Kinam Kim, Senior Green Steel Strategist
2025.03.07
One of the most crucial sectors in addressing climate change is the steel industry—yet it remains relatively unknown to many. Fortunately, a solution exists: green steel. To make this a reality, major steel companies—who have largely flown under the radar when it comes to their climate impact—must take responsibility and invest in transitioning to greener alternatives.
The reality we face
From the electric kettle we use every morning to the subway we take to work, to the buildings we live in, steel is everywhere. It’s an essential material that shapes modern life. But it’s also a major contributor to climate change.
According to recent data, the steel industry accounts for about 11% of global CO2 emissions—higher than many sectors we commonly associate with climate impact. It’s also the second most carbon-intensive of all heavy industries. This is because traditional steelmaking depends on burning coal in blast furnaces, a process responsible for 90% of the industry’s emissions.
If we’re working towards a cleaner future, where our cars and buildings and tech appliances are decarbonized, it is imperative that the material that makes up those products is itself decarbonized. Effectively reducing the steel industry’s carbon emissions is therefore crucial for maintaining temperatures under a 1.5-degree rise and mitigating the climate change threat facing humanity.
Viable solutions
The good news? A cleaner alternative already exists: green steel.
Green steel production slashes emissions by replacing blast furnaces — the traditional steelmaking technology that relies on burning coal directly, meaning it’s extremely polluting and dangerous — with electric-arc furnaces, new technology that can be powered by renewable energy. Green steelmaking also uses green hydrogen-based methods instead of coal in the reduction process. This approach, known as direct reduced iron (DRI), relies on green hydrogen—produced from renewable energy—as a reduction agent to transform iron ore into steel. And the only byproduct of this process is water.
This is the most promising decarbonization technology available. Research shows that using just 1 kilogram of green hydrogen can cut about 25 kilograms of CO2 emissions. As a result, green steel is significantly cleaner—reducing emissions by roughly 0.4 tCO2e per ton compared to conventional steel.
The challenges we face
So, if the solution is already here, why is the industry still so polluting?
There’s still several important challenges to overcome. The biggest one is building the necessary renewable energy infrastructure. Decarbonizing global steel production by 2050 will require around 2,700 TWh of renewable energy—equivalent to the EU’s entire annual power consumption. Developing this level of renewable energy capacity demands massive investment, which can be particularly challenging for developing nations.
There are also technical hurdles to overcome. Even hydrogen-based direct reduced iron (H2-DRI)—the most promising technology—has yet to reach large-scale commercialization. This is because challenges persist in green hydrogen production, transportation, and storage, with the lack of a stable supply chain acting as a significant bottleneck.
Additionally, market and policy uncertainties are slowing progress. Many steel companies have already sunk vast investments into coal-based facilities, and the higher production costs of green steel make it difficult to compete in the market. Government policies remain inconsistent, making companies hesitant to commit. As a result, many take a wait-and-see approach, unwilling to act until others prove success—stalling the entire industry’s transformation.
What we can do
Despite these challenges, there’s reason for optimism. Major steel companies still hold the power to drive an industry-wide shift. Until now, the steel sector has largely avoided public scrutiny, but that can change—with our collective attention and pressure.
In fact, signs of progress are already emerging: Swedish and German steelmakers SSAB and Thyssenkrupp have begun transitioning to green steel. The more companies that follow suit, the faster and more cost-effective the transformation will become.
So, what can you do? Start by spreading awareness. Talk to family and friends about the steel industry’s carbon footprint. Push the brands you buy from—whether car manufacturers or appliance makers—to incorporate green steel into their products. And if you happen to work in the steel industry, advocate for discussions on green steel within your workplace.
Small actions, when multiplied, create momentum.
The truth is clear: we can’t afford to delay transforming the steel industry. To reach carbon neutrality by 2050, we must act now. And every one of us has a role to play in making that happen.
