Steel’s Carbon Challenge: Industry’s Path to Net Zero
Global steel production drives 11% of carbon emissions—here’s how the industry is confronting its climate impact and chasing net-zero.
Steel is one of the world’s most essential materials—but its current production methods make it a leading contributor to climate change. The steel sector accounts for approximately 11% of global carbon dioxide (CO2) emissions, an amount far out of scale with its share of global GDP. As pressures to decarbonize rise, attention to steel’s environmental footprint intensifies, spurring both scrutiny and innovation. This article examines the core sources of steel’s climate impact, what makes decarbonization so difficult, and the potential pathways—or roadblocks—toward a near-zero carbon future.
How Steelmaking Fuels Climate Change
Steel production is deeply energy- and emissions-intensive. The vast majority of steel is produced using coal-fired blast furnaces—a process that releases enormous amounts of CO2 at each step:
- Coke Production: Coal is heated at high temperatures to create coke, releasing 0.71 tonnes of CO2 per tonne of steel produced.
- Blast Furnace Operation: Coke is then burned in blast furnaces to reduce iron ore to iron metal, resulting in 1.41 tonnes of CO2 per tonne of steel.
- Steel Processing: The conversion of iron to steel emits an additional 0.21 tonnes of CO2 per tonne.
Taken together, these add up to 2.33 tonnes of CO2 released for every tonne of steel produced, not counting indirect emissions from mining or transporting coal or iron ore. When indirect emissions and methane (with far more warming impact per molecule than CO2) are included, total emissions are even higher.
Steel’s Share of the Global Carbon Footprint
| Steel Sector Emissions | Yearly CO2 Output | Share of Global CO2 |
|---|---|---|
| Direct (Iron & Steel Production) | 2.6 gigatonnes CO2/year | ~7% |
| Total (Including Indirect & Methane) | 3.7 gigatonnes CO2/year | 11% |
The steel sector’s 11% share of emissions overshadows industries such as cement or aviation, making it a key battleground in the fight for climate stability.
Why Is Steel So Hard to Decarbonize?
- Heavy Reliance on Coal: About 73% of the energy used in steelmaking comes from coal, especially in China and India, regions that dominate global steel output.
- Blast Furnaces Are Built for the Long Haul: Most blast furnaces run for decades. Retrofitting or replacing them with cleaner technology is capital-intensive and slow.
- Technical Barriers: Iron ore must be chemically reduced; carbon (from coal or coke) is the traditional agent. Alternatives, such as hydrogen, require new, expensive infrastructure and reliable supplies of renewable energy.
- Growing Global Demand: Steel demand is forecast to rise by up to 32% by 2050 due to urbanization, infrastructure build-out, and the energy transition itself (renewable energy facilities are steel-intensive).
These factors make rapid shifts in production pathways complicated and financially risky for the industry.
Emissions Intensity: Global and Regional Disparities
| Region | Average Emissions Intensity (tCO2/tonne steel) | Main Technology |
|---|---|---|
| China/India | Up to 2.33 | Blast Furnace – Basic Oxygen Furnace (BF-BOF) |
| United States | 1.02 (carbon/alloy) | Electric Arc Furnace (EAF), some BF-BOF |
| Europe | ~1.8–2.0 | Mix of BF-BOF and EAF |
| Global Average (2020) | 1.89 | BF-BOF dominates |
The production path is decisive: electric arc furnaces (EAF), running on scrap and low-carbon electricity, can cut emissions by up to 75% compared to coal-fired blast furnaces. Yet EAFs account for a minority of production globally, though their share is rising.
Can Steel Go Green? Decarbonization Levers
Achieving net-zero emissions in steel is theoretically possible, but depends on deploying and scaling several key technologies and strategies:
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- Electrification: Transitioning to EAF and other electric-based methods powered by renewable energy, reducing emissions by an estimated 27% by 2050.
- Hydrogen-Based Reduction: Using green hydrogen instead of coal for iron ore reduction, which can cut emissions by 21%. This method is already demonstrated in pilot projects but needs reliable, low-cost renewable electricity at scale.
- Energy Efficiency: Upgrading equipment, optimizing production cycles, and increasing scrap recycling can reduce emissions by 19%.
- Carbon Capture, Utilization and Storage (CCUS): Capturing CO2 from smokestacks for long-term storage or re-use. Costly and not yet widely deployed for steel.
- Process Shifts: Developing novel iron-making methods—e.g., using direct-reduced iron (DRI) or discontinuous production to minimize emissions.
According to the Net Zero Industry Tracker, industry targets are ambitious:
- 45% reduction in emissions intensity for primary steel by 2030.
- 65% reduction for secondary steel by 2030.
- Net-zero emissions by 2050—a goal considered feasible only if the above technological levers are widely adopted and supply chains decarbonized.
Where Are We Now? Slow Progress, Stark Challenges
- Emission Intensity Rises: From 2019-2023, average emission intensity climbed by 0.6% globally. Increased production in China and India, both highly coal-dependent, offset efficiency gains elsewhere.
- Fuel Mix Is Still Dirty: As of 2022, steel’s energy mix remains 73% coal, 8% natural gas, 14% electricity (some fossil-powered), with only tiny shares for bioenergy or renewables.
- Scrap Steel Use Rising: The share of EAF-based steel production—more climate-friendly than BF-BOF—grew from 32% to 43% from 2022 to 2023, indicating a trend but still minority status globally.
- Demand Is Growing: Economic and population growth means the total steel needed for infrastructure and renewables is likely to grow steeply through 2050, further compounding the emissions dilemma.
Why Big Shifts Are Hard in Practice
- High Capital Costs: Decarbonizing often requires expensive new plants, not quick retrofits.
- Long Asset Life Cycles: Furnaces and mills operate for 30-50 years, making rapid turnover costly and complex.
- Supply Chain Dependencies: Even electrified or hydrogen-driven production needs green electricity or cheap green hydrogen, both of which require massive new infrastructure.
- Competition and Policy Constraints: Three-quarters of large producers consider climate risk in their decision-making, but without strong government incentives or regulation, radical change remains slow.
The Global Decarbonization Roadmap
The International Energy Agency (IEA) and other authorities have outlined a multi-stage approach for steel industry decarbonization:
- Short-Term: Deploy available carbon capture solutions, increase energy efficiency, and switch to lower-carbon fuels where possible.
- Mid-Term: Invest in new EAF plants, expand recycling and scrap use, and accelerate hydrogen-based pilots to commercial scale.
- Long-Term: Achieve full electrification with net-zero supply chains, relying on wide availability of renewable power and mature CCUS/hydrogen technologies.
Adopting these strategies requires global cooperation—especially as climate policy, energy pricing, and technical skills vary widely between regions.
Steel and the Circular Economy
Scrap steel offers unique opportunities for rapid emissions reduction. Recycling steel via EAFs is far less carbon-intensive than blast furnace methods—and steel can be recycled almost indefinitely without loss of quality.
- Using more scrap could dramatically curb emissions for secondary steel production (i.e., steel made from recycled materials).
- Barriers exist: availability and quality of scrap, regional infrastructure, and market demand.
- Transitioning toward a circular model for steel—where scrap supply chains are globalized and quality managed—could cut global steel emissions by more than half compared to today’s rates, if fully realized.
Calls to Action: What Must Change for Net Zero?
- Accelerate Innovation: Scale up green hydrogen, advanced EAF, and CCUS technology—plus innovate new methods beyond current pilots.
- Policy Support: Governments need to create strong incentives, carbon pricing, and phase-out plans for coal-based production.
- Finance & Investment: Decarbonizing steel requires trillions in globally coordinated investment—public and private.
- Transparency & Accountability: Standardized emissions reporting, independent verification, and consumer awareness will spur action and market signals.
77% of the world’s largest public steel producers now consider climate change in their strategies. But voluntary efforts alone may be insufficient given the scale and urgency of the climate challenge.
Frequently Asked Questions (FAQs)
Q: Why is steel production responsible for so much carbon pollution?
A: Steel production relies heavily on coal-fired blast furnaces, which emit large amounts of CO2 during both chemical reduction of iron ore and combustion for heat. With over 70% of global steel made via this process, its climate impact is disproportionately large.
Q: Are cleaner methods for making steel available?
A: Yes. Technologies using electric arc furnaces (EAF) powered by renewable energy, or hydrogen-based reduction, can cut emissions dramatically. However, scaling these approaches requires major new investment and supportive policy frameworks.
Q: Can steel be recycled to reduce emissions?
A: Absolutely—steel is infinitely recyclable, and EAFs using recycled scrap produce far less CO2. Increasing global scrap availability and upgrading sorting technologies will be key for a circular steel industry.
Q: What role does carbon capture play in steel decarbonization?
A: Carbon capture, utilization and storage (CCUS) can trap and sequester CO2 from steel plants, but high cost and scalability remain challenges. It’s a bridging solution while cleaner processes mature.
Q: What are the main roadblocks to net-zero steel production?
A: Complexity and cost of retrofitting or replacing existing plants, dependence on fossil-based energy in key producing countries, and fast-rising global steel demand make fast, complete decarbonization difficult.
Conclusion: Steel’s Decarbonization Will Shape the Climate Future
Steel’s central role in global industry comes at a daunting climate cost. Decarbonizing the sector is possible—but will require unprecedented shifts in technology, policy, capital investment, and consumer behavior. As steel underpins infrastructure, renewables, vehicles, and buildings, success in reducing its carbon footprint is essential not just for the sector, but for the world’s hopes of climate stability. The path is complex, but as demand rises and climate stakes grow clearer, transformative action in steel production can—and must—lead the way.
References
- https://steelwatch.org/steelwatch-explainers/climate/
- https://reports.weforum.org/docs/WEF_Net_Zero_Industry_Tracker_2024_Steel.pdf
- https://www.usitc.gov/press_room/news_release/2025/er0227_66582.htm
- https://worldsteel.org/climate-action/climate-change-and-the-production-of-iron-and-steel/
- https://climatetrace.org/news/climate-trace-releases-march-2025-emissions-data
- https://www.industrytransition.org/green-steel-tracker/
- https://rmi.org/steel/
- https://www.statista.com/topics/13436/steel-industry-emissions-worldwide/
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