FERROUS WEEK: Southeast Asia's 'green steel' push faces verification hurdles

The first part of this Ferrous Series provides an updated visualization of the steel decarbonization efforts being undertaken across the Asia Pacific. The second piece takes a closer look at Japan's green transformation, while the third examines how differing interpretations of carbon accounting have emerged to comply with CBAM. The fourth report looks at Simandou's export ramp-up and the impact on iron ore markets, while the fifth looks at how the Mongolia-China coking coal trade has evolved. In the final piece, we interview an executive of coking coal trading firm E Commodities.

Southeast Asia's steelmakers are making strides toward lower-carbon production, but stricter emissions-reporting requirements, spurred by the EU's Carbon Border Adjustment Mechanism entering its definitive phase in 2026, present some hurdles.

Industry participants said the transition is still hindered by weak supply chain traceability, inconsistent verification and the lack of a common definition for "green steel."

Additionally, environmental product declarations have been adopted across the region as mills seek to verify the carbon footprint of their products for buyers and regulators, but market participants said concerns about the accuracy and credibility of emissions data were growing.

They added that a key sticking point was the inconsistency in carbon accounting methods, which can produce widely different reported emissions across suppliers. That makes it harder for buyers to benchmark performance and compare claims, complicating procurement as scrutiny intensifies.

Yap Ee Gin, a senior sustainability strategist at consultancy Climate Asia, said emissions calculations were only as reliable as the data and documentation supporting them. Energy consumption records, purchase orders and production data must all be validated before carbon claims can be trusted, she told Platts, part of S&P Global Energy.

Yap added that even when third-party verification is conducted, program operators can interpret requirements differently, leading to inconsistent outcomes globally.

"Different program operators might be looking at different thresholds and asking different questions. There's definitely room for human error," she said, adding that this challenge remains even if the methods are standardized.

Other industry players emphasized the importance of on-site checks.

Jing Liu, founder of Jingzhe Environment and Climate, a CBAM research and consulting company, said real issues were hard to uncover without on-site verification by technically skilled personnel, adding that relying only on online audits leaves "room for manipulation."

He also raised concerns about how some verification agencies leaned heavily on mill-submitted documentation rather than independently validating emissions claims.

While gaps may be exploited in the short term, Yap said they will likely be closed over time, adding: "I think one way to fill the gaps lies in data transparency and verification."

Different manufacturing routes add complexity

Market participants said the problem of uneven emissions reporting standards was particularly acute in the steel industry, where manufacturing routes, product specifications and raw material sources vary widely across mills and countries.

The issue is exacerbated by the fact that low-carbon and conventional steel are indistinguishable in appearance and typically meet the same technical standards. As a result, documentation and traceability are vital to verify carbon credentials, industry participants said at a CARES Singapore event on May 21, which focused on rethinking steel supply chains under cost, carbon and compliance pressures.

CARES is an independent certification provider, backed by the Singapore Accreditation Council, that ensures structural steel and post-tensioning materials meet local safety and quality standards.

Lee Brankley, panel moderator and CEO of CARES, agreed, saying the key challenge centers on what constitutes green steel and on ensuring it has been supplied.

"That is part of the traceability challenge that we have, on top of stocking and availability," he said.

Participants also pointed to the lack of a widely recognized, standardized definition of green steel, which leaves room for ambiguity across the supply chain.

Yap added that some producers use the term to refer to steel with lower carbon content, which affects physical properties such as strength and ductility but not necessarily the production method.

Sustainability advocates typically define green steel as having lower greenhouse gas emissions, while developers and end-users often associate it with higher recycled content. These competing interpretations complicate procurement and make benchmarking across suppliers harder, Yap said.

NatSteel's Saravanan Natarajan said during the panel that multiple carbon-performance categories further strain inventory management. Even when products share the same specifications, suppliers may need to hold separate stock lots with different carbon footprints to meet differing customer and project requirements.

Southeast Asia's opportunity

Industry participants said regulatory momentum in Southeast Asia was crucial to speed up the region's energy transition.

"Thanks to CBAM, countries in Southeast Asia are catching up with regulations, as preferably carbon taxes will be paid domestically," Yap said.

Some cited Singapore's push on embodied carbon as a tailwind for the wider uptake of low-carbon steel locally. Key measures include Singapore's carbon tax policy and the Land Transport Authority's requirement that at least 50% of reinforcement steel be sourced from green steel produced via electric arc furnaces.

Cost remains the main barrier. Ronald Joel Magsajo, chairman of the Southeast Asia Iron and Steel Institute, said at the CARES Singapore event that Chinese producers continue to set regional pricing benchmarks, leaving local mills unable to compete on price.

However, Magsajo added that the region can build a competitive edge by supplying lower-carbon steel, supported by rising renewable energy capacity in the Philippines, Indonesia, Vietnam and Thailand.

"If the main driver is Singapore ... I think the region can come in and supply the needs of this country," he said.