Right now, the business case for low-carbon investments in heavy industry remains challenging given the large upfront costs required. However, an opportunity for green value creation— and ultimately competitive differentiation—is emerging for sectors like cement, chemicals, and steel.
The opportunity stems from growing interest in what are known as environmental attribute certificates (EACs)—market instruments that reflect the value of a product’s low-carbon profile.
EACs enable low-carbon producers to connect with downstream buyers. A recent sign of the market’s momentum is a March proposal from the Science Based Targets initiative (SBTi). The initiative’s draft Corporate Net Zero Standard Version 2.0 raises the possibility of broader use of EACs.
The So What
“This has the potential to be a major unlock in the business case for industrial decarbonization,” says Cornelius Pieper, a managing director and senior partner leading BCG’s climate and sustainability work in the industrial sector.
Industrial emissions are concentrated upstream—at the smelters, refiners, kilns and crackers that produce steel, aluminum, cement, and chemicals. These companies operate far from the end customer and face high costs to produce lower-carbon alternatives. Without a clear signal that someone is willing to pay for greener products, their business case to invest is limited.
Downstream, it’s a different story. Consumer-facing brands—automakers, appliance manufacturers, personal care companies—have made public climate commitments and are actively looking for ways to reduce Scope 3 emissions. Given that the green premium on raw materials account for a relatively small share of end product prices, these downstream players are better able to manage the costs for cleaner inputs. Research by BCG and the World Economic Forum found that in sectors such as autos, fashion, and electronics full decarbonization would push the prices for end consumers up 1% to 4%.
However, downstream buyers are often separated from upstream producers by layers of intermediaries: fabricators, assemblers, and tier-one suppliers.
What’s been missing is a way to efficiently transfer that demand signal upstream.
“We need a mechanism that allows a transfer of low carbon value between the top and bottom of supply chains—between companies that may not even do business together today,” notes Nicholas Collins, a principal in BCG focused on carbon accounting standards.
That’s where EACs come in. Here’s how they work:
- Producers of low-carbon materials—like green aluminum, ethylene, or cement—sell their material into the traditional market as usual.
- At the same time, they can issue a certificate that reflects the reduced carbon footprint of the product.
- The EAC that the supplier produces is calculated using chain of custody mechanisms, which track the flow of low carbon attributes through complex value chains.
The principle behind EACs is the same one that underpins renewable energy certificates (RECs). When a wind farm generates power, it feeds electricity into the grid just like any other source. What buyers actually purchase is the environmental attribute—delivered through a REC.
EACs apply this same market logic to industrial products. While companies may have struggled to meet Scope 3 targets due to market issues such as limited data access or supplier influence, EACs can break those barriers, creating a direct link between the supply of low carbon materials and those demanding them to deliver on supply chain decarbonization targets.
Now What
Capitalizing on the potential of EACs will require action from both ends of the value chain.
“If upstream and downstream players work together to build a connected, transparent, low-carbon value chain, we will start to see EACs scale,” says Paulina Ponce de León Baridó, a BCG managing director and partner specializing in sustainability. “And that could strengthen the business case for decarbonization solutions and help close the climate-finance gap.”
Upstream producers such as steel, cement, chemical companies or aluminum makers should take several steps:
- Develop the capacity to certify low-carbon production using robust, third-party-verified methodologies.
- Collaborate on common standards for how EACs are generated, audited, and tracked—aligned with emerging industry frameworks.
- Invest in digital traceability systems that support real-time tracking of emissions attributes at the plant or batch level.
- Engage downstream sectors to understand where demand for low-carbon inputs is strongest and how to structure EACs to match buyer needs.
Downstream players can take action in several areas:
- Assess the role of EACs in meeting Scope 3 emissions goals—especially where direct sourcing of low-carbon materials is limited.
- Prioritize suppliers who invest in verifiable low-carbon production and participate in credible certificate systems.
- Advocate for harmonized standards and certification bodies to ensure EACs are consistent, transparent, and trustworthy.
- Support early demand signals by committing to purchase EACs where they can drive meaningful upstream investment.
If upstream producers and downstream buyers move together—backed by clear standards and credible systems—EACs could meaningfully accelerate the path to net zero, turning decarbonization from a cost into a revenue opportunity.
