Green Steel Production: manufacturing a sustainable future?

Steel manufacturing produces more CO2 emissions than any other sector of heavy industry, accounting for approximately 8% of total global emissions. It is not, however, the worst offender per ton — but collectively we do use a lot of steel. Total global production of steel sits at around 1.85 billion tons per annum with an average figure of ~1.85 tons CO2 per ton of steel. Compare this to the 16 tons of CO2 per ton of aluminum and steel is, relatively, environmentally efficient… BUT, the outsized impact and very obvious nature of the environmental damage from basic oxygen furnaces (BOFs) however makes green steel production a prime target in the drive towards net zero.

Various pathways are being explored to decarbonise the steel production process. These include the use of electricity or hydrogen-powered furnaces, which can potentially replace the traditional coal-fired furnaces responsible for high CO2 emissions. Several steel manufacturing companies have recognised the imminent need to shift towards more sustainable methods and have set goals to reduce their emissions accordingly.

Green Steel Production Methods

Hydrogen Reduction

Hydrogen reduction is a promising method for producing green steel. In this process, hydrogen gas replaces carbon as the reducing agent, significantly reducing CO2 emissions. The hydrogen reacts with the iron ore, producing water and iron, without generating any carbon emissions. However, it’s essential that the hydrogen used in this process is produced through green methods, such as electrolysis, utilising renewable energy sources. An example of this technology is seen in Sweden, where a metal-making company has managed to produce the first fossil fuel-free ‘green’ steel using a hybrid process powered by hydrogen.


Electrolysis is another key method in green steel production. It involves using electricity to separate water into hydrogen and oxygen, which can then be used in the steel production process. To achieve truly carbon-free green steel, the electricity used for electrolysis must come from renewable energy sources, such as wind or solar power. According to AFRY and the International Renewable Energy Agency, meeting global steel production in 2021 using the green steel method would require 97.6 million tonnes of hydrogen produced through electrolysis.

Bio-based Reduction

Bio-based reduction is an alternative method for green steel production, although it is currently less developed compared to hydrogen reduction and electrolysis. In this process, biomass, such as wood or agricultural waste, is used as a reducing agent in place of carbon. The biomass then reacts with the iron ore, producing CO2 as a byproduct, which can be captured and stored or repurposed. This method can potentially help reduce CO2 emissions from the steel industry, but further research and development are needed to make it more efficient and viable on a large scale.

Environmental Impact

Carbon Emissions Reduction

Green steel aims to significantly reduce the carbon emissions associated with steel production. Traditionally, steel manufacturing has been a major contributor to CO2 emissions, accounting for around 8% of global total emissions1. However, green steel production methods, such as using hydrogen or electricity instead of coal-fired furnaces, have the potential to decrease these emissions1. By embracing cleaner technologies, the industry can move closer to reaching net-zero emissions targets.

Resource Efficiency

Another key aspect of green steel is the focus on resource efficiency. In the traditional steelmaking process, large quantities of raw materials, such as iron ore and coal, are consumed. By implementing more sustainable practices and utilising recycled materials, the industry can reduce its overall environmental impact. For example, using scrap steel as a significant portion of the input material can lead to substantial savings in raw material and energy resources.

Waste Management

Waste management is an essential part of green steel production. Sustainable practices, such as recycling and reusing waste materials, play a key role in minimising the environmental impact of the steel industry. Proper waste management practices can not only reduce the overall waste generated during steel production but also help in achieving resource efficiency goals by maximizing the use of waste materials. This, in turn, can lead to cost savings and further drive the adoption of green steel practices within the industry.


  1. What is green steel and how can it help us reach net zero?

Challenges and Solutions

Scaling Up Technologies

Green steel production has shown promising potential in reducing global greenhouse gas emissions. However, scaling up the technologies involved is a crucial challenge that the industry must overcome. One mature technology option is replacing blast furnaces and basic oxygen furnaces (BF-BOFs) with direct-reduced iron and electric arc furnaces (DRI-EAFs). This method, while effective in reducing emissions from steel production, requires significant investments in infrastructure and development to be implemented at a large scale.

Another challenge involves the need for a diverse range of policies to ensure successful market development and avoid unintended consequences for competition. Policies should consider demand-side and supply-side mechanisms for supporting green steel production while promoting competition between primary and secondary steel manufacturing processes.

Economic Viability

The economic viability of green steel production also presents significant hurdles. Financial investment in large-scale infrastructure and technology development, along with fluctuating market prices, can make it difficult for green steel to compete with conventional steel production methods. Moreover, price-sensitive buyers may not be as willing to absorb the higher production costs of green steel, affecting its market adoption rate.

In order to enhance the competitiveness of green steel, governments, industry stakeholders, and investors should collaborate in creating incentives for green steel production. This may entail targeted subsidies, carbon pricing, and effective policies that promote fair competition between green and conventional steel. A coordinated effort can not only improve the economic viability of green steel but also contribute significantly to the global efforts in reducing greenhouse gas emissions.

Industry Adoption and Future Outlook

In recent years, the steel industry has been facing increasing pressure to reduce its carbon footprint as global climate change mitigation demands rise. Aiming for net-zero emissions has necessitated a careful examination of the entire steel production process, ultimately leading to the concept of green steel.

Current Projects

Several projects are being developed to explore the potential of green steel production. One solution involves the use of green hydrogen which, when produced via electrolysis using just water and renewable electricity, can replace traditional fossil fuels in steel manufacturing. This method can significantly reduce CO2 emissions from the steel industry, in turn contributing to global climate goals.

Another mature technology being considered is replacing blast furnaces and basic oxygen furnaces (BF-BOFs) with production based on direct-reduced iron and electric arc furnaces (DRI-EAFs). This option has the potential to improve the steel industry’s environmental footprint.

Potential Growth

While green steel production remains in its infancy, there is considerable room for expansion in the coming years. Factors such as power supply, technological advances, and continued investment will play a significant role in shaping the future development and adoption of green steel technologies. Although the initial operating costs and CAPEX are estimated to be higher for green steel production, these figures could change as the technology evolves and the demand for sustainable steel alternatives increases source.

With a growing global demand for steel, the International Energy Agency forecasts that as steel production methods increasingly incorporate sustainable technologies, it can help create a greener, more sustainable future for both the industry and the planet.


The emergence of green steel presents significant opportunities for the steel industry to reduce its environmental impact. Manufacturing steel without the use of fossil fuels has the potential to curb greenhouse gas emissions, which will help the industry align itself with the global agenda of reaching net-zero emissions.

Green steel technology proves that steelmakers can make crucial decisions in the next few years, leading to transformative changes within the industry. The adoption of innovative pathways such as Direct Reduced Iron-Electric Arc Furnace (DRI-EAF) with green hydrogen will contribute to lowering CO2 emissions drastically.

It is important to recognise that the shift towards green steel will inevitably increase operational costs for steel manufacturers, the benefits of reduced emissions, and a more sustainable industry far outweigh these financial challenges. Investment in green steel technology and infrastructure, as well as policy support from governments and international organisations, will be essential for further advancements in this field.

In conclusion, green steel serves as a pivotal solution for one of the world’s most emission-intensive sectors. The industry’s commitment to embracing sustainable practices will undeniably contribute to global climate change mitigation efforts and lead to more responsible resource management.

Frequently Asked Questions

What are the main components of green steel production?

Green steel production primarily involves replacing traditional fossil fuels with cleaner energy sources and innovative manufacturing processes. One noteworthy approach is using hydrogen as a reduction agent to extract iron from iron ore, creating sponge iron as an intermediate product. This method significantly lowers greenhouse gas emissions compared to conventional steel production using coal.

How is green steel manufactured?

Green steel is manufactured by replacing the use of fossil fuels in traditional steelmaking processes with cleaner alternatives. A popular method involves hydrogen-based direct reduction, where hydrogen is used to reduce iron pellets into sponge iron at high temperatures. This sponge iron can then be processed into steel with significantly lower emissions compared to traditional methods.

Which companies are leading in green steel technology?

Some of the leading companies in green steel technology include Swedish steelmaker SSAB, which is working towards producing fossil-free steel, and German steel producer Thyssenkrupp, which has been investing in hydrogen-based steel production. Additionally, mining companies are also partnering with steelmakers to reduce emissions in the steelmaking process, such as Fortescue Metals Group in collaboration with HBIS Group.

What are the environmental benefits of green steel?

Green steel offers significant environmental benefits compared to conventional steel production. The most prominent advantage is the reduction of greenhouse gas emissions, as green steel manufacturing eliminates or significantly lowers the dependence on fossil fuels. This helps mitigate climate change and supports global efforts to achieve net-zero emissions targets.

How does green steel certification work?

Green steel certification is a process that ensures the steel produced meets specific criteria for environmental performance, such as reduced carbon emissions, responsible sourcing of raw materials, and efficient use of resources. Currently, there isn’t a single, globally accepted certification standard for green steel. However, organisations and industry bodies are working to develop universally recognised certification standards to provide transparency and traceability across the steel supply chain.

What are the applications of green steel?

Green steel can be used in a wide variety of applications across several industries, including construction, infrastructure, automotive, and renewable energy. As concerns about climate change and sustainability grow, the demand for environmentally responsible materials like green steel is increasing in both existing and emerging sectors. Green steel can help businesses and governments meet emission targets, improve their sustainability performance, and contribute to a greener, more circular economy.

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