Green Steel Revolution: How Hydrogen Steel & Low-Carbon Materials Are Building a Net-Zero Future
- Green Fuel Journal
- 1 day ago
- 26 min read
Every year, steel production pumps approximately 3.7 billion tonnes of CO₂ into the atmosphere — a figure that represents 7–9% of total global greenhouse gas emissions, according to the International Energy Agency (IEA). Green steel, produced using green hydrogen and renewable electricity instead of coking coal, offers the most credible route to dismantling that carbon burden at scale. The technology is no longer theoretical.
Plants are already operating. Investment is flowing. Policy frameworks are tightening. And demand from automakers, construction firms, and governments is beginning to create the market pull that the industry has long needed.
This guide examines how green steel is made, why it matters for net-zero goals, who is building it, what obstacles remain, and why its progress is inseparable from the wider shift toward low-carbon materials across cement, concrete, and beyond.
What is Green Steel?
Green steel is steel produced with significantly reduced or near-zero carbon emissions. It replaces the coking coal used in traditional blast furnaces with green hydrogen, renewable electricity, or advanced carbon capture technologies. The primary route is hydrogen-based Direct Reduced Iron (Hâ‚‚-DRI) combined with an Electric Arc Furnace (EAF), which can cut emissions by up to 95% compared to conventional steelmaking.
Traditional steel relies on a process that has been in use for well over a century. Iron ore is fed into a Blast Furnace (BF) alongside coke — a carbon-rich fuel derived from coal — which serves as both the energy source and the chemical reducing agent that strips oxygen from the iron.
The result is pig iron, which is then processed in a Basic Oxygen Furnace (BOF) to produce crude steel. This BF-BOF route is deeply carbon-intensive. For every tonne of steel produced, it emits roughly 1.8–2.1 tonnes of CO₂. With global crude steel production at approximately 1,880 million tonnes per year — and rising — the math is unforgiving.
Green steel breaks this dependency. The defining characteristic is not a single technology but a principle: carbon as the reducing agent is replaced by hydrogen or electricity.
When that hydrogen is produced from water using renewable electricity (green hydrogen), the only by-product of the reduction reaction is water vapor.
The resulting iron is genuinely fossil-free. Melt it in an Electric Arc Furnace powered by renewable energy, and the steel that emerges carries a carbon footprint close to zero.
"Green steel is not simply cleaner steel — it is a fundamentally different industrial process that severs the structural link between steelmaking and fossil fuels."
It is worth being precise about terminology. Low-carbon steel reduces emissions compared to the conventional route but does not eliminate them entirely — for example, natural gas-based DRI with partial hydrogen blending. Near-zero steel refers to production that comes very close to zero emissions, typically using high percentages of green hydrogen.
Fossil-free steel, the term used by SSAB's HYBRIT initiative in Sweden, denotes production with no fossil inputs at all. These distinctions matter because they affect how products are certified, priced, and counted toward corporate net-zero targets.
Why is Green Steel Critical for Net Zero Goals?
Steel is classified as a "hard-to-abate" sector because its core emissions come from Scope 1 chemical reactions, not just energy use. The IEA's Net Zero Emissions by 2050 (NZE) Scenario requires the sector's emissions to drop by 24% by 2030 and 91% by 2050. Without transforming steelmaking, achieving global net-zero targets is structurally impossible.
The steel industry sits at the intersection of two forces pulling in opposite directions. On one side, the world needs more steel — not less. Global demand is projected to rise from around 1,880 million tonnes today to over 2,400 million tonnes by 2050, driven largely by urbanisation in emerging economies and the enormous material requirements of the green energy transition itself.
Wind turbines, EV frames, rail infrastructure, and solar mounting systems all require steel. On the other side, that same steel sector is responsible for roughly 2.6 gigatonnes of direct COâ‚‚ emissions annually, equivalent in scale to the combined emissions of hundreds of millions of homes.
What makes steel particularly challenging is the nature of its emissions. Around 75% of the sector's energy and feedstock demand is currently met by coal, and much of the CO₂ produced is not from combustion alone but from the chemical reduction of iron ore — a Scope 1 process emission.
You cannot decarbonise this by switching to a cleaner electricity grid. You have to change the chemistry itself. This is precisely why the IEA classifies steel alongside cement and chemicals as a hard-to-abate sector.
The IEA's Iron and Steel Technology Roadmap is unambiguous: to align with a 1.5°C pathway, the average direct CO₂ emission intensity of steel production must fall by at least 60% by 2050, from today's roughly 1.4 tonnes CO₂ per tonne of crude steel down to 0.6 tonnes. Near-zero emission processes must account for 8% of primary production by 2030 — a commercial milestone the sector is currently racing toward.
As of 2024, the steel industry emits 3.7 billion tonnes of COâ‚‚ per year with no sign of peak emissions, according to SteelWatch. That gap between current trajectory and required trajectory makes the accelerated deployment of green steel one of the most pressing industrial challenges on the planet.
There is also a compounding systemic risk: new blast furnaces lock in emissions for 20–40 years. Every coal-based plant commissioned today becomes a stranded asset liability. Investment cycles in heavy industry are long, which means the decisions made between now and 2030 will shape the sector's emissions profile deep into the second half of this century.
How is Green Steel Produced Using Hydrogen DRI and Electric Furnaces?
Green steel production works by using green hydrogen (H₂) to chemically reduce iron ore in a Direct Reduction furnace, producing Direct Reduced Iron (DRI) and water vapor — with no CO₂. The DRI is then melted in an Electric Arc Furnace (EAF) powered by renewable electricity to produce crude steel. This H₂-DRI-EAF pathway can eliminate up to 95% of emissions compared to the traditional blast furnace route.
The Chemistry of Hydrogen Steelmaking
The core reaction in green steelmaking is elegantly simple. In a Direct Reduction (DR) furnace, a shaft furnace or fluidised bed reactor, hot hydrogen gas is passed over iron ore pellets.
The reaction proceeds as follows:
Fe₂O₃ + 3H₂ → 2Fe + 3H₂O (Iron ore + Hydrogen → Direct Reduced Iron + Water vapor)
No carbon dioxide is produced. The iron ore is stripped of its oxygen by hydrogen, and the only exhaust is water vapor. The output — Direct Reduced Iron (DRI), also called sponge iron — is then charged into an Electric Arc Furnace, where high-powered electric arcs melt the DRI along with recycled scrap steel. When the EAF is powered entirely by renewable electricity, the whole chain — from electrolysis to molten steel — is effectively carbon-free.
The electrolysis step that produces the green hydrogen deserves attention. Water electrolysis splits Hâ‚‚O into hydrogen and oxygen using electricity.
When that electricity comes from solar, wind, or hydropower, the hydrogen carries no carbon footprint.
This is the definition of green hydrogen. One tonne of steel produced through the Hâ‚‚-DRI-EAF route requires approximately 55 kilograms of green hydrogen, and roughly 300 megawatts of electrolyser capacity operating continuously to sustain a commercial-scale steel plant.
How This Differs from the Traditional Blast Furnace Route
The Blast Furnace–Basic Oxygen Furnace (BF-BOF) route uses coking coal in two critical roles: as a fuel to generate the extreme heat required (above 1,600°C), and as the reducing agent that drives the chemical reaction removing oxygen from iron ore. Carbon monoxide (CO), produced by burning the coke, reacts with the iron ore to create pig iron and CO₂. This dual role of carbon — fuel and reductant — is exactly what makes the blast furnace so difficult to decarbonise incrementally.
In the Hâ‚‚-DRI route, hydrogen replaces carbon as the reductant. The EAF provides heat through electricity rather than combustion. Neither step requires fossil fuels. The trade-off is cost and infrastructure: green hydrogen is currently far more expensive than coking coal on an energy-equivalent basis, and gigawatt-scale electrolysers are still being built. But the chemistry is proven, the engineering is mature, and the cost trajectory is downward.
What Are the Main Technologies Behind Green Steel?
The four core technologies enabling green steel are: green hydrogen production via electrolysis (PEM or alkaline), hydrogen-based Direct Reduction of iron ore, Electric Arc Furnaces (EAF) powered by renewables, and scrap steel recycling. Carbon Capture, Utilisation and Storage (CCUS) serves as a transitional bridge for existing blast furnace assets.
1. Green Hydrogen Production: PEM vs. Alkaline Electrolysis
Electrolysis is the upstream heart of any green steel plant. Two technologies dominate the commercial landscape. Proton Exchange Membrane (PEM) electrolysers use a solid polymer membrane, operate at higher current densities, respond rapidly to fluctuating renewable power inputs, and produce very high-purity hydrogen.
They are well-suited for integration with intermittent solar and wind generation. Their drawback is cost — PEM electrolysers use platinum group metals as catalysts, adding capital expense.
Alkaline electrolysers are the older, more established technology.
They use a liquid potassium hydroxide solution as the electrolyte, run at lower temperatures, and are generally cheaper per unit of capacity. They are the workhorse of large-scale industrial hydrogen projects today.
Their weakness is slower response to load changes, which can be a limitation when paired directly with variable renewables. Both technologies are scaling rapidly: electrolyser capacity is expected to exceed 260 MW globally by 2025 and surpass 1 GW by 2030, according to IIMA data.
2. Direct Reduction Technologies: Shaft Furnaces and Fluid Beds
Shaft furnace technologies — primarily the MIDREX and Energiron (HYL) processes — are the most commercially mature DR systems. Iron ore pellets descend through a vertical reactor while hot reducing gas (historically natural gas, now increasingly hydrogen) flows upward, reducing the ore. These systems are already widely deployed in the Middle East, India, and Latin America using natural gas. Converting them to hydrogen is technically feasible and is the core strategy for companies like SSAB, H2 Green Steel (now Stegra), and thyssenkrupp.
Fluidised bed reactors, being developed by companies like Voestalpine and POSCO, work with lower-grade iron ore fines rather than requiring premium DR-grade pellets — a meaningful advantage given that high-grade iron ore suitable for shaft furnaces is a constrained resource. Plasma reduction is an emerging variant where high-temperature plasma replaces the reducing gas entirely, though it remains at an earlier stage of development.
3. Electric Arc Furnaces (EAF)
Electric Arc Furnaces melt steel using electrical energy delivered through graphite electrodes. They are already the standard technology for recycling scrap steel, and their carbon footprint is determined almost entirely by the electricity they consume.
A scrap-based EAF running on renewable power emits less than one-third of the COâ‚‚ of a BF-BOF plant. When fed with hydrogen-reduced DRI instead of (or in addition to) scrap, the EAF becomes the final stage of a near-zero emission steel production chain.
As of 2025, Electric Arc Furnace (EAF) technology accounts for approximately 29% of global crude steel production capacity. By 2032, more than half of all newly commissioned steelmaking capacity is expected to adopt EAF-based routes, driven by scrap availability, renewable electricity integration, and tightening emissions regulations. This is a structural shift in how the world makes steel.
4. Scrap Steel Recycling
Scrap-based steelmaking is the most immediately scalable low-carbon pathway. Secondary production through scrap-EAF already emits less than one-third of the emissions from primary BF-BOF production. The IEA projects that the share of scrap in metallic inputs for steel production will reach 48% by 2050, up from around 32% today.
Globally, scrap availability is expected to grow from 770–870 million tonnes per year currently to between 1,250 and 1,550 million tonnes per year by 2050 as historical steel reaches end of life.
The main constraint is scrap quality: tramp elements like copper, tin, and zinc limit scrap's use in high-grade applications, and collection infrastructure in emerging markets remains underdeveloped.
5. CCUS as a Bridge Technology
Carbon Capture, Utilisation and Storage (CCUS) applied to blast furnaces or natural gas DRI plants is a transitional strategy — not a long-term destination. It allows existing assets to operate with reduced emissions while the green hydrogen supply chain scales up. The IEA's revised net-zero roadmap envisions that 44% of iron production will come from hydrogen-based processes by 2050, with CCUS-equipped DRI handling much of the balance.
BloombergNEF projects that by 2050, 64% of primary steel production will use the H₂-DRI-EAF pathway, with CCUS-equipped DRI accounting for another 25%. That leaves a very small slice for unabated blast furnaces — essentially, a structural end to coal-based steelmaking within three decades.
What Are "Near-Zero" Steel Plants and Why Are They Growing Rapidly?
Near-zero emission steel plants use hydrogen-based DRI, renewable-powered EAFs, or advanced CCUS to reduce emissions by 70–95% compared to conventional production. Close to 100 million tonnes of hydrogen-ready production capacity has been announced globally by the mid-2030s, marking the shift from pilot projects to industrial-scale deployment.
The gap between laboratory proof-of-concept and commercial-scale production is where most industrial technologies fail. Green steel is beginning to cross that gap. Close to 100 million tonnes of hydrogen-ready steelmaking capacity has been announced globally, according to IDTechEx. Multiple projects are now in advanced construction or commissioning phases rather than simply on paper.
The fastest progress is in Europe, where the EU Emissions Trading System (ETS), the Carbon Border Adjustment Mechanism (CBAM), and national industrial policy have created the regulatory and financial architecture for early movers.
The CBAM — which phases out free ETS allowances for steel between 2026 and 2034 — is particularly consequential. It means that carbon costs will increasingly be embedded in the price of steel, closing the gap between conventional and green production.
In the Middle East, the combination of abundant solar resources, low-cost renewable electricity potential, and existing natural gas DRI infrastructure makes the region a logical hub for future green steel exports. Emirates Steel and other Gulf producers are positioning themselves accordingly.
The market for green steel is expanding rapidly.
The global green steel market was valued at USD 8.46 billion in 2025 and is projected to grow at a CAGR of 55.6%, potentially reaching USD 186.83 billion by 2032. This growth reflects early-stage base effects, large-scale plant commissioning, long-term offtake agreements, and green public procurement mandates.
Still, it must be noted: as of 2025, approximately 62% of global crude steel production capacity remains BF-BOF. The scale of transition required is enormous, and the pace must accelerate substantially to align with the IEA's net-zero pathway.
What Are the Biggest Challenges in Scaling Green Steel?
The three primary barriers to scaling green steel are:
(1) the high cost of green hydrogen, currently well above coking coal on an energy basis;
(2) the intermittency of renewable energy and the infrastructure gaps it creates; and
(3) the green premium price gap — green steel currently costs 40–70% more per tonne than conventional steel, limiting buyer demand.
The Green Hydrogen Cost Problem
Green hydrogen is the single most critical input in the Hâ‚‚-DRI pathway, and it is currently expensive. The cost of green hydrogen production varies widely by region and energy source, but most estimates for commercially available green hydrogen in 2025 range from USD 4 to USD 8 per kilogram. Coking coal, by contrast, is a far cheaper reducing agent on an energy-equivalent basis. This cost differential is the primary driver of the green premium on green steel.
The trajectory, however, is downward. Electrolyser costs are falling with scale, the cost of solar and wind electricity continues to decline, and early mover projects are beginning to demonstrate learning curve effects. Achieving green hydrogen below USD 2/kg — a commonly cited threshold for steel competitiveness — is considered feasible in high-solar regions by the late 2020s to early 2030s, particularly in areas like the Middle East, Australia, and parts of India, Brazil, and Chile.
Renewable Energy Intermittency and Infrastructure
Steel production runs continuously — blast furnaces do not stop and start with the wind. Green hydrogen production via electrolysis is inherently tied to the intermittent output of solar and wind generation. Integrating these systems requires either large-scale hydrogen storage (as demonstrated by HYBRIT's rock cavern storage pilot, which won the Grand Prize for Engineering 2025 in Sustainability) or grid-scale battery buffers, both of which add cost.
Additionally, DR-grade iron ore pellets — the high-purity feedstock required by shaft furnace DRI processes — are a constrained resource, with limited production concentrated in a few regions globally. New projects must secure long-term supply chains for this input before they can operate at full capacity.
The Green Premium
Producing a tonne of green steel currently costs 40–70% more than conventional steel. This "green premium" is real and significant for industrial buyers working on thin margins. However, the downstream impact is often smaller than the raw numbers suggest.
A 40–70% increase in steel cost per tonne translates to less than a 1% increase in the overall cost of an average passenger car, and roughly 2% on the cost of a building, according to IRENA.
This context is helping downstream buyers — particularly in automotive and construction — justify green steel procurement commitments. Volvo Cars began accepting trial deliveries of fossil-free steel from SSAB as early as 2021, and major OEMs including BMW and General Motors have signed long-term green steel supply agreements.
Policy and Regulatory Fragmentation
A consistent global policy framework for green hydrogen standards, certification, and carbon pricing does not yet exist. Different regions use different certification methodologies for "green" hydrogen, creating confusion and trade barriers.
ArcelorMittal, one of the world's largest steel producers, explicitly cited "insufficient policy and market developments" in its Q4 2024 results when announcing a slower pace for large-scale decarbonisation projects in Europe. This underscores that technology readiness alone is not enough — sustained, predictable policy support is essential to de-risk the multi-billion-dollar capital commitments required.
How Does Green Steel Compare to Traditional Steel Production?
Compared to the conventional BF-BOF route (emitting ~1.8–2.1 t CO₂/t steel), the H₂-DRI-EAF green steel route emits as little as 0.05–0.1 t CO₂/t steel when powered by green hydrogen and renewable electricity — a reduction of up to 95%. The trade-off is a currently higher production cost and greater energy infrastructure requirement.
Parameter | BF-BOF (Traditional) | NG-DRI-EAF (Transitional) | Hâ‚‚-DRI-EAF (Green Steel) | Scrap-EAF (Renewable) |
Primary Energy Source | Coking coal | Natural gas | Green hydrogen + Renewables | Renewable electricity |
CO₂ per Tonne of Steel | ~1.8–2.1 t CO₂ | ~0.7–1.1 t CO₂ | ~0.05–0.1 t CO₂ | ~0.1–0.4 t CO₂ |
Emission Reduction vs. BF-BOF | Baseline | ~40–55% | Up to ~95% | ~75–95% |
Cost Premium vs. BF-BOF | Baseline | ~15–25% | ~40–70% | ~10–20% (scrap-dependent) |
Primary Feedstock | Iron ore + Coking coal | DR-grade iron ore + Natural gas | DR-grade iron ore + Green Hâ‚‚ | Scrap steel |
Key By-product | COâ‚‚, Slag | COâ‚‚ (lower), Slag | Water vapor, Slag | Minimal COâ‚‚ (if renewable) |
Commercial Maturity | Fully established | Commercially mature (Middle East, India) | Early commercial / scaling | Commercially established |
Leading Examples | Majority of global plants | Gulf states, India (JSPL) | HYBRIT, Stegra (Sweden) | Nucor (USA), EAF mills globally |
How is Green Steel Driving the Shift to Low-Carbon Materials?
The transition to green steel is part of a broader industrial transformation toward low-carbon materials. It is creating momentum for parallel decarbonisation in green cement, low-carbon concrete, and other building materials through shared infrastructure, co-located carbon capture systems, and the concept of Industrial Symbiosis — where industrial by-products become inputs for other processes, reducing waste and emissions simultaneously.
Steel and cement are the two dominant structural materials of the modern built environment. Together, they account for roughly 15–17% of global CO₂ emissions. Their decarbonisation pathways share important structural features: both are hard-to-abate due to process emissions, both require massive capital investment, and both are beginning to see breakthrough technologies achieve commercial scale. The progress in green steel is creating spillover effects in adjacent materials sectors.
Industrial Symbiosis: When Steel Plants Feed Cement Plants
Industrial Symbiosis refers to the practice of using waste outputs from one industrial process as inputs for another — closing material and energy loops across an industrial ecosystem. In the context of green steel and low-carbon construction materials, this concept has real commercial traction.
Traditional blast furnaces produce granulated blast furnace slag (GBFS) — a glassy by-product of iron production — which is already used as a supplementary cementitious material (SCM) in concrete, reducing the amount of clinker required and lowering cement's carbon footprint.
As the steel sector transitions away from blast furnaces toward Hâ‚‚-DRI-EAF routes, the supply of GBFS will diminish. This creates both a challenge (less SCM available for concrete) and an opportunity (incentivising the development of alternative SCMs like calcined clay, fly ash, and novel binders).
More directly, CO₂ captured from integrated steelworks can be piped to adjacent concrete curing facilities, where it is mineralised into calcium carbonate within the concrete matrix — permanently sequestering carbon while improving the concrete's early strength. This Carbon Capture and Utilisation (CCU) in concrete is already being piloted.
Companies like CarbonCure Technologies inject CO₂ directly into ready-mix concrete, achieving emissions reductions of 5–10% per batch at near-zero additional cost. When combined with SCM substitution and renewable-powered mixing, the lifecycle emissions of concrete can be reduced dramatically.
The concept extends further. Industrial parks that co-locate green steel plants, hydrogen production facilities, renewable energy generation, and materials processing operations can share infrastructure costs, heat recovery systems, and logistics — driving down the per-unit cost of every product. This model is being explored in Sweden's Norrbotten industrial cluster, where SSAB's steel operations, LKAB's iron ore mining, and Vattenfall's energy infrastructure are integrated under the HYBRIT framework.
What Role Do Cement and Concrete Play in Low-Carbon Materials Transition?
Cement production accounts for approximately 8% of global CO₂ emissions — comparable to the steel sector. Its decarbonisation requires attacking both process emissions from limestone calcination (which account for ~60% of cement's carbon) and energy emissions from kiln heating. Key technologies include alternative clinkers, Supplementary Cementitious Materials (SCMs), carbon-cured concrete, and carbon capture.
The Calcination Problem
Concrete is the second most consumed substance on Earth after water, with approximately 4.2 billion tonnes produced annually — a figure expected to grow by 48% to reach 6.2 billion tonnes by 2050. The central emissions problem is calcination. When limestone (calcium carbonate, CaCO₃) is heated to approximately 1,450°C in a kiln to produce clinker — the binding agent in cement — it releases CO₂ as an inherent chemical by-product.
This accounts for roughly 60% of cement's total emissions, and it cannot be eliminated simply by switching to renewable energy. The chemistry itself produces the COâ‚‚.
This is precisely why cement, like steel, is classified as hard to abate. Around 85% of CO₂ emissions from cement production are attributable to either the calcination process or the heat required to reach calcination and clinkering temperatures — processes that are difficult to decarbonise through grid greening alone.
Alternative Binders and Clinker Substitution
Supplementary Cementitious Materials (SCMs) replace a portion of clinker in cement blends, reducing the amount of limestone that must be calcined. Common SCMs include fly ash (from coal combustion), ground granulated blast furnace slag, and silica fume.
The emerging leader in alternative low-carbon binders is Limestone Calcined Clay Cement (LC3), developed through research at EPFL (Switzerland) and IIT Delhi. LC3 is a blend of clinker, calcined clay, limestone, and gypsum that can replace up to 50% of traditional cement clinker while being 25% more cost-effective than Ordinary Portland Cement (OPC). It is being deployed in infrastructure projects globally, with a large-scale plant in Colombia already operational.
Alkali-activated materials and geopolymer concrete, which use industrial by-products like slag and fly ash as the primary binder with no clinker at all, represent the most radical end of the clinker substitution spectrum. Studies show these materials can reduce CO₂ emissions by 30–50% compared to OPC. California-based company Brimstone has taken an even more radical approach, replacing limestone with calcium silicate rock — a widely available, carbon-free raw material.
The process is inherently carbon-negative when powered by clean energy: the magnesium residue from the process permanently sequesters COâ‚‚ from the atmosphere. In March 2024, Brimstone was awarded up to USD 189 million from the US Department of Energy's Industrial Demonstrations Program.
Carbon Curing Technologies
Carbonation curing is a process in which freshly cast concrete is exposed to concentrated CO₂ during its early curing phase. The CO₂ reacts with calcium silicate hydrates in the cement paste to form calcium carbonate crystals — this reaction both sequesters the carbon permanently and accelerates strength development.
Carbonation-cured concrete technologies can achieve CO₂ reductions of 30–50% compared to OPC while simultaneously providing a carbon utilisation pathway for industrial CO₂ streams. This is the bridge between steel decarbonisation (which produces capturable CO₂ from existing blast furnaces) and concrete decarbonisation (which needs to absorb and lock away that CO₂).
The world's first industrial-scale Carbon Capture and Storage project at a cement plant — Heidelberg
Materials' Norcem Brevik plant in Norway — began capturing CO₂ in 2024, using amine-based post-combustion capture. The project demonstrates that cement CCS is technically feasible, though its cost remains a challenge for widespread replication.
What Are the Leading Global Green Steel Projects and Case Studies?
The leading global green steel initiatives include HYBRIT (Sweden, the world's first fossil-free steel delivery), Stegra (formerly H2 Green Steel, targeting 2.5 million tpa commercial production from 2026), ArcelorMittal's XCarb programme, and India's emerging projects under the National Green Hydrogen Mission, led by companies including JSPL, JSW Steel, and Tata Steel.
HYBRIT (Sweden) — The World's First Fossil-Free Steel
HYBRIT — Hydrogen Breakthrough Ironmaking Technology — is a joint venture between SSAB (steel), LKAB (iron ore mining), and Vattenfall (energy), established in Sweden in 2016. Its stated goal is to produce steel using 100% fossil-free hydrogen generated from renewable electricity. In 2021, HYBRIT delivered the world's first batch of fossil-free steel to Volvo Cars — a milestone that marked the transition of green steel from concept to physical product.
The pilot plant in Luleå successfully demonstrated the H₂-DRI process at meaningful scale, and the project has since completed a pioneering hydrogen storage pilot using lined rock caverns — a technology that won the Grand Prize for Engineering 2025 in Sustainability. The storage project confirmed that it is technically and economically feasible to store large volumes of fossil-free hydrogen gas underground to buffer the intermittency of renewable electricity.
HYBRIT also received the World Economic Forum's 'Moving Force in Business' Award at Davos. The next phase involves a full demonstration plant being built by LKAB in Gällivare, Sweden, with SSAB's Luleå and Oxelösund works eventually converting to EAF steelmaking fed by green DRI.
Stegra (Formerly H2 Green Steel) — First Commercial-Scale Green Steel Mill
Stegra (formerly H2 Green Steel) is building what it describes as the world's first commercial-scale green steel mill in Boden, Sweden, targeting a 2026 start-up. The plant is designed around the MIDREX Hâ‚‚â„¢ process, supplied by Midrex Technologies and Paul Wurth. Initial production capacity is 2.5 million tonnes per year of green steel, fed by 2.1 million tonnes per year of hot DRI.
The plant will operate an electrolyser capacity of over 700 MW to produce green hydrogen, making it one of the largest electrolyser installations in the world. By 2030, the project aims to reduce Swedish CO₂ emissions by approximately 5 million tonnes per year — a nationally significant number.
ArcelorMittal and XCarb
ArcelorMittal, the world's second-largest steel producer with revenues of USD 62.4 billion in 2024, launched its XCarb programme to consolidate its low-carbon steel ambitions under a single brand. In January 2024, it formalised its XCarb programme focused on carbon-neutral steel via hydrogen and renewable investments. ArcelorMittal sold 400,000 tonnes of XCarb® steel in 2024, with sales expected to rise further.
XCarb® steel is available in two forms: XCarb® recycled and renewably produced (manufactured in an EAF using renewable electricity and high recycled content) and XCarb® certificates (based on independently audited CO₂ savings). ArcelorMittal's current European investment focus is on a new EAF in Gijón, Spain and an EAF expansion at Sestao, Spain.
The company has been candid that large-scale H₂-DRI projects are "advancing at a slower pace than originally anticipated" due to insufficient policy and market conditions — a reflection of the structural gap between ambition and enabling conditions in parts of the EU steel market.
India — A Market at a Crossroads
India produced 151.1 million tonnes of crude steel in FY 2024–25, a 10% increase year-on-year, making it the world's second-largest steel producer. India's steel sector presents a formidable decarbonisation challenge: it emits approximately 2.65 tonnes of CO₂ per tonne of steel — over 20% higher than the global average — due to heavy reliance on coal-based BF-BOF and DRI (using coal, not gas) processes. The sector accounts for 10–12% of India's industrial carbon emissions.
India's government response is taking shape through multiple instruments. In February 2024, the Ministry of New and Renewable Energy (MNRE) released guidelines allocating ₹455 crore (approximately USD 55 million) for pilot green hydrogen projects in the steel sector under the National Green Hydrogen Mission (NGHM).
This includes support for producing DRI using 100% hydrogen in vertical shaft furnaces and hydrogen injection into blast furnaces.
In December 2024, India introduced a Green Steel Taxonomy defining and categorising low-emission steel to create a market and provide financial support. In September 2024, the Ministry of Steel released a landmark 420-page report outlining decarbonisation pathways for the Indian steel industry.
On the corporate side, progress is concrete. Jindal Steel and Power Limited (JSPL) — already operating DRI with approximately 55% hydrogen content — announced in September 2024 a partnership with Jindal Renewables to develop a 4,500 tonnes per annum green hydrogen facility at its Angul plant in Odisha, supported by 3 GW of captive renewable power. The project is designed to halve JSPL's coal use in DRI operations within 18–24 months.
JSW Steel, as of December 2024, was in the final stages of commissioning a 25 MW electrolyser-driven DRI pilot at its Vijayanagar facility, with plans for a 4 million tpa green steel plant and signed offtake agreements for 90,000 tpa of green hydrogen by 2030.
Tata Steel completed a world-first trial of hydrogen injection in its E Blast Furnace in Jamshedpur at up to 40% of injection capacity and developed API X65 ERW — India's first hydrogen-grade pipeline steel — in January 2025. In March 2026, Tata Steel confirmed an ₹11,000 crore (approximately USD 1.3 billion) investment in its Jamshedpur facility in Jharkhand for advanced low-carbon green steel production technologies.
India's EU-bound steel exports face growing pressure from CBAM, with estimates suggesting upwards of 60% of India's steel exports head to the European Union. This trade exposure is increasingly forcing the question of decarbonisation from a commercial, not merely environmental, perspective.
Middle East and Gulf States
The Gulf region is uniquely positioned for green steel due to its vast solar irradiation, existing DRI infrastructure, and port access for export. Emirates Steel in the UAE and several Saudi Arabian projects are developing hydrogen-ready DRI facilities.
The availability of low-cost renewable electricity — particularly solar — makes the Gulf a credible hub for producing green hydrogen at competitive costs from the late 2020s onward. Natural gas DRI experience provides the workforce and technical base for a relatively smooth transition to hydrogen-based processes.
What is the Future of Green Steel and Zero-Carbon Materials?
By 2050, the IEA's net-zero scenario envisions 44% of global iron production from hydrogen-based processes, with green steel becoming the industry standard in the automotive, construction, and energy infrastructure sectors. Policy tools including the EU's CBAM and the US Inflation Reduction Act are already reshaping investment and procurement patterns.
Demand Signals from Automotive and Construction
Corporate demand is beginning to move markets in meaningful ways. Volvo Cars accepted the world's first delivery of fossil-free steel from SSAB in 2021, using it in a prototype vehicle. BMW has committed to purchasing green steel as it scales its electric vehicle production. General Motors has signed long-term green steel supply agreements.
The automotive sector is the single largest purchaser of flat-rolled steel, and its shift toward Electric Vehicles (EVs) — which require lighter, stronger steel for battery housings and structural components — is creating a natural demand pull for certified low-carbon steel.
In construction, green procurement policies are accelerating. The EU's push for embodied carbon standards in buildings, and the movement toward Environmental Product Declarations (EPDs) as mandatory disclosures, mean that specifiers and engineers will increasingly need to demonstrate the carbon footprint of the steel they use. This is creating a lead market for green steel in public infrastructure — bridges, rail, social housing, and wind turbine towers — that is insulated from short-term commodity price volatility.
Policy Architecture: CBAM and the Inflation Reduction Act
The EU Carbon Border Adjustment Mechanism (CBAM) is the most consequential trade policy for steel decarbonisation currently in force. It took effect in its transitional reporting phase in October 2023 and will fully impose carbon costs on steel imports from January 2026 onward, with free ETS allowances for steel phasing out between 2026 and 2034. For exporters to the EU — including major steelmakers in India, Ukraine, Turkey, and China — this creates direct financial pressure to reduce emissions or face levies.
In the United States, the Inflation Reduction Act (IRA) provides substantial production tax credits for green hydrogen, which feeds directly into the economics of green steel. The Bipartisan Infrastructure Law allocates billions for regional Clean Hydrogen Hubs (H2Hubs). These combined incentives are triggering investment in US-based green steel projects, with Nucor Corporation's Econiq line — using EAF technology powered by renewable energy — already in the market.
Technology on the Horizon
Beyond Hâ‚‚-DRI-EAF, two longer-range technologies are worth watching. Molten Oxide Electrolysis (MOE), being developed by Boston Metal, uses electricity to directly reduce iron ore in a molten state without any hydrogen. It could theoretically achieve zero-carbon steelmaking without the complexity of a hydrogen supply chain.
However, it is not expected to be commercially ready before 2040. Direct electrification of cement kilns, plasma arc furnaces for cement, and bio-based binders are similarly on the medium-to-long-term horizon for construction materials. The near-term agenda is clear: scale what works now — H₂-DRI, EAF, SCMs, and CCS — while funding the next generation of breakthrough technologies.
Frequently Asked Questions About Green Steel
Is green steel completely carbon-free?
Not entirely, but it comes very close. When green steel is produced via the Hâ‚‚-DRI-EAF route using 100% green hydrogen and fully renewable electricity, direct COâ‚‚ emissions can be reduced by up to 95%. Residual emissions come from ancillary processes, transport, and the small amount of carbon added during EAF steelmaking to achieve target carbon content in the final product.
The term "fossil-free steel", used by SSAB and HYBRIT, is more precise — it means no fossil fuels are used in the process, even if trace emissions remain.
Why is green steel expensive?
The primary cost driver is green hydrogen, which currently costs USD 4–8 per kilogram — significantly more expensive than coking coal as a reducing agent. Additional costs come from the capital investment in electrolysers, DRI furnaces, and renewable energy generation.
The total green premium on finished green steel is currently estimated at 40–70% above conventional steel prices. However, this gap is narrowing as electrolyser manufacturing scales up, renewable electricity prices fall, and carbon pricing mechanisms make conventional steel more expensive.
Can green steel replace traditional steel completely?
Yes — in principle, and the IEA's net-zero scenario envisions it doing so over the course of several decades. In practice, the transition will be gradual. The world currently has approximately 1,880 million tonnes of annual steel production capacity, the majority in long-lived blast furnaces.
Full replacement requires both the retirement of existing BF-BOF assets and the construction of new Hâ‚‚-DRI-EAF facilities at enormous scale. IRENA projects that up to half of 2050 steel demand could be met through scrap-based EAF recycling, with the remainder from primary green hydrogen routes.
What industries will use green steel first?
The automotive sector is the leading early adopter, driven by EV manufacturers seeking to decarbonise their supply chains and meet Scope 3 emissions targets. Construction — particularly public infrastructure, wind turbine manufacturing, and green buildings — is the second major segment, supported by green procurement mandates in the EU and elsewhere.
The energy infrastructure sector (offshore wind foundations, solar racking, transmission towers) also represents a high-volume, early-demand segment where developers are increasingly specifying low-carbon materials to meet project-level sustainability commitments.
Is hydrogen steel scalable globally?
Yes, with important caveats. The H₂-DRI-EAF route is technically scalable, and a projected pipeline of approximately 80 million tonnes per year of hydrogen-based DRI capacity is in development globally, according to IRENA. The key constraints are: the availability of DR-grade iron ore (concentrated in Australia, Brazil, and a few other regions); the build-out of gigawatt-scale electrolyser capacity; access to abundant, low-cost renewable electricity; and policy frameworks that provide long-term revenue certainty for green steel producers. Countries with co-located renewable resources and iron ore — notably Australia, Brazil, India, and Gulf states — are the most naturally advantaged for globally competitive green steel production.
Disclaimer:
This article is intended for informational and educational purposes only. It does not constitute financial, investment, or legal advice. Data, projections, and company details are sourced from publicly available authoritative references and are subject to change. For full terms, please refer to our Disclaimers page.
References & Further Reading
This article is backed by authoritative sources and research. All claims are drawn from peer-reviewed publications, international energy agencies, and verified industry reports.
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IRENA — Iron and Steel: Decarbonising Hard-to-Abate Sectors with Renewables. https://www.irena.org
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GreenFuelJournal.com Published: April 2026 Â |Â Research Team, GreenFuelJournal.com
