  • Naval shipbuilding ($161.9B): The crown jewel of funding will demand vast amounts of plate, structural steel, and specialized alloys. Key programs like Virginia-class submarines, Guided Missile Destroyers, and Landing Ships Medium are included.
  • Defense manufacturing ($267.4B): Includes munitions, weapons production, and critical mineral supply chains—all steel-intensive sectors.
  • Border infrastructure ($46.5B): Large-scale fencing, gates, and structural projects will drive demand for marine-grade and structural steel.

This massive defense and security investment will require not only traditional steel, but also specialized grades that meet military specifications—offering huge opportunities for domestic producers.

Steel: $475.3 Billion in New Demand

ALUMINUM: $246.9 BILLION AEROSPACE BOOM

Aluminum demand will surge via defense and aerospace:

  • Defense munitions and equipment ($125.4B): Lightweight aluminum is favored for military vehicles and aircraft.
  • Coast Guard vessels and aircraft ($53.1B)
  • Shipbuilding superstructures ($29.2B)
  • Mars and Artemis space missions ($22.9B)

These programs open new frontiers in demand for ultra-lightweight, aerospace-grade aluminum alloys.

Aluminum’s strength-to-weight advantages make it critical in both manned and unmanned systems, driving innovation in materials for advanced military and space applications.

Copper: $160.7 Billion Electrical Backbone

Copper is positioned as the essential metal for powering the future, with demand driven by:

With major construction projects nationwide, copper producers must prepare for surging demand
in electrical, security, and telecommunications infrastructure.

Challenges and Risks

Supply Chain Stress

A synchronized surge in metals demand could trigger:

Regulatory & Compliance

Producers must navigate:

Political Uncertainty

Shifts in political priorities could affect:

Strategic Implications

Timeline Pressure: Through FY2029

Funding must be deployed by 2029, accelerating demand across metals over the next 4–5 years. This compressed timeline creates both opportunity and urgency, forcing producers to expand quickly or risk falling behind.

Capacity Constraints

Meeting demand will strain current industry capabilities:

  • Steel mills may need rapid capacity expansion.
  • Aluminum smelters face power constraints.
  • Copper mining and refining is difficult to scale fast.
  • Specialty production lines may be needed for defense-compliant grades.
Regional Clustering

Key projects will concentrate in:

  • Coastal areas (shipbuilding),
  • Border regions (infrastructure),
  • Defense hubs (manufacturing).

Companies with facilities near these locations may enjoy cost and logistical advantages.

Workforce Gaps

Skilled labor shortages could hamper execution. The metals sector will need:

  • Welders, fabricators, and inspectors meeting defense specs.
  • Technicians for aerospace and advanced manufacturing roles.

Strategic Recommendations

For Steel Producers:

For Copper Producers:

For Investors:

The Bottom Line

The Bottom Line

The $5.7 trillion budget bill is a once-in-a-generation catalyst for the U.S. metals sector. For steel, aluminum, and copper producers, it presents a historic opportunity to align with national priorities in defense, infrastructure, and technology. Success will depend on strategic planning, rapid scaling, and the ability to meet rigorous specifications under tight timelines.
The U.S. is entering an industrial reinvestment era. The metals industry stands at the center of this transformation, and the companies ready to execute will lead the next decade of industrial growth.

Essential Points

  • Mandatory Reporting Phase: CBAM reporting is now required for covered products exported to the EU (iron, steel, aluminum, cement, fertilizers, hydrogen, electricity), with U.S. suppliers needing to disclose embedded emissions data immediately.
  • Financial Impact Coming: While only emissions reporting is required during the transitional phase (2023-2025), by 2026, U.S. exporters will face carbon costs at the EU border unless equivalent carbon pricing is implemented domestically.
  • Expanding Scope: CBAM coverage is likely to expand to downstream products (metals-intensive machinery, equipment, fasteners, automotive components), significantly increasing compliance burdens throughout manufacturing value chains.

Overview of EU CBAM

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is designed to prevent carbon leakage by placing a carbon cost on imports of carbon-intensive goods from countries without similar regulations. It serves dual purposes as both a climate action tool and a mechanism to level the playing field for EU producers subject to the EU Emissions Trading System (ETS).

CBAM entered its transitional phase in October 2023. During this phase (2023-2025), U.S. exporters in affected industries must submit quarterly declarations of embedded greenhouse gas emissions associated with their products. This includes both direct emissions (Scope 1) from production processes and indirect emissions from electricity (Scope 2), depending on the product

Although the U.S. lacks a federal carbon pricing mechanism equivalent to the EU ETS, the transitional period provides time for preparation. Starting in 2026, importers into the EU will need to purchase CBAM certificates—effectively paying a carbon price equivalent to that faced by EU manufacturers, unless an equivalent carbon price exists in the exporter’s country.

Compliance Requirements and Risks

For U.S. companies exporting to the EU, CBAM creates both a compliance obligation and a market access risk. Firms unable to report verifiable emissions data may face unfavorable default values (typically higher than average emissions) applied to their products, potentially eroding price competitiveness or resulting in rejection by EU customers seeking low-carbon supply chains.

In addition to CBAM requirements, U.S. exporters should be aware that the EU’s Corporate Sustainability Reporting Directive (CSRD) introduces complementary compliance challenges. The CSRD will require detailed sustainability disclosures from companies doing business in the EU, including non-EU suppliers in their value chains. This creates a dual compliance burden where U.S. manufacturers must not only report carbon emissions for CBAM purposes but also meet broader environmental, social, and governance reporting standards to maintain EU market access.

U.S. steel and aluminum producers exporting to the EU must gather verified emissions data consistent with EU standards, including alignment with ISO 14067 and frameworks such as GHG Protocol. Value-added manufacturers must assess the origin and emissions footprint of their material inputs, even if their own operations are low- emitting.

Digital Compliance Tools

The EU is promoting digital CBAM compliance tools, including electronic reporting portals and integrated product sustainability declarations. U.S. suppliers need:

  • Structured emissions data linked to enterprise systems
  • A clear bill-of-materials mapping emissions from raw materials to final products
  • Early adoption of digital material passports and traceability solutions

Strategic Implications

Proactive U.S. companies can leverage these tools to position themselves as low- carbon suppliers of choice in the EU market. Energy efficiency and low energy costs potentially place U.S. exporters at an advantage.

While CBAM may initially appear as a trade barrier, it presents a strategic opportunity for climate-aligned U.S. exporters to differentiate on sustainability. As the EU moves forward, other economies are considering their own border carbon measures. Early compliance can offer reputational, operational, and financial advantages.

However, without a federal carbon pricing scheme in the U.S., exporters may be at a disadvantage under CBAM. Some industry groups and policymakers are exploring carbon clubs or sectoral agreements, particularly for clean producers in the U.S. steel and aluminum sectors.

Conclusion

For U.S. metals and manufacturing firms, CBAM introduces new expectations and opportunities. Companies that invest now in emissions transparency, traceability, and digital readiness will be best positioned to maintain competitiveness in the decarbonizing European market.

The Challenge:

Increasingly end users find it necessary to understand their value chain carbon footprint. The reasons for this are varied and include regulatory requirements to decarbonize supply chains associated with carbon liability. They include the desire to meet consumer demand for sustainable products. They can include financial stakeholders wanting disclosure around climate related risks.

Greenhouse gas (GHG) emissions accounting follows the principles of the GHG Protocol. Think of these as the GAAP for financial world of accounting. Included in GHG Protocols are procedures for what are called indirect, scope 3 emissions. In the United States, exceptions to climate risk disclosure requirements proposed by the SEC are often
focused on scope 3 emissions. There are fifteen categories. They can be a challenge to determine however only certain categories are responsible for the majority of value chain emissions.

When your customer requests from you a global steel and aluminum parts supply chain footprint, where should you start?

M A I N T A K E A W A Y

Driven by regulations, and financial stakeholders, understanding and addressing supply chain carbon footprints, particularly challenging Scope 3 emissions, is crucial, but can be simplified with systematic approaches, established protocols, and tools like Greenway Steel’s Greenway Calculator.

Case Study:

This is what the National Materials Company had needed to address for a valuable automotive customer of theirs. Complicating the challenge was the global nature of the established steel and aluminum parts supply chain.

National Materials Company (NMC) and the National Material Steel Group, established in 1964, is now identified as a leader in steel processing and supply-chain management. Servicing the needs of the steel industry and prominent industrial and consumer product manufacturers, NMC is a company that leads the way through efficiency, innovation, and performance.

NMC and Greenway Steel partnered up to tackle the initial challenge in an expedient and efficient manner. And for the second year, building on their previous efforts together, they further improved on the efficiency of this process.

Understanding and determining a full value chain carbon footprint within the metals and manufacturing supply chain, or, the GHG emissions associated with a specific supply chain, does not need to be complicated. It does need to be approached in a systematic way using established protocols and common sense. Software based tools, such as Greenway Steel’s Greenway Calculator, can help ensure accuracy and efficiency.

Starting with direct emissions, one can determine the emissions intensity associated with a specific processing route. In other words, x amount of metals is processed through a facility that consumes x amount of energy over the course of a year.

That provides us with the energy intensity of the metals having been processed. Energy intensity translates directly to emissions intensity. Standard emissions factors associated with the energy being used are used to calculate direct emissions.

When calculating emissions intensity, or those emissions that result from processing of the metals product, we are considering the intensity on a unit basis associated with volume and not revenue. In the metals industry, volume unit basis is typically preferable to a financial unit basis as commodity prices can be volatile.

After we understand the direct emissions, the scope 1&2 emissions associated with processing the metals, we move on to indirect emissions, or scope 3 emissions. A good dose of common sense is best applied here. Or, more specifically, we can refer to what would be considered material to the results. The majority of emissions associated with a metals parts supply chain will be those emissions associated with the production of the base metals being used. These are called embedded emissions or embedded carbon. Next will be logistics associated with transporting the product from producer to processing and then to end user.

Consider scope 3 emissions and the fifteen categories associated with these. These emissions are in part why the U.S. Chamber of Commerce and the National Association of Manufacturers take exception to regulations or laws that require disclosure of climate related risk. And rightfully so given that some of these can 1) be complicated while at same time 2) not have meaningful impact or even 3) not be easily addressed. A lot of work and effort can be put forth to identify and measure these emissions and they will not have material impact on results nor be efficient, or even possible, to address.

Importance of Transparency:

However, identifying the metals being purchased, from what producer and their process, the logistics in delivering them, and further processing enroute – this transparency is where the value to account for and reduce supply chain emissions comes from.

Working together in a holistic manner, identifying all components of the supply chain, and then identifying what levers provide best opportunity for improved efficiencies will ultimately result in the quickest path to a sustainable, decarbonized, supply chain.

NMC’s expert experience defining and managing the components of a complex global supply chain provide the starting
point for carbon footprint calculation. This further supports end users wanting to meet future decarbonization and sustainability targets. Having the baseline data is necessary. That is only possible when providing transparency of the base metals production and supply, all associated logistics, and further processing steps before reaching the end use manufacturer. This transparency also provides confidence in the accuracy of the data. Working with
Greenway Steel, an expert in carbon accounting for metals supply and manufacturing industries, while providing
efficient tools and experience, is a valued component of supply chain transparency.

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