The steel industry has begun to decarbonise through various initiatives, including retrofitting existing facilities, developing low-emission steel plants, integrating biomass in blast furnaces, and investing in carbon capture and storage. However, significant challenges remain, particularly addressing global excess capacity, which has weakened steelmakers’ financial performance and their ability to invest in decarbonisation. Investment in low-carbon production should not exacerbate market imbalances. The transition requires vast financial resources and growing markets for low-carbon steel. Key challenges include ensuring high-quality iron ore and scrap availability. OECD analysis shows that the global supply of available external scrap will likely increase sharply in the coming decades. The geographic landscape of iron and steel production is expected to change significantly, with ironmaking potentially shifting to regions with abundant high-grade iron ore and low-cost renewable energy, impacting national decarbonisation goals, socio-economic development and value-added creation.
OECD Steel Outlook 2025
Abstract
The iron and steel sector accounts for nearly 8% of global carbon dioxide (CO2) emissions and ranks as one of the highest-emitting industry sectors, accounting for about 30% of total industrial carbon emissions (OECD, 2022[1]).
To meet the Paris Agreement climate objectives, steel industry emissions will need to decrease by 90% from 2020 levels by 2050 (IEA, 2021[2]). Meeting these goals will require profound changes in steelmaking operations. The changes include: 1) enhanced performance through improved energy efficiency; 2) the switching of fuels away from gas and coal; 3) the development and deployment of new technologies to produce steel; 4) material efficiency improvements for increased recycling; and 5) expansion of carbon capture, utilisation and storage (CCUS) efforts. On the demand side, material efficiency and reducing waste through recycling (i.e. circular economy practices) are other factors that would contribute to emission reduction. The complexity of the steel value chain and the heterogeneity in industrial structures provide a variety of decarbonisation pathways (OECD, 2023[3]).
The challenges facing steelmakers differ worldwide, depending on the age of their facilities and the equipment used to produce steel. With respect to the latter, steel produced via the integrated route using blast furnaces and basic oxygen furnaces (BF-BOF) is far more carbon-intensive than steel produced in electric furnaces using recycled ferrous scrap or directly reduced iron (Figure 6.1). Worldwide, steel produced in BOFs accounts for about 70% of total production, with electric furnaces accounting for the balance. However, in some economies, BOF production accounts for 90% or more of production (e.g. the People’s Republic of China, [hereafter “China”]). In contrast, in more than 50 countries, steel is produced exclusively in electric furnaces.
In tonnes CO2 to 1 tonne steel
Note: BF-BOF: Blast furnaces and basic oxygen furnaces; DRI-EAF: Direct reduced iron and electric arc furnaces; EAF: electric arc furnaces. Scope 3 (other emissions linked to a company’s upstream and downstream activities) is not covered.
Source: IEA (2020[5]), Iron and Steel Technology Roadmap, https://www.iea.org/reports/iron-and-steel-technology-roadmap.
Growing steel excess capacity strongly impacts progress towards steel decarbonisation directly and indirectly. The growth in new capacity in high-emissions production routes such as BOFs adds further emissions to global steel production. As indicated in Chapter 2, BOF construction, which generally is associated with large-scale operations, is concentrated in Asia (China, India, Indonesia, the Philippines, and Viet Nam) and the Commonwealth of Independent States (Kazakhstan); no new BOF projects are planned in other regions over the next three years. Indirectly, excess capacity has a negative impact on steel prices and cost profitability, resulting in an overall weakening of the financial performance of steelmakers and their ability to invest in new plants and equipment for decarbonisation and other purposes.
The efforts to reduce emissions encompass three aspects of the industry. Scope 1 refers to efforts to reduce direct emissions from steelmaking. They include interim technologies for emission reduction that focus on enhancing energy efficiency; these include hydrogen injection into blast furnaces and basic oxygen furnaces. Near-zero emission technologies include CCUS, the production of directly reduced iron using hydrogen, expansion of production in scrap-based electric arc furnaces (EAF) and direct iron electrolysis (IOE), which uses electricity to produce iron. Scope 2 emission reductions refer to shifts in the industry’s power supply towards low-carbon energy sources, such as renewable or nuclear energy. Scope 3 reductions refer to all other indirect emissions that occur in the upstream and downstream value chain of a company. Excess capacity risks affecting emission reduction efforts in all three aspects.
Decarbonisation targets and roadmaps
The OECD has carried out an assessment (OECD, 2024[6]) of the steel industry’s decarbonisation plans based on a review of 26 geographically dispersed companies. The companies account for about 40% of world steel production and 33% of world steelmaking capacity.
Most companies in the sample have set decarbonisation targets (88%), with 65% of the companies in the sample having set net-zero targets. Most net-zero targets are for 2050 or later, with two companies having more ambitious goals of reaching net-zero emissions in 2030 and 2045. Some 23% of the companies have not set net-zero targets, instead establishing intermediary emission reduction or emission intensity targets, while 12% of companies, which tend to be the smaller companies in the sample, have not set any decarbonisation targets. As noted earlier, three areas need to be addressed in setting targets: direct emissions (Scope 1); indirect emissions (Scope 2); and other emissions linked to a company’s upstream and downstream activities (Scope 3). While 65% of the sampled companies have indicated the scope of their targets, it is unclear for 35% of the companies sampled (Figure 6.2).
More than 70% of the sampled companies have established roadmaps for achieving their targets, while 16% of the companies had no roadmaps despite having set targets. The level of detail of the roadmaps varies significantly among the companies; some have clear timelines for investment and technological adaptation, while others have produced roadmaps that are imprecise and vague.
Note: The results refer to the companies that have set a decarbonisation target (net-zero or other) among the sample of companies analysed.
Source: OECD calculations based on companies’ annual sustainability reports, companies’ websites, and other media sources.
Low-carbon emissions projects
OECD work on decarbonisation has included the monitoring of low-carbon emissions projects announced by steelmakers. The monitoring goes beyond the 26 sampled companies discussed above, thereby providing a more comprehensive picture of the progress being made by the industry. Included in the monitoring are projects that meet the following criteria:
directly target iron and steel production and impact direct emissions
involve low-carbon steelmaking innovative technologies, or involve a full site transformation plan for decarbonisation purposes (typically existing BF-BOF transformation to direct reduced iron [DRI]-based EAF), or significant adaptation of the production process (BF with fuel switching/blending)
involve a facility (industrial, demonstration or pilot scale) for which the production technology type is clearly identified in the announcement.
The monitoring identified nearly 65 announced projects meeting such criteria as of end 2022. The number of such projects has grown steadily in recent years, more than tripling between 2020 and the end of 2022 (Figure 6.3). However, against the background of rising excess capacity, in recent years, a growing number of companies have announced that decarbonisation projects are being postponed.
Source: OECD calculations based on various information sources (Metal Expert, Kallanish, Platts, media, companies and regional steel associations websites).
Regional profile
Regionally, the European Union accounted for about 60% of the low-carbon project portfolio. China accounted for almost 15%, and North America and Asia (excluding China and India) accounted for 8% each. The relatively high level of EU projects reflects the region’s early commitment to climate action, coupled with ambitious carbon targets (i.e. carbon neutrality by 2050). Furthermore, the significant role that BF-BOF steelmaking in the European Union provides is an important incentive for adopting breakthrough technologies to meet the target. At the same time, the relatively low share in North America reflects the already high adoption of EAF scrap-based steel production in the region.
In China, following the national pledge of carbon neutrality by 2060 and the target of emissions peaking by 2030, major Chinese steel producers have taken initiatives, such as the Global Low-Carbon Metallurgical Innovation Alliance launched by Baowu Steel in 2021. However, as noted earlier, new BOF construction continues to take place in China or via Chinese firms elsewhere in Asia, adding to already high emissions.
Project profile
The projects that have been announced comprise plant replacements (34% of the reported projects), new plants (31%), plant adaptation (22%) and research and development (R&D) stage projects (13%). Some 90% of the plant replacement projects involve a switch from BOF steelmaking to EAF, with DRI as the preferred feedstock for the EAF furnaces. The DRI would ultimately be produced using only green hydrogen, with natural gas being used on an interim basis in some cases.
Plant adaptation projects focus on maintaining the technology of the current asset while modifying some processes to lower carbon emissions. More than half of plant adaptation projects involve BFs, which produce the pig iron eventually used in BOFs. The adaptation foresees fuel blending or fuel switching, which would include the use of hydrogen, followed by carbon capture utilisation (CCU) (one-third). These adaptations provide a first step for a gradual transition, ultimately shifting to breakthrough technologies compatible with near-zero emission steel production. The plant adaptation projects are either already implemented or planned to be completed by 2025.
With respect to new plant projects, half of the projects focus on DRI facilities. As with plant replacement, the focus is on ultimately using green hydrogen in the facilities, with the possibility that natural gas would be used initially. Other reported new plant projects include integrated DRI-EAF plants (one-third of new plant projects). The new plants, however, would not significantly affect the industry as they would impact less than 1% of current global capacity.
Finally, it is important to note that around 60% of the projects are designed to run on an industrial scale, but only 15% are in operation, almost all of which involve BF plant adaptation. The remaining projects are at the pilot or demonstration stage.
Challenges
While decarbonisation is an important area of focus for steel companies, and decarbonisation strategies are becoming more transparent and ambitious, there are challenges in implementing the strategies. These include: 1) scaling up innovative technologies; 2) resources; 3) costs and financing; 4) markets for low-emission steel; and 5) barriers to exit. The current rise in excess capacity further aggravates these challenges.
Scaling up innovative technologies
A high share of company decarbonisation strategies is based on using breakthrough low-carbon technologies and scrap-based EAF technology. For near-zero-compatible technologies, 74% of companies say that they will use CCUS, 52% will use hydrogen-based DRI production, and 11% will use IOE. Their ability to do so will depend on the speed at which the new technologies come to industrial maturity.
CCUS is the most-cited technology route by companies in their respective decarbonisation strategies. The technology has the benefit of being able to be retrofitted to existing blast furnaces, which is the central source of emissions in the BF-BOF steelmaking process, allowing emission reductions from existing steelmaking assets. However, chemical absorption technology for blast furnaces, essential for carbon removal, is at the large prototype stage, with several steps left until maturity (IEA, n.d.[7]). Chemical absorption technologies for DRI, on the other hand, are further along, at the commercial operation stage.
Hydrogen-based production of DRI for electric arc furnaces (H2-DRI-EAF) is the second most-cited low-carbon technology route steelmakers cite in their decarbonisation strategies. By using this route, companies can first implement emission reductions by transitioning to natural gas as a reductant and later replace natural gas with hydrogen as it becomes available. Using 100% electrolytic hydrogen as a reductant in the direct reduction step can enable large emission reductions, but this technology is at the full prototype stage. In addition, the DRI-EAF technology route requires high-quality iron ore, which is in limited supply.
IOE is another low-carbon technology route comprising alkaline iron electrolysis and molten oxide electrolysis. It is only mentioned by 11% of the companies but holds the potential to reduce the energy needed in steelmaking by 30% compared to traditional forms of steelmaking while significantly reducing emissions. The technology is, however, in the early stages of development.
Resources
Access to key resources is required to implement company decarbonisation strategies. Companies aim to switch to using hydrogen for iron reduction for use in electric furnaces or sequestering carbon. These changes will require large amounts of resources that were previously less in demand. CCUS requires infrastructure for carbon management and sites for carbon storage. In the International Energy Agency (IEA) net-zero scenario, some 27 mmt of CO2 is captured from the steel sector by 2030, then 131 mmt by 2035 and 399 mmt CO2 by 2050, up from 1 mmt in 2022. In the sustainable development scenario from 2019, captured carbon reaches 400 mmt by 2050 (IEA, 2020[5]). This will significantly increase the need for carbon storage sites and carbon transportation from current levels.
Associated with the hydrogen direct reduction process is, as mentioned above, the issue of available iron ore of the relevant quality. The DRI-EAF process that is used by the majority of steel producers requires DR-grade pellets, which are iron ore pellets with a Fe content of over 67% and with low impurities (Agora, n.d.[8]) (IEEFA, n.d.[9]). Today, only 3-4% of current seaborne shipments of iron ore are of this quality, significantly below what is deemed necessary for meeting expected demand. Options are being explored, but iron ore availability appears to be a bottleneck for transitioning to the hydrogen-DRI-EAF route (H2-DRI-EAF).
One-third of company decarbonisation roadmaps indicate higher use of scrap-based steelmaking as a key step to their decarbonisation. The availability of scrap, which is material generated as new steel is processed and obsolete articles containing steel (like automobiles) are discarded, is an issue. The challenge is most pertinent in developing economies where steel demand is expected to grow the most but where scrap availability is most limited.
The availability of renewable-based electricity will also be key, particularly in the case of electric furnace steelmaking and in advancing certain emerging technologies, such as IOE.
Financial costs
Achieving decarbonisation targets will require substantial capital expenditures for new plants and technologies and, where needed, adaptation of existing plants. A low-emission demonstration plant, for example, could cost between EUR 5 million (euros) and EUR 400 million; a scaled-up intermediate version could cost between EUR 500 million and EUR 1 billion, while the deployment of a fully operational plant could cost around EUR 1 billion (De Santis et al., 2021[10]).
With respect to specific technologies, the H2-DRI-EAF route, the second most popular route that companies are planning to develop, requires significant modification of existing plants or the construction of completely new plants. Switching to the H2-DRI-EAF route from existing BF-BOF plants implies that most major facilities and equipment (coke making, sintering, blast furnace and basic oxygen furnace) have to be replaced by new units. The estimated investment costs for an H2-DRI-EAF operation are EUR 574 per tonne of capacity, which is about 30% higher than the cost of a greenfield BF-BOF operation (Vogl, Åhman and Nilsson, 2018[11]) (Wörtler et al., 2013[12]).
Further analysis is needed to determine the total cost of decarbonisation for the industry under various scenarios and the prospects for funding the transition. Some analysis has already been carried out on the impact that decarbonisation could have on steelmaking costs. The IEA, for example, has estimated that the costs per tonne of product could rise by 10-50%, with significant variation among countries and companies (IEA, 2020[13]). The variability and level of the cost increases could thus have a significant impact on the competitiveness of individual producers. With respect to the total cost of decarbonisation, estimates vary significantly but generally exceed USD 1 trillion (US dollars), some far more than this level.1 In the current circumstances, where excess capacity is rising, and prices and profitability of steel firms are under pressure, it becomes increasingly difficult for investments of such size to materialise.
Markets for low-emission steel
As mentioned above, the cost of producing steel in a decarbonised manner will add significantly to costs; the ability of companies to pass these costs on to customers through higher prices will be difficult as steel markets are highly competitive with respect to prices. Success in this regard will, in part, rely on companies’ abilities to differentiate their low-emission steel from steel that has not been produced using advanced low-emission technologies. The effects may be muted, however, in sectors where steel is an important component of a final product but accounts for a small percentage of final costs. According to a report from the Mission Possible Partnership, passenger car cost increases from low-carbon steelmaking, for example, will reach 0.5%, 2.1% for construction and 1.5% for white goods in 2030. By 2050, these cost increases fall to 0.3%, 1.4% and 1% respectively (MPP, 2022[14]).
Moreover, the consumer and societal pressures for steel-using industries to use low-emission steel may create a growing market for producers. A growing number of companies that use steel, for example, have announced their commitment to procure such steel on a voluntary basis. This includes 28 companies that made a specific commitment to ensure that at least 10% (by volume) of all of their steel purchased per year will be near-zero emissions by 2030. The commitment was made under the First Movers Coalition, which is the world’s largest private sector initiative wherein members commit to purchasing low-emission products (First Movers Coalition, n.d.[15]).
In addition, some sample companies are involved in partnership projects, either in the form of off-take agreements with their customers or joint development projects for low-emission technology with stakeholders such as the government, energy producers and academia. However, further development of markets for green steel products may require the development of internationally recognised definitions of green steel; differences across jurisdictions could otherwise undermine progress on this front.
Barriers to exit
The social and economic costs of closing uncompetitive steel facilities, along with the cost of any environmental remediation that may be required, have slowed the retirement of such facilities, which in turn has contributed significantly to global overcapacity in the industry. Excess capacity has impacted prices and costs, resulting in an overall weakening of the financial performance of steelmakers, thereby lowering the financial resources available to invest in new plants and equipment for decarbonisation and other purposes. The increased need for steelmakers to reduce carbon emissions may eventually provide greater pressure for the uncompetitive facilities to be closed, but this will take time, thereby potentially delaying the implementation of decarbonisation strategies.
Government policies
Governments have promoted decarbonisation in the steel industry through a number of measures, including:
Establishing industry or company net-zero level targets: Target achievement years range from 2027 to 2030, though most are set for 2050.
Carbon pricing: These are mechanisms established by governments to capture the external costs of greenhouse gas emissions, tying them to their sources through a price, usually in the form of a price on the carbon dioxide emitted. The measures are not widely used, as only around 20% of steelmaking capacity is covered by such policies.
Technology support: A total of 87 support policies were identified covering 8 low-carbon steelmaking technologies in the 11 countries/jurisdictions covered in the OECD analysis (i.e. Brazil, Canada, China, European Union, India, Indonesia, Japan, Korea, Türkiye, United States and Viet Nam). Hydrogen-oriented policies were the most common of the named technologies, followed by energy efficiency, scrap (tied), and CCUS. The majority of policies, however, have not been technology-specific.
The policies have demand-side and supply-side dimensions. Supply-side policies target the production of goods and services to limit emissions or to support alternative emission-free production. In contrast, demand-side policies are designed to increase demand for low-carbon products or lower demand for emission-intensive products. Additionally, the policies can be further categorised as phase-in policies, which promote the production of and demand for low-carbon steel or phase-out policies, which reduce the capacity of and demand for emission-intensive steel. Most of the identified policies were supply-side, phase-in (Figure 6.4). In the context of rising excess capacity challenges, Figure 6.4 shows that the use of phase-out policies is currently very limited.
The policies can also be mapped to the five challenges facing the industry that are mentioned above. Technology scale-up was the leading area addressed by policies, followed by mobilising resources necessary for low-carbon steelmaking and financial costs. Relatively few policies were directed to exit barriers and the development of demand for low-emission steel.
Looking towards the future, attention should be paid to the following in developing and adapting policies:
Technology is evolving rapidly, and policies will need to be adapted to respond to evolving needs.
Close co-ordination between government and companies on decarbonisation strategies is essential, as is the need to co-ordinate policies to ensure that the infrastructure is in place to facilitate the steel industry’s decarbonisation.
International co-operation should be enhanced with a view to identifying best decarbonisation practices and common understandings of the challenges facing the industry.
Actions will need to be taken to promote demand for low-emission steel through, for example, government procurement, as well as through market incentives that increase demand for low-emission steel.
Excess capacity is a persistent problem in the steel sector due to market-distorting subsidies and barriers to exit; policymakers should consider how to enable “space” in the market for new low-carbon steel plants by increasing the exit rate for emission-intensive plants that are, in particular, contributing to the excess capacity.
Source: OECD calculations based on various information sources (Metal Expert, Kallanish, Platts, media, companies and regional steel associations websites).
Recycled ferrous scrap is a key ingredient used in steelmaking, particularly in electric furnaces, where it can be used for up to 100% of the ferrous metallics charge for certain steel products (e.g. rebar). The scrap arises: 1) from within steel mills as steel is processed from semifinished products to a wide range of finished products (home scrap); 2) when steel is shaped into component parts for final products, such as automobiles and household appliances (prompt industrial scrap); and 3) when steel is recovered from obsolete machinery and equipment that has been discarded (obsolete scrap). Approximately 650 million tonnes of scrap are recycled by the industry annually, helping to reduce industry emissions of CO2 by approximately 975 million tonnes annually (World Steel Association, 2021[16]). The recycling of scrap has also been beneficial, as it lowers the use of natural resources, such as iron ore, coal and limestone. The material has thus increased its strategic importance over time, playing an important role in industry decarbonisation efforts.
Significant volumes of scrap are traded internationally. In 2022, some 65 million tonnes were exported, accounting for approximately 10% of total consumption. The European Union and the United States were the leading suppliers, shipping more than 17 million tonnes each to foreign markets, thereby accounting for 54% of total exports (excluding intra-EU trade) (International Steel Statistics Bureau, 2022[17]). The United Kingdom, Japan and Canada also exported significant tonnages; together with the European Union and the United States, they collectively accounted for 85% of the world total. Scrap import volumes are similarly concentrated among a small number of economies, as the biggest ten importers accounted for nearly 90% of the global total in 2022. India and Türkiye, the two largest importers, together accounted for around half of the total, with Türkiye alone accounting for more than one-third of the total.
Export policies
The strategic importance of scrap has resulted in a number of countries introducing measures to control exports. In 2022, some 72 export measures affecting 3.3 million tonnes of exports were in effect globally (Figure 6.5).
Note: No data available on the volume of scrap subject to export surtax or fiscal tax on exports.
Source: Authors’ calculations based on International Steel Statistics Bureau (2022[17]), Bilateral scrap trade data and OECD (2024[20]), “Unlocking potential in the global scrap steel market”, https://doi.org/10.1787/d7557242-en.
Export taxes and licensing requirements were the most common policies, followed closely by export quotas. With respect to export taxes, China maintains a tax of 40%, while the Russian Federation (hereafter “Russia”) imposes one of 15%. (Government of India, 2019[18])
Scrap market outlook
The external commercial market for scrap comprises prompt industrial scrap and obsolete scrap. Prompt industrial scrap is price inelastic as it is a byproduct of manufacturing and, as such, is generated at a fixed rate that is not sensitive to price fluctuations. In contrast, prices for obsolete scrap are elastic; as prices rise, recovery of obsolete material will increase, expanding the supply of available material. The amount of steel scrap that is potentially recoverable each year, however, is not unlimited; rather, it is based on the historical sectoral mix of steel consumption, including indirect imports and the specific life span of steel products. For example, motor vehicles may remain in use for 15 years before being recycled, while the life of steel used in construction might range from 30 to 60 years or longer. Moreover, there are limitations on the amount of steel that could technically be recovered, depending on recovery costs and other limitations.
OECD analysis shows that the global supply of available external scrap will likely increase sharply in the coming decades due to the large volume of steel products consumed since the turn of the century that will reach the end of their useful lives and could, therefore, be recycled. Based on historical recovery rates, external scrap availability could double between 2019 and 2050, from 600 mmt to over 1 200 mmt. Prompt industrial scrap will also increase, reflecting increasing manufacturing and construction activity. China is expected to account for over 60% of the increase, with its availability rising threefold, from 170 mmt in 2019 to 545 mmt in 2050 (OECD, 2024[20]).
With rising demand for scrap to support decarbonisation, increased and accelerated recovery rates could increase global scrap availability to 1 350 mmt in 2050 (Figure 6.6). This would entail digging deeper into the reservoir of recoverable obsolete scrap. Demand would be further bolstered by a rise in electric furnace steelmaking, from 510 mmt in 2019 to 1 340 mmt in 2050; in this scenario, electric furnaces would account for 50% of crude steel production in 2050, up from 27% in 2019.
Source: World Steel Dynamics (WSD) model.
The rise in scrap supply presumes that the scrap recycling industry will be able to expand its collection, processing and distribution capacities. The structure of the industry is already changing as steel producers around the world are investing upstream to acquire scrap operations. More than a strategy to simply ensure captive supply, these moves often entail investment in equipment, transportation infrastructure and advanced detection/selection technologies to optimise the use values of different types of scrap. There may be a role for governments as well. In India, for example, the government has developed a comprehensive Steel Scrap Recycling Policy that identifies bottlenecks and inefficiencies in current practices and outlines a series of steps to improve efficiency, increase collection rates, and lower the costs of scrap recycling (Government of India, 2019[18]).
As scrap supply and demand grow, one key question is the role that international trade in scrap will play. While measures controlling scrap exports are currently limited for the most part to a handful of African countries, plus China and Russia, the treatment of scrap as a strategic material needed to support environmental objectives is likely to grow, which could tempt a larger number of governments to introduce measures that limit exports or otherwise favour domestic steelmakers.
Circular economy
Alongside efforts to promote and realise decarbonisation are more general efforts to create a circular economy, which is a model of production and consumption involving sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. The model embraces four main principles in the case of steel (the four Rs): 1) reduce the amount of material, energy and other resources used to produce steel and develop needed products that are lighter than existing ones; 2) reuse steel in similar ways, without significantly altering its physical form; 3) refurbish or restore steel to a new state; and 4) recycle steel products at the end of their useful life to create new products (World Steel Association, 2023[21]). Recycling ferrous scrap fits neatly into Point 4. The challenges facing the industry and government principally involve providing the infrastructure for recovering, sorting, processing and distributing the scrap to steel markets and, with respect to governments, ensuring that incentives to maximise scrap use are in place (OECD, 2024[22]).
The transition to low-emission iron will likely reshape the global steel industry, driven by the need to meet climate targets and significantly reduce carbon emissions associated with the steel industry. While efficiency improvements and carbon capture technologies have contributed to lowering emissions, they are insufficient for full decarbonisation. A fundamental shift in iron production is required, particularly through hydrogen-based processes for the production of iron intermediate products such as DRI and hot briquetted iron (HBI). These technologies rely on high-grade iron ores and substantial renewable energy, both of which are unevenly distributed globally. As a result, the geographic landscape of iron and steel production is changing, with ironmaking potentially increasingly shifting to regions that have both an abundant supply of high-grade ore and low-cost renewable energy.
This possible shift in production locations may transform international trade flows in iron and steel. Ultimately, the transition to low-emission iron should not occur in a policy vacuum but through careful planning and international co-operation. It is important for governments and industry stakeholders to anticipate the broader consequences of this structural shift, supporting innovation while ensuring a level playing field. This includes fostering stable trade frameworks, aligning environmental regulations, and avoiding excessive state intervention that could create market distortions.
References
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[10] De Santis, M. et al. (2021), INVESTMENT NEEDS, Green Steel for Europe Consortium.
[15] First Movers Coalition (n.d.), Members by Sector Commitment, https://initiatives.weforum.org/first-movers-coalition/members#.
[18] Government of India (2019), “National Resource Efficiency Policy”, https://ic-ce.com/wp-content/uploads/2020/10/Draft-National-Resourc.pdf.
[2] IEA (2021), Net Zero by 2050 - A Roadmap for the Global Energy Sector, IEA, Paris, https://www.iea.org/reports/net-zero-by-2050.
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[7] IEA (n.d.), ETP Clean Energy Technology Guide, IEA, Paris.
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[1] OECD (2022), Assessing steel decarbonisation progress: ready for the decade on delivery?, OECD, Paris, https://doi.org/10.1787/b2dfa00f-en.
[11] Vogl, V., M. Åhman and L. Nilsson (2018), “Assessment of hydrogen direct reduction for fossil-free steelmaking”, Journal of Cleaner Production, Vol. 203, pp. 736-745, https://doi.org/10.1016/j.jclepro.2018.08.279.
[21] World Steel Association (2023), Circular Economy, https://worldsteel.org/wider-sustainability/circular-economy/.
[16] World Steel Association (2021), “Scrap use in the steel industry”, Fact sheet, https://worldsteel.org/wp-content/uploads/Fact-sheet-on-scrap_2021.pdf.
[12] Wörtler, M. et al. (2013), Steel’s Contribution to a Low-Carbon Europe 2050, Boston Consulting Group.
← 1. See, for example, McKinsey Sustainability (https://www.mckinsey.com/capabilities/sustainability/our-insights/spotting-green-business-opportunities-in-a-surging-net-zero-world/transition-to-net-zero/steel), Mission Possible Partnership (https://3stepsolutions.s3-accelerate.amazonaws.com/assets/custom/010856/downloads/Making-Net-Zero-Steel-possible.pdf) and Wood Mackenzie (www.woodmac.com/horizons/pedal-to-the-metal-iron-and-steels-one-point-four-trillion-usd-shot-at-decarbonisation/).