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.