Green steel will be a premium product

Steel consumers may find that they must pay the price for greener products and materials in the near future

Steel consumers who want to help with the move toward production with lower carbon-dioxide emissions will find that they must pay a premium for greener material, Fastmarkets has heard.

Massive investment will be needed to improve the green credentials of the industry, which is responsible for roughly 7% of global energy emissions, and steelmakers will expect their customers to foot the bill.

The US industry is in the vanguard of the change because more than 70% of the country’s output now comes from electric-arc furnaces (EAFs), not blast furnaces, which are used for the bulk of production elsewhere in the world.

“We are seeing a modernization and electrification of the domestic steel industry,” Steel Manufacturers Association president Philip Bell told Fastmarkets. “I’ve actually had talks with companies that are required to buy American steel, and they say they are willing to pay a modest premium for more [of this material].”

CO2 emissions via EAF production are reduced by 75% in comparison with the blast furnace method, according to SMA. A further reduction in emissions from the US industry would require the closure of blast furnaces and a switch to cleaner power sources, such as hydrogen, by the country’s EAFs.

Cleveland-Cliffs, the biggest US steelmaker, set a target to slash its greenhouse gas emissions by 25% by 2030 in a statement on January 28 this year.

“This is a capital-intensive industry. We have facilities that are up and running and have many years left to their lifespan,” Pinakin Chaubal, ArcelorMittal’s vice president and chief technology officer, told Fastmarkets. “If you want to add technology, and retrofit them, that’s not cheap.”

ArcelorMittal, the world’s largest steelmaker, has set a target of reaching carbon neutrality by 2050, but it aims for a 30% reduction in CO2 emissions by its European operations by 2030. The company is counting on two technologies to meet this goal – Smart Carbon and direct-reduced iron.

The company’s $100-million-per-year “XCarb innovation fund” is part of ArcelorMittal’s sustainability initiative to achieve carbon-neutral steel. XCarb green steel certificates will enable the company to support customers who seek to reduce their Scope 3 emissions, and the company will also offer recycled and renewably produced pioneering products for customers under the XCarb brand name.

Scope 3 is the highest emissions standard measured under the international accounting tool, the Greenhouse Gas Protocol.

Find out how US steel companies are tackling Scope 3 emissions in our recent report, The steelmaker’s guide to tackling upstream Scope 3 emissions

“We are starting to get requests, asking about the carbon footprint of the steel,” Chaubal said. “We are starting to see customers willing to pay a premium for greener steel, starting in Europe, where we sell steel with an XCarb green steel certificate.”

Swedish steelmaker SSAB intends to be fossil-fuel-free by 2045, and will have fossil-fuel-free steel on the market in 2026, Mia Widell, the company’s manager of press relations and sustainability communications, told Fastmarkets. SSAB will close its blast furnaces and replace them with EAFs that will eventually run on clean energy, including hydrogen.

“Fossil-free steel made with electricity is coming, and it’s a prime product,” Widell said. “We expect that customers will pay more for a prime product [such as this, although] we believe in the beginning it will be more expensive than other steel.”

CO2-negative steel is possible but it will require further significant changes throughout the production chain, according to the authors of a study in the International Journal of Greenhouse Gas Control.

“We are starting to see more and more customers asking about the carbon footprint, but we’ve only just started to see whether there is an appetite from customers to pay more for a product – low-carbon steel – which will cost considerably more to make,” Chaubal said.

To keep up with the green steel discussion, visit our Green Steel Spotlight page.

What to read next
A US court has struck down key reciprocal tariffs imposed by President Donald Trump, ruling that the International Emergency Economic Powers Act (IEEPA) does not grant unlimited tariff authority. While markets reacted positively, Section 232 duties on steel and aluminium remain in effect, prompting continued uncertainty and a likely appeal by the Trump administration.
President Trump's endorsement of the $14 billion US Steel and Nippon Steel partnership sparks hopes for innovation and economic growth in manufacturing, but labor unions raise concerns about job security and workplace conditions, leaving stakeholders eager to see how it unfolds.
Five key takeaways from our CIPS webinar.
Fastmarkets' Tina Tong discusses adopting ESG practices for a sustainable ferro-alloys future
The Mexico Metals Outlook 2025 conference explored challenges and opportunities in the steel, aluminum and scrap markets, focusing on tariffs, nearshoring, capacity growth and global trends.
The recent US-China agreement to temporarily reduce tariffs is a major step for global trade, with tariffs on US goods entering China dropping from 125% to 10% and on Chinese goods entering the US decreasing from 145% to 30% starting May 14. While this has boosted markets and created optimism, key industries like autos and steel remain affected, leaving businesses waiting for clearer long-term trade policies.