State of Steel Decarbonisation 2026
Steel is the single largest industrial source of carbon dioxide, responsible for somewhere between 7% and 9% of global emissions. The path off coal is now technically clear — recycle more scrap in electric furnaces, reduce iron with clean hydrogen rather than coke, and capture what is left — but the economics still favour the blast furnace. This report compiles the public figures on where steel decarbonisation actually stands in 2026, and where analysts still disagree.
Steel still carries about two tonnes of CO2 per tonne of metal
Source: World Steel Association — Climate change and the production of iron and steel (2025)
Roughly 1.89 billion tonnes of crude steel were produced in 2024, and the sector remains one of the most carbon-intensive activities on earth. The World Steel Association reports that in 2023 about 1.92 tonnes of CO2 were emitted for every tonne of crude steel cast, on a direct-emissions basis. Counting the full life cycle pushes the figure higher — worldsteel's broader accounting, which adds methane, nitrous oxide and upstream mining, puts 2024 intensity nearer 2.18 tonnes of CO2-equivalent per tonne. The gap between those two numbers is not noise; it reflects an ongoing debate about where the system boundary should sit, and it matters for any 'green steel' claim.
The electric route is growing, but the blast furnace still makes most steel
Source: World Steel Association — World Steel in Figures 2025 (2025)
The cleanest mainstream route — melting recycled scrap in an electric arc furnace — reached about 29.1% of global crude-steel output in 2024, up from 28.6% the year before. That is real progress, but it leaves the coal-fired blast-furnace and basic-oxygen-furnace route accounting for roughly 70% of production. The constraint is physical as much as financial: there is only so much scrap to recycle, and primary steel made from iron ore still needs a reduction step that today comes overwhelmingly from coke. Until that primary route changes, the headline emissions barely move.
Clean hydrogen is the primary-steel answer — at a cost premium
For ore-based steel, the leading low-carbon route is hydrogen direct reduction: using hydrogen instead of coke to strip the oxygen from iron ore, then melting the result in an electric furnace. The catch is price. Analyses put hydrogen-based DRI at roughly 30% more expensive than the natural-gas DRI route today, with renewable hydrogen alone making up something like 15% to 40% of the finished cost of green steel. Whether that premium narrows depends almost entirely on the future cost of green hydrogen and clean electricity, which is why forecasts diverge so widely. The technology is proven; the economics still need carbon pricing, offtake commitments or subsidy to close the gap.
FAQ
Why is steel so hard to decarbonise?
Primary steel is made by reducing iron ore, which today uses coke — a process that releases CO2 chemically, not just from heat. Switching the furnace's electricity supply does not fix that. It requires a different reduction route, such as hydrogen direct reduction, or carbon capture, both of which cost more than the incumbent blast furnace.
Is recycled steel the same as green steel?
Recycling scrap in an electric arc furnace is much lower-carbon than making steel from ore, and it already supplies about 29% of world output. But scrap is limited, so it cannot meet all demand. Truly low-carbon primary steel needs clean hydrogen or carbon capture, so 'green steel' usually refers to those routes rather than recycling alone.
Sources
- World Steel Association — Climate change and the production of iron and steel
- World Steel Association — World Steel in Figures 2025
- Lawrence Berkeley National Laboratory — Green steel: design and cost analysis of hydrogen-based direct iron reduction
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Sectors: Steel & Metals · Power Generation · Cement