Sharing CO2 abatement costs in the iron and steel sector: A shared responsibility input-output approach

Abstract

The Japanese iron and steel sector is central to supply chains, making its decarbonization crucial. However, technological innovation required for this is costly. Assessing CO2 emission responsibility across the supply chain is necessary for fair cost distribution. This study uses environmentally extended input–output and structural path analyses based on shared responsibility to decompose CO2 emissions in steelmaking and final goods production. A practical cost allocation strategy is proposed in this study to support decarbonization innovations in iron-making. The results show that shared responsibility redistributes CO2 emissions from the final goods to intermediate goods sectors, reducing cost burdens compared to consumption-based emissions. Specifically, the cost burden of the passenger motor car sector under shared responsibility is reduced by approximately 17 times compared with consumption-based emissions. These findings highlight the importance of quantifying each sector's CO2 responsibility under a shared responsibility for fair cost allocation.