Green steel - pressing the accelerator with the handbrake on
The decarbonisation of steel is often framed as a technological challenge. In reality, many of the core technical solutions are already understood, tested and increasingly deployed. The question now facing the industry is not what needs to be done, but whether the conditions exist to do it at scale. What comes next for green steel depends less on innovation breakthroughs and more on the economic, policy and market environment that surrounds them.
I have spent a large part of my career working with steel producers on accounting for, and assuring, carbon emission reductions. Last year alone I visited more than 10 steel producing sites in Europe and Asia, and worked on carbon reduction projects at more than 20 sites across the world, including many of those mentioned below. Accordingly, here are some of my reflections on the current direction of the industry.
The Technology Is Largely Known
Low-carbon steel production rests on a combination of established and emerging technology approaches:
Across major steel-producing regions, these routes are already being pursued. For example in Japan and South Korea, incumbent producers are investing in new and expanded EAF capacity, increasing scrap use and piloting hydrogen technologies at existing integrated sites. Nippon Steel, for example, is expanding EAF capacity at its Kyushu Works, while JFE Steel is constructing a large new EAF at its West Japan Works in Kurashiki. Kobe Steel is focusing on incremental decarbonisation across its Japanese operations through higher scrap use, biomass power generation and energy-efficiency improvements.
Japan’s major producers are also exploring hydrogen injection into blast furnaces. Under a long-running Japanese government–industry consortium involving Nippon Steel, JFE Steel and Kobe Steel, pilot hydrogen-injection trials have been carried out at Nippon Steel’s East Nippon Works (Kimitsu) and at JFE Steel’s Chiba site, reflecting a strategy focused on reducing emissions from existing blast furnace assets rather than full replacement in the near term.
In South Korea, POSCO’s HyREX programme combines energy-efficiency measures with increased use of scrap, DRI and HBI, while a new large-scale EAF is under construction at the Gwangyang works. Hyundai Steel is pursuing hybrid configurations across its operations, including plans to recommission an idle EAF and build a new pilot scale DRI facility at its Dangjin site, alongside measures intended to reduce the emissions intensity of blast furnace production.
In Europe, companies such as Tata Steel at IJmuiden in the Netherlands focus on replacing blast furnaces with direct reduction and EAF capacity, while voestalpine’s Linz site is developing the Hy4Smelt industrial-scale demonstration project combining hydrogen-based direct reduction with electric steelmaking. New entrants such as Stegra in Boden, Sweden, and Hydnum Steel in Puertollano, Spain, are pursuing greenfield hydrogen-based models in regions with relatively favourable access to renewable power.
In India, producers are also advancing electrification, hydrogen pilots and efficiency improvements across major integrated sites, while navigating an evolving domestic policy framework.
China, as the largest steel producing country, heavily dependent on coal based blast furnaces, and the USA (70% EAF production) have differing priorities in relation to green steel, which I may explore in a subsequent article.
A Reality Check on the Transition
While momentum is building, it is important to remain realistic about the pace and shape of change. Renewable electricity remains expensive or constrained in many locations, while large-scale green hydrogen and CCUS are not yet economically viable. Steel produced using fossil fuels in traditional blast furnaces is still expected to account for around one third of global production by mid-century.
This reflects the long operational lifetimes of steel assets, uneven access to affordable clean energy and scrap, and the sheer scale of capital required for full conversion. Even where technical pathways exist, external conditions frequently slow or defer implementation.
Recent developments in Europe illustrate this clearly. Several major hydrogen-based DRI projects proposed by ArcelorMittal in Spain and Germany, and thyssenkrupp Steel in Germany have been delayed or discontinued as companies reassess the cost and availability of renewable electricity and green hydrogen. Salzgitter, at its Flachstahl site, has similarly postponed the later phases of its SALCOS programme.
In Asia, much of the near-term decarbonisation effort at sites such as Kimitsu, Chiba, Gwangyang and Dangjin is focused on incremental improvements — higher scrap ratios, energy efficiency and hybrid configurations — rather than full displacement of blast furnaces.
These examples highlight a broader industry reality: technical readiness does not automatically translate into commercial viability. Decarbonisation strategies must therefore balance the rollout of low-carbon production with transitional approaches for existing assets, rather than assuming a rapid or uniform shift away from blast furnaces.
Policy, Standards and Credibility Gaps
As technology deployment accelerates, differences in policy frameworks and standards are becoming increasingly visible. India’s Green Steel Taxonomy, introduced in 2025 by the Ministry of Steel, is a case in point. While it mirrors international initiatives in classifying steel by emissions intensity, its thresholds and treatment of production routes differ materially from European and global standards.
For producers such as ArcelorMittal Nippon Steel India, operating large integrated sites while serving international customers, these differences risk creating parallel narratives around what constitutes “green” steel. As procurement teams become more sophisticated, credibility will matter as much as ambition. Claims that are acceptable in one regulatory context may be challenged in another, particularly where customers are being asked to pay a premium.
Clear labelling and incorporation of green steel into public and corporate procurement requirements are essential. As a lead auditor under the LESS (Low Emission Steel Standard) scheme, and a member of the Responsible Steel Assurance Panel, I have a vested interest in seeing greater uptake of Standards by steel producers and their customers alike. With so many competing commercial priorities, achieving alignment on what constitutes ‘green steel’ remains a challenge that will unavoidably pervade progress over the coming years.
What Is Really Needed Now
Three conditions will largely determine whether green steel can move from early deployment to mainstream production:
Clean electricity sits at the heart of every credible green steel pathway. Both hydrogen production and electric furnaces are highly energy-intensive. Without abundant, low-cost renewable power, even advanced plants — whether at IJmuiden, Kakogawa, Gwangyang or Hazira — will struggle to deliver genuinely low-carbon steel at viable cost. 26% of ArcelorMittal Nippon Steel India’s total electricity consumption was sourced from renewable energy in 2024, boosted through investment in a 1-GW hybrid renewable energy project in Andhra Pradesh. For many steel companies, shifting from fossil fuel powered electricity generation to renewables is becoming mission critical.
Steelmaking investments at large sites typically span decades. For producers to commit billions to plant conversion or new facilities, policy and regulatory frameworks must be durable and predictable.
“It is critical that we see progress …in …creating a policy environment that incentivizes the investment required to accelerate decarbonization in Europe” Aditya Mittal, February 2025
Low-carbon steel will cost more than conventional steel for the foreseeable future. Widespread adoption therefore depends on customers integrating carbon intensity into procurement decisions, supported by clear standards and credible claims linked to specific production sites. 2025 pricing evidence confirms active green premiums: tradable premiums of €100+ per tonne for verified low-carbon steel have been accepted in Europe, signalling practical upfront willingness to pay in some markets.
An Ecosystem Challenge, Not a Single-Company One
Green steel cannot succeed in isolation. Progress depends on coordination across energy systems, infrastructure providers, policymakers, financiers and customers. Green steel has moved beyond the question of technical feasibility. The industry is now firmly in an implementation phase, where outcomes depend on power markets, policy durability, standards alignment and customer behaviour.
For steel producers, this means communicating transition pathways with realism, clarity and confidence, aligning ambition with the complex realities of a transforming industrial system. It also means accounting accurately for carbon emission reductions, and managing schemes to present green steel to customers with credibility.
The many examples of progress listed above indicate that change is occurring; albeit in a sometimes disconnected, sporadic, delayed and variable way. It’s not just a rapid technological revolution that is needed: other systemic changes are required to remove the handbrake.