NSCarbolex

NIPPON STEEL

What is NSCarbolex Neutral?— Steel products essential for realizing a decarbonized society —

NSCarbloex Neutral is green steel to which part of the amount of total greenhouse gas including CO2 (“CO2”) emissions savings in Nippon Steel’s product manufacturing processes (“NSC Total CO2 Emissions Savings”) is allocated through the application of the mass balance approach.

As the demand for decarbonization in society continues to grow, we believe that accelerating efforts towards decarbonization will enhance the competitiveness of our customers.

Nippon Steel aims to contribute to our customers’ decarbonization efforts by establishing a stable supply system for NSCarbolex Neutral at an early stage.

4 Features of NSCarbolex Neutral

Feature 1Utilize actual CO2 emissions savings through Nippon Steel's own transformative actions and improvements in its product manufacturing processes

NSCarbolex Neutral is the steel products to which part of the NSC Total CO2 Emissions Savings achieved through the CO2 reduction project of Nippon Steel implemented as Countermeasures with additionality*1 is allocated.

Feature 2Obtain assurance from an independent third-party organization and issue certificates

Nippon Steel has obtained a limited assurance from a third-party organization and issues certificates*2, in relation to the NSC Total CO2 Emissions Savings for the products, ensuring impartiality.
(Nippon Steel has obtained a limited assurance from a third-party organization in relation to the NSC Total CO2 Emissions Savings for the products achieved through its Countermeasures with additionality and the appropriateness of its operation of the mass balance approach.)

Feature 3Contribute to reduction of Scope 3 CO2 emissions of customer

It is our interpretation that NSC Total CO2 Emissions Savings for the product, as stated in the certificate as " Total GHG emissions savings for the Product ", can be reported as a deduction from the Customer’s Scope3 GHG emissions and the Customer’s upstream emissions at the product level.*3*4.

Feature 4Applicable to all steel products manufactured by Nippon Steel

All steel products manufactured by Nippon Steel can be supplied as NSCarbolex Neutral. Furthermore, these products are available with the same quality as the ones our customers are already using.

*1 “Countermeasures with additionality” means the measures that are implemented at our own expense and that have actually resulted in a reduction of Scope 1+2 emissions

*2 The NSCarbolex Neutral Certificate and the NSC Total CO2 Emissions Savings for the product stated therein do not represent a carbon credit and may not be transferred or sold to any third party. If the Customer wishes to transfer the GHG emission reductions certified by the certificate to secondary customers (i.e., the next actors in the supply chain, including buyers of the Customer’s products manufactured using NSCarbolex Neutral ) at the organizational or product level, the Customer must issue their own attribute certificate as stated in the " Guidelines on Green steel " established by the Japan Iron and Steel Federation. Additionally, the Customer must manage the total amount of CO2 emission reductions transferred to the secondary customers and beyond to ensure that it does not exceed the total amount stated in the certificate.

*3 The NSC Total CO2 Emissions Savings for the product, as stated in the certificate, may not be used for any purpose other than reporting a reduction from the Customer’s Scope 3 CO2 emissions and the Customer’s upstream emissions at the product level. CO2 Emissions Savings stated in the certificate are associated only with the designated NSCarbolex Neutral products and cannot be transferred to other steel products. The certificate itself may not be circulated independently.

*4 This interpretation is based on the information available as of Feb 25th, 2025. This interpretation is subject to change due to evolving policies, regulations, legislation, scientific developments, or other factors. While Nippon Steel has taken care to ensure the accuracy of this interpretation, it is provided for informational purposes only. Nippon Steel assumes no liability whatsoever for any consequences arising from reliance on this interpretation by the Customer or any other party, including but not limited to any loss, damage, disadvantage, injury, additional cost, consequential loss, or lost opportunities, whether incurred directly or indirectly. Nippon Steel has no obligation to notify the Customer or third parties of any changes to this interpretation.

What is mass balance approach?

It is not easy for the steel industry to achieve decarbonization, and it is expected that it will take a long time to develop decarbonization technology.

In the meanwhile, Nippon Steel is able to deliver the steel products to which actual CO2 emissions savings through Nippon Steel's transformative actions and improvements in its product manufacturing processes tracked on project-by-project basis are allocated through the application of the mass balance approach *5. (See Chart 1 and Chart 2).

figure1 What is mass balance approach? figure1 What is mass balance approach?

figure2

*5 Nippon Steel allocates part of the NSC Total CO2 Emissions Savings to the product in accordance with the “Guidelines for green steel upon the application of the mass balance approach,” as published by The Japan Iron and Steel Federation. Nippon Steel has obtained a limited assurance from JIC Quality Assurance Ltd. (“JICQA”) regarding the appropriateness of its operation of the mass balance approach in accordance with the said Guidelines.

*6 " Customer " means the corporation or entity indicated in the " Customer Name " column of the NSCarbolex Neutral Certificate.

Independent Assurance Report issued by JICQA is bellow.