Decarbonizing Steel: The Next Frontier in Climate Action

As the world races to limit global warming to 1.5°C under the Paris Agreement, one of the toughest challenges lies in an industry as solid as its product: steel. Responsible for a significant share of global carbon emissions, the iron and steel sector is emerging as a critical obstacle—and opportunity—in the fight against climate change.

Globally, the industrial sector accounts for about 25% of energy- and process-related CO₂ emissions, with iron and steel production topping the list of emitters. The reliance on fossil fuels—coal and natural gas—to generate heat, convert iron ore into iron, and strengthen steel, makes the sector especially difficult to decarbonize.

Yet there is hope. A recent study published in the Journal of Cleaner Production systematically examines the feasibility of various strategies to slash emissions in steelmaking. Conducted by researchers from the Massachusetts Institute of Technology (MIT), the University of Illinois at Urbana-Champaign, and ExxonMobil Technology and Engineering Company, the study explores a range of technological and economic pathways to reduce the sector’s carbon footprint.

Using the MIT Economic Projection and Policy Analysis (EPPA) model, the researchers evaluated several key approaches: increasing energy efficiency, switching to low- or zero-carbon fuels, boosting the use of recycled scrap steel, and curbing overall demand. Among the most promising solutions are electric arc furnaces (EAFs) powered by cleaner energy sources and fed with either scrap steel or direct reduced iron (DRI)—the latter produced using either natural gas with carbon capture and storage (NG CCS DRI-EAF) or hydrogen (H₂ DRI-EAF).

According to the study, under a global climate mitigation scenario aligned with the 1.5°C goal, these advanced technologies could help achieve deep decarbonization of steelmaking by 2050—if costs remain manageable. In scenarios where advanced technology remains expensive, the sector may instead lean heavily on incremental changes: replacing coal with natural gas and electricity, maximizing scrap steel use, and enhancing energy efficiency. Even these measures could cut emissions by more than 50% compared to current levels.

But if the costs of new technologies fall, wider adoption of NG CCS DRI-EAF or H₂ DRI-EAF could lead to a 75% reduction in emissions—an outcome that would be transformative for the sector and the planet.

Notably, even without a technological revolution, substantial progress is still possible. Replacing coal with cleaner fuels, expanding recycling efforts, and streamlining energy use in existing processes could all reduce the sector’s CO₂ intensity—that is, emissions per unit of steel produced.

“The iron and steel industry needs to combine several strategies to substantially reduce its emissions by midcentury, including an increase in recycling,” said Dr. Sergey Paltsev, the study’s supervising author and deputy director of the MIT Center for Sustainability Science and Strategy (CS3). “But investing in cost reductions in hydrogen pathways and carbon capture and sequestration will enable even deeper emissions mitigation in the sector.”

The path to a low-carbon steel industry is steep and complex—but not impossible. With the right mix of innovation, investment, and policy support, steel could be reshaped not only as the backbone of modern infrastructure, but also as a cornerstone of a sustainable future.