Appendix E - Calculations Methods Appendix

Appendix E
Calculation Methods Appendix $-$ Part III

III. Computing Product-Level Emissions Inventories

After the Commission has allocated the emissions data from facilities to subprocesses and unit processes as described above, it takes the following steps to prepare product-level emissions inventories. As shown in equation E.2 above, the product-level emissions inventory of each reference product ( $G H G_{p r o d u c t}$ ) includes two main components: (1) unit process emissions encompassing all direct emissions that occur during the unit process as well as indirect emissions from energy and externally sourced materials used in that unit process ( $U G H G_{p r o d u c t}$ ); and (2) the sum of all emissions associated with upstream materials made in the same facility and used in the production of the reference product ( $\sum_{m a t e r i a l} I C G H G_{m a t e r i a l, p r o d u c t}$ ). The sections above describe the methods for calculating each scope’s contribution to unit process emissions, which are summed to equal $U G H G_{p r o d u c t}$ in equation E.3. This section describes the Commission’s calculation of $I C G H G_{m a t e r i a l, p r o d u c t}$ and its incorporation of this term into $G H G_{p r o d u c t}$ using material flow analysis.

$I C G H G_{m a t e r i a l, p r o d u c t}$ is a portion of the facility’s product-level emissions inventory for its own on-site production of an upstream product used as a material ( $m a t e r i a l$ ) in the production of the reference product ( $p r o d u c t$ ). The Commission calculated $I C G H G_{m a t e r i a l, p r o d u c t}$ using equation E.60.

$\begin{matrix} I C G H G_{m a t e r i a l, p r o d u c t} = G H G_{m a t e r i a l} * \frac{I C O u t p u t_{m a t e r i a l}}{O u t p u t_{m a t e r i a l}} * \frac{U s e_{m a t e r i a l, p r o d u c t}}{U s e_{m a t e r i a l}} (E .60) \end{matrix}$

Equation E.60 is the product of:

· $G H G_{m a t e r i a l}$ : the facility’s product-level emissions inventory for $m a t e r i a l$ .

· $I C O u t p u t_{m a t e r i a l} / O u t p u t_{m a t e r i a l}$ : the “internal consumption share” for $m a t e r i a l$ , or the share of the facility’s output of $m a t e r i a l$ that is used in on-site production as opposed to shipped off-site. Equation E.60’s incorporation of the internal consumption share ensures that downstream product-level emissions inventories do not include emissions associated with quantities of $m a t e r i a l$ that are shipped off-site.

· $U s e_{m a t e r i a l, p r o d u c t} / U s e_{m a t e r i a l}$ : the facility’s use of $m a t e r i a l$ from all sources (including external receipts and on-site production) in the production of $p r o d u c t$ as a share of the facility’s total use of $m a t e r i a l$ .

The material use data are from questionnaire data in which facilities reported their use of materials in specific subprocesses ( $s u b p r o c$ ). Where a subprocess produces multiple reference products, material use data at the subprocess level ( $U s e_{m a t e r i a l, s u b p r o c}$ ) are split using a similar physical allocation approach to that used above to allocate facility-level emissions to unit processes (see equation E.61).

$\begin{matrix} U s e_{m a t e r i a l, p r o d u c t} = U s e_{m a t e r i a l, s u b p r o c} * \frac{O u t p u t_{p r o d u c t}}{O u t p u t_{s u b p r o c}} (E .61) \end{matrix}$

In effect, this approach uses emissions inventories for upstream products made at facilities for multiple purposes.567F[564] Because the upstream products made at a facility have a portion of their emissions inventories included within those of further downstream products, the term $G H G_{p r o d u c t}$ must be calculated sequentially starting with the furthest upstream reference products. This ordered approach is referred to in this report as “material flow analysis” and is based on a combination of Commission research into how unit processes relate to each other in steel and aluminum facilities as well as the information provided in questionnaire responses in which facilities identified how they used materials.

III.A. Material Flow Analysis for the Steel System Boundary

For reference products in the steel system boundary, material flow analysis begins with calculation of $G H G_{p r o d u c t}$ for industrial gas products: oxygen, nitrogen, argon, and hydrogen. Industrial gas products are assumed not to use other products made at steel facilities as materials and are also potentially used to make most of the downstream reference products. Therefore, for these products (which are rarely made at steel facilities), $G H G_{p r o d u c t}$ = $U G H G_{p r o d u c t}$ without the inclusion of any derivative of $I C G H G_{m a t e r i a l, p r o d u c t}$ .

Subsequent calculations of $G H G_{p r o d u c t}$ become more complex as they include additional derivatives of $I C G H G_{m a t e r i a l, p r o d u c t}$ . Table E.11 provides a list of all reference products ( $p r o d u c t$ ) for which values of $G H G_{p r o d u c t}$ were calculated, ordered by the sequence in which these values were calculated. For each $p r o d u c t$ , a list of materials ( $m a t e r i a l$ ) includes all upstream products that were $—$ or potentially could be $—$ produced by facilities and that could be used as materials in the production of $p r o d u c t$ . Each $p r o d u c t$ and $m a t e r i a l$ combination listed in table E.11 has a corresponding term for $I C G H G_{m a t e r i a l, p r o d u c t}$ that is included in the calculation of $G H G_{p r o d u c t}$ .568F[565] If a facility does not have production of $m a t e r i a l$ or does not use $m a t e r i a l$ in the production of the $p r o d u c t$ , then $I C G H G_{m a t e r i a l, p r o d u c t}$ corresponding with $m a t e r i a l$ will not contribute any emissions to $G H G_{p r o d u c t}$ .

Table E.11 List of materials made at steel facilities that are used in the production of reference products

$—$ (em dash) = not applicable.

Reference products made at steel facilities (in calculation order)	Corresponding materials made on-site at steel facilities that could be used to produce the reference product
Oxygen	$—$
Nitrogen	$—$
Argon	$—$
Metallurgical coke	Oxygen, Nitrogen
Calcined lime	Oxygen, Nitrogen
Calcined dolime	Oxygen, Nitrogen
Iron sinter	Metallurgical coke, Calcined lime, Calcined dolime, Oxygen, Nitrogen
Pig iron	Iron sinter, Metallurgical coke, Calcined lime, Calcined dolime, Oxygen, Nitrogen
Semifinished steel products	Pig iron, Metallurgical coke, Calcined lime, Calcined dolime, Oxygen, Nitrogen, Hydrogen, Argon
Hot-rolled flat steel products	Semifinished steel products, Oxygen, Nitrogen, Hydrogen
Cold-rolled flat steel products	Hot-rolled flat steel products, Oxygen, Nitrogen, Hydrogen
Coated flat steel products	Hot-rolled flat steel products (if not cold rolled before being coated), Cold-rolled flat steel products, Oxygen, Nitrogen, Hydrogen, Argon
Hot-worked long steel products	Semifinished steel products, Oxygen, Nitrogen, Hydrogen
Cold-formed long steel products	Hot-worked long steel products, Oxygen, Nitrogen, Hydrogen, Argon
Seamless tubular steel products	Semifinished steel products, Hot-worked long steel products, Oxygen, Nitrogen, Hydrogen, Argon
Non-seamless tubular steel products	Hot-rolled flat steel products, Cold-rolled flat steel products, Coated flat steel products, Hot-worked long steel products, Oxygen, Nitrogen, Hydrogen, Argon

Source: USITC, Greenhouse Gas (GHG) Emissions Intensities Questionnaire: Facility-Level, 2024, responses to questions 2.1.1, 5.1.6a, 5.1.8a, 5.1.9a, 5.1.10a, 5.1.10b, 5.1.10c, 5.1.13a, 5.1.17a, 5.1.18a, 5.1.19a, 5.1.20a, 5.1.23a.

Note: Where the upstream material is itself a steel product, only the emissions associated with that type of steel were included in the inventory. For example, if a facility produced both stainless steel and carbon and alloy steel types of semifinished steel and used those products to make both types of hot-worked long steel products, then only the emissions associated with the facility’s production of stainless semifinished steel would be used within the emissions inventory for production of stainless hot-rolled flat steel products (and vice versa for carbon and alloy products).

An example of how $G H G_{p r o d u c t}$ is calculated is illustrated by the production of carbon and alloy semifinished steel in a hypothetical integrated steel facility (see figure E.4). In this example, the facility produces the following reference products and associated unit process emissions:

· 1.00 million metric tons (mmt) of metallurgical coke associated with unit process emissions ( $U G H G_{m c o k e})$ of 0.40 mmt CO₂e. Of this production, 0.50 mmt (50 percent) of this material is used on-site to produce other products. The facility reports that 80 percent of the metallurgical coke that it uses is used in blast furnace operations and 20 percent is used in iron sinter production.

· 1.00 mmt of semifinished steel in BOF steelmaking associated with unit process emissions ( $U G H G_{c a r s e m i}$ ) of 0.40 mmt CO₂e.

· 1.20 mmt of pig iron associated with unit process emissions ( $U G H G_{p i g})$ of 1.80 mmt CO₂e. Of this production, 0.90 mmt (75 percent) is used on-site to produce other products and 0.30 mmt is shipped to other facilities. The facility reports that all of the pig iron that it uses is used in blast furnace operations (production of pig iron).

· 1.40 mmt of iron sinter associated with unit process emissions ( $U G H G_{s i n t e r})$ of 0.30 mmt CO₂e. All iron sinter is used to produce pig iron on-site.

· 1.20 mmt of pig iron associated with unit process emissions ( $U G H G_{p i g})$ of 2.00 mmt CO₂e. Of this production, 0.60 mmt (50 percent) is used on-site to produce other products. The facility reports that all of the pig iron that it uses is used in BOF steelmaking.

· 0.80 mmt of carbon and alloy semifinished steel in BOF steelmaking associated with unit process emissions ( $U G H G_{c a r s e m i}$ ) of 0.40 mmt CO₂e.

· The facility does not report production of any other products.

First, $G H G_{m c o k e}$ is calculated. No upstream materials made at this facility are included in the calculation of this product-level emissions inventory. Therefore, $G H G_{m c o k e}$ is equal to $U G H G_{m c o k e}$ , or 0.40 mmt CO₂e. Of those emissions, 0.20 mmt CO₂e (corresponding with the share of production used on-site) are allocated to downstream products that use metallurgical coke. Based on the use of metallurgical coke in the facility, $I C G H G_{m c o k e, s i n t e r}$ is equal to 0.04 mmt CO₂e (corresponding with 20 percent of metallurgical coke use), and $I C G H G_{m c o k e, p i g}$ is equal to 0.16 mmt CO₂e (corresponding with 80 percent of metallurgical coke use).

Second, $G H G_{s i n t e r}$ is calculated as the sum of $U G H G_{s i n t e r}$ and $I C G H G_{m c o k e, s i n t e r}$ . This sum is 0.34 mmt CO₂e. All sinter is used on-site in the production of pig iron. Therefore, $I C G H G_{s i n t e r, p i g}$ is also 0.34 mmt CO₂e.

Third, $G H G_{p i g}$ is calculated as the sum of $U G H G_{p i g}$ , $I C G H G_{m c o k e, p i g}$ , and $I C G H G_{s i n t e r, p i g}$ . This sum is 2.50 mmt CO₂e. Of those emissions, 1.25 mmt CO₂e (corresponding with the share of production used on-site) are allocated to the only downstream product made at the facility that uses pig iron, which is semifinished steel. Therefore, $I C G H G_{p i g, c a r s e m i}$ is also equal to 1.25 mmt CO₂e.

Fourth, $G H G_{c a r s e m i}$ is calculated as the sum of $U G H G_{c a r s e m i}$ and $I C G H G_{p i g, c a r s e m i}$ , which is 2.50 mmt CO₂e.

In all four summations of $G H G_{p r o d u c t}$ described above, other derivatives of $I C G H G_{m a t e r i a l, p r o d u c t}$ are also included based on the material and product relationships shown in table E.11. Because this facility has no material production or product use of that material, all those derivatives are equal to zero and are not depicted in the figure.

Figure E.4 Example of how material flow analysis is used to calculate product-level emissions inventories in an integrated steel facility

mcoke = metallurgical coke; sinter = iron sinter; pig = pig iron; semi = carbon and alloy semifinished steel; UGHG_product = unit process emissions from production of the reference product; GHG_product = the product-level emissions inventory of the reference product; ICGHG_{material,product} = emissions associated with upstream materials made in the same facility and used in the production of the reference product; mmt CO₂e = million metric tons of carbon dioxide equivalent.

Figure E.4 is a flowchart depicting how material flow analysis is used to calculate product-level emissions inventories for an example integrated steel facility. This figure depicts the flow of materials (metallurgical coke, iron sinter, pig iron, and carbon and alloy semifinished steel) and the calculation of product-level emissions inventories that are described in the example provided in this section.

Source: Compiled by the USITC.

III.B. Material Flow Analysis for the Aluminum System Boundary

In the United States, upstream materials used in the production of aluminum products are not typically produced in the same facility producing the aluminum products $—$ with two exceptions. First, carbon anodes are typically produced in the same facility as primary unwrought aluminum. Incorporating emissions from the production of carbon anodes (i.e., anode baking) into the primary unwrought aluminum emissions estimate is straightforward as anode baking only maps to one product $—$ primary unwrought aluminum. Thus, all upstream emissions from anode baking material ( $m a t e r i a l$ ) that is consumed on-site can be allocated to primary unwrought aluminum ( $p r o d u c t$ ) and included in $G H G_{p r o d u c t}$ . Second, secondary unwrought aluminum may be produced in the same facility as wrought aluminum products and other noncovered products. Therefore, upstream emissions from this on-site secondary unwrought aluminum production ( $I C G H G_{m a t e r i a l, p r o d u c t}$ ) are included in the emissions inventories ( $G H G_{p r o d u c t}$ ) for all downstream wrought aluminum products (e.g., aluminum bars, rods, and profiles) that use secondary unwrought aluminum produced on-site.

III.C. Additional Analysis for Aggregate Product Categories and Product Subcategories

The calculations in the sections above generate product-level emissions inventories for reference products that correspond directly with most product categories for which estimates are presented in this report.569F[566] This section describes how the Commission calculated product-level emissions inventories for products that are either aggregates or subcategories of reference products.

III.C.1. Calculation of Product-Level Emissions Inventories for Product Subcategories

The Commission calculated emissions intensity estimates for certain steel products that are subcategories of reference products (see table E.12 for a list of these products). For each subcategory ( $s u b c a t e g o r y$ ), the Commission calculated the product-level emissions inventory ( $G H G_{s u b c a t e g o r y}$ ) using equation E.62.

$\begin{matrix} G H G_{s u b c a t e g o r y} = G H G_{p r o d u c t} * \frac{O u t p u t_{s u b c a t e g o r y}}{O u t p u t_{p r o d u c t}} (E .62) \end{matrix}$

Table E.12 List of reference products with associated subcategories

Reference product(s)	Associated subcategories
Semifinished steel	Ingots and steel in other primary forms (carbon and alloy, stainless); slabs (carbon and alloy, stainless); and all other forms of semifinished steel (carbon and alloy, stainless)
Carbon and alloy hot-rolled flat steel	Hot-rolled plate; all other hot-rolled flat steel products
Carbon and alloy hot-worked long steel	Rebar; wire rod; heavy structural shapes and sheet piling; all other hot-worked long steel products
Cold-formed long steel	Wire (carbon and alloy, stainless); all other forms of cold-formed long steel products (carbon and alloy, stainless)
Carbon and alloy seamless steel tubular products	Seamless oil country tubular goods; all other seamless steel tubular products
Carbon and alloy non-seamless steel tubular products	Non-seamless oil country tubular goods; all other non-seamless steel tubular products

Source: Compiled by the USITC.

Note: The term “carbon and alloy, stainless” indicates that both stainless steel and carbon and alloy steel types of that reference product have associated subcategories of the same type.

This approach meant that, for a given facility, there was no difference in the emissions intensities of the broader reference product and underlying subcategories of products. Emissions intensity estimates presented for different product subcategories do not reflect distinctions in production practices within individual facilities that may affect the emissions intensities of subcategories. For example, a facility that produces both rebar and steel wire rod would not have a different emissions intensity for those product subcategories, nor would those emissions intensities be distinct from carbon and alloy hot-worked long products generally. However, for the industry-wide estimates presented in this report, the different production practices and efficiencies of facilities and the different concentration of product subcategories across all facilities is reflected in distinct estimates for each subcategory. Using the above example again, the industry-wide emissions intensity for rebar and wire rod will differ from each other based on the hot-worked long product emissions intensities of the facilities concentrated in either product subcategory.

III.C.2. Calculation of Product-Level Emissions Inventories for Aggregate Product Categories

Certain product categories are aggregates of other product categories and therefore encompass multiple underlying reference products (see table E.13). Aggregate product categories are steel product categories specified in the Trade Representative’s letter under attachment A.570F[567]

Table E.13 List of aggregate product categories and underlying reference products

Aggregate product categories	Underlying reference products
Unwrought aluminum	Primary unwrought aluminum; secondary unwrought aluminum
Wrought aluminum	Bars, rods, and profiles; wire; plates, sheets, and strip; foil; tubes, pipes, and tube or pipe fittings; castings; forgings
Carbon and alloy flat steel	Carbon and alloy hot-rolled flat steel; carbon and alloy cold-rolled flat steel; carbon and alloy coated flat steel
Carbon and alloy long steel	Carbon and alloy hot-worked long steel; carbon and alloy cold-formed long steel
Carbon and alloy tubular steel	Seamless steel tubular products; non-seamless steel tubular products
Stainless steel	Stainless semifinished steel; stainless hot-rolled flat steel; stainless cold-rolled flat steel; stainless hot-worked long steel; stainless cold-formed long steel; stainless seamless tubular steel products; stainless non-seamless tubular steel products

Source: Compiled by the USITC.

The emissions inventories of unwrought aluminum, wrought aluminum, and carbon and alloy tubular steel are the sums of the product-level emissions inventories of underlying reference products. For stainless steel products ( $s s a l l$ ), carbon and alloy flat steel products ( $c a r f l a t$ ), and carbon and alloy long steel products ( $c a r l o n g$ ), the underlying reference products were vertically integrated. As a result, product-level emissions inventories for downstream underlying reference products (e.g., carbon and alloy cold-rolled flat steel products) included emissions associated with the production of upstream underlying reference products (e.g., carbon and alloy hot-rolled flat steel products). The Commission calculated the emissions inventories of each of these three aggregate product categories by summing $G H G_{p r o d u c t}$ for all underlying reference products and by subtracting all terms for $I C G H G_{m a t e r i a l, p r o d u c t}$ where both $m a t e r i a l$ and $p r o d u c t$ referred to underlying reference products.571F[568]

[564] Emissions associated with upstream materials sourced externally and used in the production of the reference product are captured within $U G H G_{p r o d u c t}$ based on methods described in the section covering scope 3 emissions. For example, if a facility receives semifinished steel slabs (denoted here as $s e m i$ ) from external sources and uses that product to produce hot-rolled flat steel products ( $h r$ ), the scope 3 emissions associated with receipts of those slabs would be incorporated within $U G H G_{h r}$ . However, if the facility produces its own slabs and uses that to produce hot-rolled flat steel products, the emissions associated with slabs used to make hot-rolled flat steel would be incorporated within $I C G H G_{s e m i, h r}$ .

[565] Materials in the system boundary other than those listed in table E.11 that are used in the production of the listed product categories. Examples include ferroalloys, direct reduced iron and hot briquetted iron (DRI), and iron pellets. However, none of those materials are made in U.S. steel facilities themselves, and therefore are not included in this material flow analysis, which focuses on relationships between products made within steel facilities. All materials in the system boundary that are sourced externally (including those that can also be made internally within steel facilities) are included within the scope 3 analysis. Scope 3 emissions associated with those externally sourced materials are allocated to the unit process emissions that use those materials.

[566] Table E.1 in the “I. Overview of Product-Level Emissions Intensity and Inventory Calculations” section of this appendix contains the full list of reference products.

[567] See appendix A for the Trade Representative’s request letter for this investigation.

[568] For similar reasons, emissions intensity calculations for these same three aggregate product categories did not include all production of all underlying reference products. Specifically, production of upstream underlying reference products used to make downstream underlying reference products was not included. As a result, the production of aggregate product categories used in emissions intensity calculations only include production for external shipment and production for use in the same facility used to make products other than those covered under the aggregate product category itself. The Commission estimated a facility’s production of a material used to make specific downstream products by multiplying $I C O u t p u t_{m a t e r i a l}$ and $\frac{U s e_{m a t e r i a l, p r o d u c t}}{U s e_{m a t e r i a l}} .$