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Steelmaking is emissions-intensive because most steel still begins with iron ore that must be chemically reduced, and the dominant blast-furnace route uses coal-derived coke for both heat and reduction. The International Energy Agency (IEA) estimates that blast-furnace/basic-oxygen-furnace (BF–BOF) production represented about 70% of global steel output in its 2025 assessment. Lower-emissions options include using scrap in electric arc furnaces (EAFs), producing primary iron with hydrogen-based direct reduction, adding carbon capture to existing processes, and developing iron electrolysis. None is automatically low-carbon: the result depends on electricity and hydrogen sources, scrap quality, infrastructure, plant operation, and the emissions boundary used for accounting.
The IEA’s 2025 steel assessment describes a sector in transition, but announced capacity is not the same as verified near-zero production. A sound comparison therefore examines how each route works, what inputs it requires, whether those inputs are genuinely low-emissions, and whether projects have credible operating and transition plans.
Where steel production emissions come from
Iron ore reduction in a blast furnace
Iron ore is mostly iron oxides. Before it can become steel, oxygen must be removed to make metallic iron. In a BF–BOF plant, prepared ore, coke and fluxes enter a blast furnace. Coke, made from coal, burns to provide high-temperature heat and also supplies carbon monoxide and other reducing chemistry that strip oxygen from the ore. The resulting hot metal is refined in a basic oxygen furnace, where oxygen lowers its carbon content and removes impurities.
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This route creates emissions from several sources at once. Burning coke and injected fuels produces energy-related carbon dioxide; the chemical reduction of iron oxides produces process carbon dioxide; and making coke, preparing ore, generating electricity and transporting materials add upstream or indirect emissions. The exact intensity varies with ore quality, fuel rates, plant efficiency, electricity use and the accounting boundary. The 70% global share reported by the IEA is a production-route estimate, not a universal emissions factor for every BF–BOF plant.
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Electricity is part of the answer, not a guarantee
An electric arc furnace melts metallic feedstocks with electricity rather than using a blast furnace. If its electricity comes from low-emissions generation, direct plant emissions can be comparatively low; if the grid is carbon-intensive, a large share of the footprint occurs at power stations. EAF operations can also use natural gas, oxygen, carbon electrodes and other consumables, so “electric” does not by itself mean “zero-emissions.”
Lifecycle studies may count mining, ore preparation, fuel production, hydrogen production, electricity generation, transport, plant operations and the treatment of by-products. A plant-level figure that counts only CO2 released inside the fence line cannot be compared fairly with a lifecycle figure that includes upstream energy. Any claimed reduction should state its boundary and whether it reports carbon dioxide alone or broader greenhouse-gas emissions.
Why scrap changes the calculation
Scrap-based EAF production starts with steel that already exists. Melting and refining scrap avoids the ore-reduction step for the scrap portion, which can remove the most carbon-intensive chemistry from the production chain. The benefit grows when the furnace uses low-emissions electricity and efficient sorting.
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Scrap is not an unlimited or perfectly clean substitute for new iron. Available quantities depend on how much steel reached end of life, collection systems and trade. Copper, tin and other residual elements can accumulate during repeated recycling. The European Commission’s Joint Research Centre (JRC) notes that scrap-based production cannot supply the purity required for every application, limiting substitution in some value chains. High-quality scrap and carefully controlled dilution with primary iron may be needed for demanding grades. Details are set out in the JRC/INCITE 2026 report.
Lower-carbon steelmaking pathways
| Pathway | What changes | Conditions and limits |
|---|---|---|
| Scrap-based EAF | Recycles steel and melts it electrically, avoiding ore reduction for the scrap share. | Needs suitable scrap, sorting and low-emissions electricity. Some grades require purer inputs than scrap alone can provide. |
| Hydrogen DRI–EAF | Uses hydrogen to remove oxygen from iron ore in a direct-reduction reactor, then melts the direct-reduced iron (DRI) in an EAF. | Deep reductions require low-emissions hydrogen and electricity, plus ore, transport and grid infrastructure. Early plants face a substantial cost premium. |
| Natural-gas DRI–EAF with later transition | Uses natural gas in DRI first, with equipment that may later operate with more hydrogen. | Can be an intermediate route, but gas operation is not automatically near-zero. The timing and credibility of a hydrogen conversion matter. |
| CCUS-equipped iron or steelmaking | Captures a portion of process or combustion CO2 for use or permanent storage. | Requires effective capture, reliable CO2 transport and storage or use, energy for the capture system, and supportive regional economics. |
| Iron electrolysis | Uses electricity in an electrochemical process to reduce iron ore instead of using carbon or hydrogen as the reducing agent. | Electricity must be low-emissions. Commercial readiness, comparable costs and operating performance are not established by the sources cited here. |
| Efficiency, material efficiency and circularity | Uses less steel, extends product life, improves yield and increases reuse or recycling. | These measures reduce demand and energy use but do not eliminate emissions from all primary iron production. |
Scrap EAF: the most established lever where feedstock allows
Scrap EAFs are commercially established and can expand without building a new ore-reduction line when adequate scrap is available. Operators still need to control residual elements, remove coatings and contaminants, and match furnace chemistry to the required grade. A construction bar producer may have more flexibility than a producer of flat steel for demanding automotive or electrical applications.
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The electricity contract and physical grid matter. A furnace connected to a coal-heavy grid can shift emissions from the plant to power generation. Hourly matching, additional clean generation and transmission capacity can matter more than a generic annual renewable-energy label. The appropriate claim is therefore conditional: scrap EAF can be a lower-emissions route under favorable feedstock and power conditions, not a universal replacement for primary ironmaking.
Hydrogen DRI–EAF: primary iron without coal reduction chemistry
Hydrogen direct reduction replaces the reducing role of carbon monoxide with hydrogen. The reactor produces solid DRI, often called sponge iron, which is then melted in an EAF. The process still consumes electricity for hydrogen production, compression and the furnace, and it still needs suitable iron ore. If hydrogen is made by electrolysis using low-emissions electricity, the reduction step can avoid the blast furnace’s coal-based chemistry. If hydrogen is produced from fossil gas without effective carbon capture, the apparent benefit can be much smaller.
Hydrogen DRI also depends on regional resources. Projects need abundant low-emissions power, water and hydrogen equipment, transmission, storage and transport. Ore quality affects energy use and whether the material can be fed directly to the reactor. Where clean hydrogen is scarce or expensive, a plant may operate below its intended load or use another gas, changing its emissions profile.
The IEA estimates that early commercial plants using 100% hydrogen blends face a cost premium of roughly 50% to 140% compared with today’s BF–BOF plants, with the range varying by region. This is a project and regional production-cost comparison, not a universal increase in the price of finished steel. See the IEA 2025 steel assessment for the qualification behind that estimate.
Natural-gas DRI as an intermediate step
Direct reduction using natural gas can lower some emissions relative to a conventional blast furnace and can use equipment designed for eventual hydrogen substitution. It is not equivalent to hydrogen DRI while it is operating on gas: methane extraction, gas reforming and the carbon in the reducing gas still create emissions. The transition case is credible only if the reactor, burners, pipelines, power supply and financing can actually accommodate hydrogen and if a firm conversion schedule exists.
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The IEA reports that many projects described as capable of near-zero production plan to start with natural gas, while their timing for a full transition is unclear. A project announcement should therefore distinguish “hydrogen-ready” equipment from current hydrogen consumption and disclose the expected fuel mix for each operating phase.
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CCUS can capture CO2 from blast-furnace gases, direct-reduction processes, furnaces or other concentrated sources. Captured carbon may be transported for permanent geological storage or, where a durable pathway exists, used in a product. Capture does not remove every emission: uncaptured process gas, fuel production, electricity, mining and transport remain, and the capture plant itself consumes energy.
Feasibility depends on a regional network of pipelines, compression, injection sites, monitoring and long-term liability arrangements. A steel plant without access to verified storage or transport cannot claim the same result as one connected to an operating system. The IEA discusses these enabling conditions in Demand and Supply Measures for the Steel and Cement Transition; the Energy Transitions Commission also describes CCUS among the sector’s possible options at its steel sector overview.
Iron electrolysis
Iron electrolysis seeks to reduce ore electrochemically, using electricity rather than coke or hydrogen. In principle, a low-emissions electricity system could make this a fundamentally different primary-iron route. It may also avoid some combustion equipment and associated gases.
It remains a technology option rather than a universally available commercial solution. The cited sector overview identifies electrolysis but does not establish a common commercial-readiness rating, comparable cost, or verified project performance. Readers should treat claims about large-scale deployment as prospective unless a project publishes operating data, input sources and an independently defined emissions boundary.
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Efficiency, material efficiency and circularity
Using less steel for the same function, designing products for longer life, improving rolling yields and reusing components reduce the amount of new iron and steel required. Better collection and sorting increase the share of future demand that can be met with scrap. These measures are often faster to apply than a new primary-production route, but they complement rather than replace changes to plants that still need to make virgin iron.
How to compare emissions claims fairly
There is no single route-by-route number that can be applied worldwide. The sources considered here do not provide a directly comparable emissions-intensity table built on one common boundary. Use the following questions before treating one figure as evidence that a route is cleaner:
- What boundary is used? Check whether the number covers only direct plant emissions or also mining, ore preparation, fuel and hydrogen production, electricity, transport, scrap collection and carbon-storage operations.
- What feedstock enters the plant? Separate scrap, pellets, lump ore, DRI and hot briquetted iron. A route’s result changes with the proportion and quality of each input.
- What powers the process? Record the electricity mix, whether clean power is new or existing, and the source and production method of hydrogen. Annual certificates do not by themselves describe every hour of operation.
- What happens to carbon captured? Count capture energy, transport losses, storage permanence and any emissions from using CO2. Temporary use is not the same as permanent removal.
- Which grade is being made? A scrap-rich route may work for one product but need primary iron to control residual elements in another. Compare like-for-like steel grades and yields.
- Is the figure measured or modelled? A demonstration estimate, a design target and an operating measurement have different evidentiary weight. Ask for the date, plant boundary, measurement method and independent verification.
The IEA Iron and Steel Technology Roadmap and the European Parliament’s Moving towards zero-emission steel overview both emphasize that energy inputs, technology choice and local conditions shape the result.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What current deployment figures actually show
Near-zero capacity is smaller than “capable” capacity
The IEA’s 2025 assessment reports about 10 million tonnes of near-zero-emissions iron and steel capacity planned for 2030, compared with just over 80 million tonnes of capacity described as capable of near-zero production. Those are different categories. Many capable projects intend to start on natural gas, and the IEA says their schedules for a complete transition are unclear. A pipeline announcement therefore does not establish that near-zero steel will be produced from the first day of operation.
European Union project pipeline
For the European Union, the JRC/INCITE frontloading report identifies approximately 17 million tonnes per year of planned DRI capacity across eight plants and about 35 million tonnes per year of planned EAF capacity across sixteen installations during 2026–2030. These figures describe EU plans, not global capacity, and they do not by themselves specify the eventual electricity, hydrogen, scrap mix or operating rate.
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Demand commitments and procurement
Low-emissions steel usually costs more before supply chains, energy systems and plants scale. The IEA finds that current demand commitments for near-zero and low-emissions steel have not been sufficient to increase production at the required pace and scale. Aggregated buyer commitments, long-term offtake contracts and public procurement can create a lead market in which producers can finance new equipment and secure clean inputs.
Procurement rules should define the emissions boundary, verification method, delivery date, steel grade and acceptable transition period. Otherwise, a label such as “green” can conceal a gas-fired start-up, unverified offsets or a boundary that excludes hydrogen and electricity production.
Infrastructure and policy that determine whether alternatives work
Technology alone cannot decarbonise a plant. Hydrogen DRI needs low-emissions generation, electrolyzers or a dependable hydrogen supply, storage, pipelines and suitable ore. EAF expansion needs reliable high-capacity electricity, grid connections, scrap collection and sorting. CCUS needs shared CO2 networks and permanent storage. All routes need skilled operators, financing, maintenance supply chains and clear product standards.
Policy can reduce the risk that a plant is built with a nominal future option but runs for decades on a higher-emissions fuel. Useful measures include contracts for difference or other revenue support tied to measured emissions, infrastructure planning for power and CO2, standards that recognize verified low-emissions steel, and public purchasing that creates predictable demand. The IEA’s 2025 demand-and-supply report stresses coordinated action rather than isolated plant subsidies.
A practical decision framework for buyers, planners and policymakers
- Define the product. Specify grade, dimensions, recycled-content needs, purity limits and delivery volume. This determines whether scrap alone can work or whether primary iron is required.
- Set the accounting rule. Choose a recognised boundary covering the relevant upstream energy and materials. Require suppliers to report direct and lifecycle components separately.
- Map local inputs. Quantify scrap availability and contamination, ore quality, electricity carbon intensity, hydrogen supply, natural-gas dependence and CO2-storage access.
- Check the operating plan. For a “transition-ready” project, ask what fuel is used at commissioning, when hydrogen or capture begins, what equipment must be replaced, and which permits and contracts are already secured.
- Compare total cost and risk. Include power and hydrogen price volatility, grid upgrades, carbon costs, capture transport, downtime during conversion and the cost of qualifying a new steel grade.
- Require verification. Use plant measurements or independently reviewed lifecycle calculations, identify the reporting year and disclose assumptions. Do not treat an announcement or equipment capability as proof of actual low-emissions output.
- Use a portfolio. Combine scrap EAF where quality and supply allow, primary low-emissions iron where scrap is insufficient, and efficiency and reuse to reduce total demand. A mixed strategy is more realistic than relying on one technology everywhere.
Common mistakes when interpreting “green steel” claims
- Equating EAF with zero emissions: the electricity mix and metallic feedstock determine much of its footprint.
- Counting all scrap as interchangeable: residual elements and grade specifications can require virgin iron.
- Calling gas-based DRI near-zero: natural-gas operation is an intermediate pathway unless the fuel and any associated emissions are addressed.
- Using a plant-only boundary: excluding hydrogen, electricity, mining or transport can reverse the apparent ranking.
- Assuming capture equals removal: capture rates, energy penalties, transport and permanent storage must be demonstrated.
- Reading announcements as production: planned, capable and operating capacities are separate categories.
- Applying one global cost premium: the IEA’s 50–140% estimate for early 100%-hydrogen plants varies by region and is not a universal finished-steel price increase.
Bottom line
Steel emissions come mainly from the carbon-intensive chemistry of primary ironmaking and from the energy used throughout the chain. Scrap EAFs can cut emissions where suitable scrap and clean electricity are available; hydrogen DRI–EAF offers a primary route with deep-reduction potential but currently high regional costs and demanding infrastructure; CCUS can reduce emissions where capture and storage networks exist; and iron electrolysis remains a developing option. The most credible pathway is location-specific and evidence-based: compare common boundaries, verify the actual energy and feedstock, distinguish operating output from announced capability, and combine production changes with efficiency, reuse and stronger demand and infrastructure policy.
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