Breakthrough technologies for low-carbon steelmaking

There is no single solution to low-carbon steelmaking. Expanding production with already available technologies such as natural gas-based DRI and EAF will be a significant step forward. However, to achieve deep decarbonisation, a broad portfolio of new technology options will be required. These can be deployed alone or in combination, as local circumstances permit. Our industry is leading research, development, and deployment efforts globally.

The BF remains the predominant technology for reducing iron ore today and is expected to be a key component of the global steel industry for years to come. Modern BFs operate near theoretical efficiency limits but continue to be refined, and many innovative practices are being developed to significantly reduce their carbon footprints.

The next-level blast furnace

• Top gas recycling
• Lower carbon and circular reductants
• Direct and indirect use of hydrogen
• Electrification
• Plasma injection
• Oxyfuel injection
• Digitalisation

When used alone or combined, these practices can transform the BF into an even more efficient technology on the path to low-carbon steelmaking.

However, to achieve drastic reductions, new and transformative approaches are required, and several promising technologies are under development and in the initial stages of application.

These fall into three main categories:

• Using carbon as a reductant while preventing the emission of fossil CO₂
• Substituting carbon with hydrogen (H₂) as a reductant, generating water (H₂O) rather than CO₂
• Using low-carbon electrical energy through an electrolysis-based process

Energy and cost

Low-carbon steel production is expected to be significantly more expensive than conventional methods. Access to capital and modern financing schemes will be necessary both during the installation of new facilities and to ensure that operating costs are at a viable level. Most low-carbon steelmaking technologies depend—either directly or indirectly—on abundant, reliable supplies of low-carbon energy. In many cases, this energy will be converted to hydrogen, which acts primarily as a reducing agent in novel technologies (e.g., H2 DRI) and, in some cases, as a replacement for fossil fuels in existing processes. Ensuring a consistent and affordable supply of these forms of energy is vital.

worldsteel estimates that the transition will require in capital expenditure (CAPEX):

• US$1.2 trillion for new facilities and adaptation of existing facilities
• US$2.5 – US$4 trillion in upstream or downstream processes, e.g. energy and infrastructure

Infrastructure

Infrastructure is key to guaranteeing a consistent supply of low-carbon energy, as well as the development of carbon capture, use, and storage (CCUS) networks. This includes the infrastructure for safe and efficient storage, transportation, and conversion of hydrogen and its derivatives. Even so, proposed projects still face significant hurdles, such as complex regulatory environments.

Consequently, rollout requires a multi year approach and may only show results by the mid-2030s and beyond.

In this challenging context, steelmakers and hydrogen producers are increasingly exploring strategies such as long-term offtake agreements or vertically integrated renewable generation to guarantee access and price stability.

Ore quality

High iron content in raw materials is vital for efficient low-carbon steel production. Current DRI processes and early hydrogen-based variants need high-grade iron ore (at least 64% Fe), which accounts for less than 20% of global supply. The scale-up of DRI will boost demand for these and, therefore, costs. Investing in technologies like electric smelting furnaces (ESF) can enable the use of BF-grade ores in DRI processes.

People

The transition is not solely a technological or economic shift—it also represents a profound workforce, community, and organisational transformation. It creates urgent demand for technical training, reskilling, workforce mobility, and systematic knowledge transfer across the value chain. A just transition-ensuring fair treatment, inclusive dialogue, and shared opportunities—demands proactive collaboration among industry, governments, communities, and labour representatives.

Market demand

A strong demand-side signal and clear policy are essential for deploying low-emission technologies at scale, whether new or replacing existing capacity.

Supportive government and private sector demand-side initiatives can accelerate and reinforce demand and bridge the gap between the availability of low-carbon steel and the market readiness to absorb it. These include:

• Strengthen transparency in carbon disclosure with harmonised or interoperable standards, clear certifications, and labelling schemes for embodied emissions in steel production and in steel-using sectors
• Demand side policies including tax incentives linked to carbon intensity, contracts for difference, and public procurement schemes that give preference to low-carbon steel products.
• Effective carbon pricing offers long-term incentives for low carbon production. Policies must support decarbonisation and industrial growth, considering varied pathways and funding needs.
• Steel buyers’ initiatives, such as commitments to purchase a certain percentage of low-carbon steel and off-take agreements.