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A framework for supply-side industrialemission reduction pledges Disclaimer This work is published under the responsibility of the Secretary-General of the OECD. The opinionsexpressed and arguments employed herein do not necessarily reflect the official views of the Membercountries of the OECD. This document, as well as any data and map included herein, are without prejudice to the status of orsovereignty over any territory, to the delimitation of international frontiers and boundaries and to the nameof any territory, city or area. Extracts from publications may be subject to additional disclaimers, which areset out in the complete version of the publication, available at the link provided. Photo credits:Shutterstock ID153149813.Contributor:JianqingDiao. Attribution 4.0 International (CC BY 4.0) This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you acceptto bebound by the terms of this licence(https://creativecommons.org/licenses/by/4.0/). Attribution–you must cite the work. Translations–you must cite the original work, identify changes to the original and add the following text:In the event of anydiscrepancy between the original work and the translation, only the text of original workshouldbe considered valid. Adaptations–you must cite the original work and add the following text:This is an adaptation of an original work by the OECD. Theopinions expressed and arguments employed in this adaptation should not be reported as representing the official viewsof the OECDor of its Member countries. Third-party material–the licence does not apply to third-party material in the work. If using such material, you are responsible forobtaining permission from the third party and for any claims of infringement. You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses youruse of the work. Any dispute arising under this licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration(PCA)Arbitration Rules2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one. Acknowledgements The report was developed with support from the Co-Chairs of the Climate Club (Chile andGermany) andwith funding from the German government. The study was prepared by Jonas Algers (Lund University, Sweden), Luciano Giua and Adrien Corneillefrom the OECD Steel Secretariat, under the supervision of Stephan Raes, Head of the OECD Structuraland Industry Policy Division. The study benefited from apeer review by several experts and fromcomments by the Climate Club Co-Chairs and members. The report has been submitted for feedback from OECD Steel Committee members. Table of contents 1 Disclaimer Acknowledgements Highlights 1 Introduction 2 Towards a framework for supply-side industrial emissions pledges 3 Interpreting the framework and levels Overall objective (level 1)Capacity adjustments to reduce emissions (level 2)Decrease emission-intensive capacity (level 2 A)Lower emissions in existing capacity (level 2 B)Increase near-zero emission capacity (level 2 C) 1213141619 4 From framework to pledge23 5 Pledges and international collective action26 6 Assessing potential pledges28 7 ConclusionReferences 32 33 FIGURES Figure1. Framework for supply-side pledges andpossible implementation actions on industrial emissionsreductions10Figure2. Example of United Kingdom16Figure3. Country’s BF-BOF carbon intensity stemming from scopes 1 and 2 in 202419Figure4. Example of United States22Figure5. Pledge structure inside the carbon-capacity nexus lens24 TABLES Table1. Overview of potential pledges on the steel sector: benefits, implications and side effects Highlights Thisreportaims to propose a new framework to gain deeper understanding on the complex interactionsbetween emissionsreductions and capacity adjustments, referred to as the carbon-capacitynexus, with afocus on steel. To accelerate the industry transition and deliver on the Paris Agreement, countries can make emissionreduction pledges linked to the interrelations between capacity, production, requirements and policies. Theframework identifies three main supply-side capacity adjustments to lower industrial emissions: 1)decreasing emission-intensive capacity, 2) lowering emissions from existing capacity, and 3) increasingnear-zero emission capacity. Articulating these supply-side capacity adjustments is particularly important since they currently receiveless attention than demand-side pledges. They are also important because they help clarify that in orderto achieve the objectives of the Paris Agreement, a focus on increasing near-zero emissions capacity initself is insufficient but needs to be combined with efforts to decrease emission-intensive capacity and thelowering of emissions from existing capacity. Addressing the carbon-capacity nexus challenge may require strengthening intern