In contrast, electric arc furnace (EAF)-based producers – which predominantly consume ferrous scrap and direct-reduced iron (DRI) – have received relatively limited attention, in part because they are inherently less carbon-intensive.
But this disparity overlooks the potential and challenges unique to EAF steel production, especially while the industry shifts toward greater use of scrap and renewable electricity. Addressing decarbonization in EAF steel operations is essential for achieving a comprehensive level-playing field across the European steel industry.
During Fastmarkets’ International Iron Ore & Green Steel Summit 2025 that took place in Barcelona on June 17-19, Julia Bolotova, Fastmarkets’ strategic markets editor for green steel, met with Alexander Gordienko, export director of Spanish EAF-based steelmaker Celsa Group, to discuss these topics and more.
The carbon intensity of BF-BOF steel production in Europe
Currently, about 55% of steel in Europe is produced via the BF-BOF route. This generates approximately 2.0 to 2.2 tonnes of carbon dioxide (CO2) emissions (both direct and indirect) per tonne of steel, according to the European Commission.
In contrast, around 45% of European steel is manufactured using the electric arc furnace (EAF) route. This figure is projected to increase to roughly 57% while the EU transitions to cleaner technologies in pursuit of its net-zero emissions target by 2050.
Defining green long steel and lowering emissions thresholds
In terms of definitions of green long steel, Gordienko pointed out that there were currently none as such. He also said it was “a bit of a moving target,” with emissions thresholds getting lower over time.
“If you asked me [about green longs definition] even six months ago, I’d tell you that we consider green long products produced with emissions of under 500 kilograms of CO2 per one tonne of steel…Today we would consider green longs with emissions under 400 kilograms of CO2 per one tonne of steel,” Gordienko said.
“And I wouldn’t be surprised if [in one year] this number will move to under 300 kilograms of CO2 per one tonne of steel,” he added.
Competition between long steel suppliers on CO2 emissions levels is getting tighter. EPD is getting “better and better”. And the grid energy supply was getting “greener” across Europe, according to Gordienko.
“Every time the grid gets 10% greener, we are shaving off around 50 kilograms [of CO2 emissions] on our EPD,” he said.
On April 9, Fastmarkets launched a price assessment for green steel, differential to steel reinforcing bar (rebar) domestic, delivered Northern Europe.
Fastmarkets’ methodology defines European green long steel as “steel produced with Scope 1, 2 & 3 emissions at 500 kilograms of CO2 per tonne of steel.”
Fastmarkets’ assessment of the green steel, differential to rebar, domestic, delivered Northern Europe was €15-30 ($17-34) per tonne on Wednesday, widening downward from €20-30 per tonne seven days earlier.
Examining the energy efficiency gap between EAF and BF-BOF
When it comes to the perception of EAF steel among EU policymakers, Gordienko said he doesn’t believe “EAFs are really appreciated” for their cleaner production method.
Using steel scrap instead of virgin ore in steelmaking reduces CO2 emissions by 58%. And recycling one tonne of steel saves 1.4 tonnes of iron ore and 0.8 tonnes of coal, according to European studies cited by recycling companies like Stena Metal.
But despite its cleaner setup, Gordienko pointed out that EAF energy efficiency is actually much worse compared to BF-BOF mills.
While BF-BOFs use 0.05 MWh per tonne of steel production. EAFs use 0.45 MWh per tonne of steel, he estimated.
“EAFs are up to 10% more energy inefficient than BOFs,” he said.
High electricity costs hurt EAF steel in Europe
“The way green transition is handled in Europe – it’s front-loaded,” he said. “The costs [of electricity] for the operators of the grid are being passed to consumers. We are the main consumers – and we are paying for the green transition”.
Gordienko also pointed out that highly fluctuating power prices in renewable energy grid have a massive impact on the costs of steelmaking for EAF-based steelmakers.
“After 2022, the swing in the power costs [in European electrical grid] can go from historical lows – €20-30 per MWh — up to €200 per MWh. [And it is unsustainable]. One day it can go to €200 per MWh, another to €50 per MWh, and then back to €200 per MWh. It’s completely unpredictable for long term agreements,” he said.
“[These electricity price fluctuations] transit up to €70 per tonne of additional costs of steel production – only for electricity, which [steel mills] can’t pass down to the customers,” he added.
Electricity prices in Europe remain significantly higher than in many other regions. Industrial rates often exceed €100 per MWh – compared to around €30-50 per MWh in parts of the United States and China. This poses a major competitiveness challenge for energy-intensive industries like steelmaking.
“Even with the Carbon Border Adjustment (CBAM) costs, imports still might be competitive, considering the disparity in electricity costs,” Gordienko said.
“It’s very difficult for us to compete [outside Europe] due to high electricity costs,” he added.
Support for the green steel transition
By the end of 2024, the total amount of public funding dedicated for green steel transition was significantly above €14 billion, Fastmarkets estimates. But practically all of this was granted to BF-BOF based steelmakers.
“As far as I know there wasn’t a single project which has been funded for [existing] EAF-based steelmakers. 80% of public funding goes to BOF projects, with very little to no support for EAFs,” Gordienko said.
The only known funding for EAF steelmakers was to new facilities not yet in production, Fastmarkets understands.
“We asked the EU to arrange [the] renewable power tariff, which is fixed on the ETS (Emission Trading System) price,” Grodienko said. “We are already paying for renewable energy sources, so it’s not a subsidy or anything like that. It’s just fixed cost for EAFs, which would help us to manage the cost [of electricity],” he said.
The challenge of limited scrap supply
Another bottleneck for the green steel transition was the limited prime steel scrap generation in the EU and high domestic prices, according to market sources.
Europe generates around 100 million tonnes of scrap per year. And 20% of that amount is being exported at prices very often cheaper compared to domestic prices, according to Gordienko.
These higher scrap prices in the European domestic market result in €20-40 per tonne higher costs for steel production, Gordienko said.
Meeting future demand for premium scrap in green steelmaking
Between 40 million and 50 million tonnes of new green steelmaking capacity – using just EAFs or EAFs and DRI – is expected to come online in Europe by 2030, Fastmarkets’ research team estimates.
For EAF-made flats, steelmakers will need premium scrap with low copper content. The generation of low copper scrap in Europe is only around 1 million tonnes per year at present, according to Gordienko.
“[Premium scrap generation] can be improved, but huge infrastructure investments are required – and it’s not happening at the moment,” he said.
Ferrous scrap prices in key markets such as Turkey have trended downward over the last three years, but Gordienko said he believes they are still too high for the makers of EAF steel.
Pressure from European steelmakers has led to the European Commission pondering the imposition of export tariffs or restrictions on EU-origin ferrous scrap. A decision is expected in the second half of the year, according to market participants.
Such measures are strongly opposed by scrap processors in the region, which point out that Europe doesn’t have enough demand to consume all of the scrap it generates, making exports necessary, according to industry sources.
But European scrap should stay “at home”, Gordienko said.
Scrap export tariffs would be “in line” with WTO rulings and the European Commission “must consider” such an approach, he added.
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