Climate change
NLMK Group takes a responsible attitude to climate change issues and takes substantial actions aimed at curbing greenhouse gas emissions, consistently reducing the carbon footprint of its products.
The company’s management keeps focus on climate change issues, which are integrated in the corporate governance system. The Board of Directors, the Board’s committees, СЕО (Chairman of the Management Board), and the Management Board prioritize strategic development domains and provide overall guidance for sustainable development. The company’s climate change initiatives are linked with sustainable development and risk management.
NLMK Group’s business model itself has a number of advantages supporting successful transition to a less carbon-intensive production chain. First, a world-class resource base is available that allows for the production of pellets with a higher Fe content. Second, NLMK Group has access to natural gas and low-carbon nuclear power. Finally, the Group's lack of coal assets pushes for lower consumption of coal and its derivative, coke.
Moreover, NLMK Group products themselves (e.g., steel for wind power, energy-efficient electrical steels) enable a wide range of consumer industries to significantly reduce their climate impact and meet their decarbonization targets.
NLMK Group is focusing on the following actions:
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Assessment of direct and indirect greenhouse gas emissions (Scope 1, 2, 3) in line with the international GHG Protocol;
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Regular verification of greenhouse gas emission data;
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Evaluation of climate risks and opportunities, including analysis of potential mitigations;
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Climate change reporting under the CDP format (Carbon Disclosure Project);
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Regular GHG emission reporting in accordance with local statutory requirements in the countries of NLMK Group operation;
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Carbon Border Adjustment Mechanism reporting (СВАМ).
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Assessment of the carbon footprint of products;
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Development and monitoring of СО2 reduction projects;
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Consumer-side emission avoidance evaluation.
The company has set a measurable СО₂ emission reduction target.
The strategic cycle goal for specific emission of CO2 at 1.91 tonnes per tonne of steel has been achieved, which is on par with global leaders in steelmaking.
The group target is to reduce specific CO₂ emission from stationary sources (Scope₁ + Scope₂) within the current strategic cycle until 2023 without changing external emission factor, t CO₂ / t Fe
* Specific emissions without the impact of temporary factors related to lower production
* Удельная эмиссия без влияния временных факторов, связанных со снижением производства
Key projects aimed at reducing greenhouse gas emissions
At the end of 2023, the closing year of the past strategic cycle, the total annual reduction of GHG emissions due to projects was 1,283 kt of CO2eq. under Scopes 1+2+3, including 817 kt under Scope 1 and 90 kt under Scope 2.
The Company continues to work on other projects, including a major ongoing undertaking to build a new power plant for secondary fuel gas recovery. This will be Russia’s first power plant that burns BOF gas for energy generation.
NLMK Group will continue to reduce its greenhouse gas emissions while increasing steel output. NLMK has set a long-term goal for reduction of specific emissions (Scope 1+2) at 1.2 tonnes of CO2 per tonne of steel by 2050.
In 2021, NLMK group adopted its Climate Programme that envisages a phased transition to EAF steelmaking with DRI/HBI as feedstock (high Fe-content raw materials obtained without the use of coal or coke). Even with the current energy consumption structure, the EAF process allows for a twofold reduction of СО2 emissions compared to the BF–BOF route. From there onwards, when sufficient volumes of green hydrogen and industrialized hydrogen-based reduction technologies become available, the decarbonization potential of the process will exceed 90% (vs. the current levels). In light of the restrictions on access to HBI technologies, the timeline of the programme will be determined at a later date.
NLMK Group has adopted long-term goals to reduce specific emissions (Scope 1+ 2) by 2050 to at least 1.2 tonnes of СО2 per tonne of steel (-40% from current level intensity), with a full transition to HBI+EAF supplied with the Group’s own iron ore, as well as procurement of natural gas and electricity at the current levels of carbon intensity.
When the industrialized hydrogen-based iron reduction technologies come along and sufficient amount of low-carbon electricity becomes available, the new process chain will reduce the Group’s carbon intensity to 0.2 tonnes of CO2 per tonne of steel (90% reduction vs. the current level). The remaining emissions can be reduced to net zero through СО2 capture projects or offset by absorption projects.
Thus, when the necessary external conditions allow it, NLMK Group aims to achieve carbon neutrality.
In 2023, NLMK Europe elaborated and adopted its Climate Strategy. The Strategy outlines a plan of actions for operational improvements and investments to reduce specific emissions with a focus on energy-efficiency:
- Optimization of equipment operation,
- reduction of electricity and natural gas consumption,
- Transition to induction heating,
- A higher share of renewables in the Division’s energy mix.
NLMK Europe has also set medium-term goals for reduction of its specific emissions to 0.15 tonnes of CO2 per tonne of rolled steel by 2030, or a 30% reduction vs. the 2021 baseline.
CO₂ emission of NLMK according to EU ETS methodology (Scope 1), t CO₂ / t of pig iron
Deloitte, an international auditing company, has acknowledged the compliance of NLMK Group's calculated greenhouse gas emissions at the Lipetsk site with the methodology of the EU Emissions Trading System (EU ETS). Expert review of emissions was carried out at the production of coke, sinter, pig iron, lime and dolomite. The verification of NLMK emission values at the production of steel and iron ensures a reliable benchmarking with the EU emissions trading system. In 2021, NLMK’s greenhouse gas emission values were initially certified for EU ETS methodology compliance.
NLMK Group is exploring advanced decarbonization methods at its sites.The Company continues exploration of carbon capture, utilization and storage technologies, biofuels, and renewable power generation.
Climate cooperation
Interaction with trade associations
As for cooperation with trade associations, NLMK Group is a member of the Russian Steel Association and actively participates in the work of its Environmental protection committee, which examines various environmental aspects of steel production and environmental regulation issues, as well as the working group responsible for developing a strategy for decarbonization of steel in Russia. Committed to reducing CO2 emissions throughout the supply chain, the Association firmly believes that addressing climate change and promoting decarbonization can only be achieved at the global level through multilateral action.
Disclosure in CDP
In 2023, the NLMK Group continued to disclose information as part of the CDP Climate Change survey, despite the fact that CDP currently does not evaluate companies headquartered in Russia and Belarus. For the first time, the Group submitted a CDP report in 2021, disclosing information about its climate activities for 2020.