US steel industry in critical window of opportunity for decarbonization amid upcoming relines: RMI

Key takeaways:

• Capital decisions made before 2030 will lock in US steelmaking pathways for decades, as blast furnaces approach costly reline deadlines.
• DRI–EAF remains the leading decarbonization route, even as hydrogen deployment faces near-term policy and cost headwinds in the US.
• The early 2030s are shaping up as a supply-side inflection point, with new DRI capacity set to materially reshape the US iron and steel market.

US steelmakers face near-term reinvestment decisions

“As we think about the existing [steel] asset base, largely clustered in the Midwest in the US, a lot of these assets are coming up on dates where they need significant amounts of reinvestments,” Kaitlyn Ramirez, senior associate of RMI’s Climate-Aligned Industries Program, said.

Several coal based blast furnace steel mills in the US are approaching reline deadlines before 2030, forcing near term capital decisions that will shape US steelmaking for decades, according to RMI.

Major steelmaking facilities, including US Steel’s Gary Works No 14 in Indiana, will reline their largest blast furnaces from May to August this year in a $350 million project designed to extend the furnace’s life by 20 years, US Steel said in December.

Cleveland-Cliffs is also planning to reline its blast furnaces at its Burns Harbor and Middletown facilities, extending the life of the furnaces by approximately 20 years and costing the steelmaker hundreds of millions of dollars.

“There’s this chance to choose a path that is not… locking in coal-based production for the next couple of decades but instead pivoting that to focus on a pathway that enables near zero emissions iron and steel production in the future,” Ramirez added.


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Emissions pressure and momentum for low-carbon steel

The steel industry is responsible for around 7-9% of global carbon dioxide emissions, according to the International Energy Agency.

“The good news is that there is both demand and supply in the pipeline for near zero emissions iron and steel,” Kyle Clark-Sutton, the analysis team lead of the US Program at RMI, said. “There are a lot of companies trying to reduce emissions in the iron and steel value chain, and all of them are needed to varying degrees.”

Steelmakers are increasingly turning to methods that reduce the use of coal in their main ironmaking process, the largest source of emissions in the industry. Most decarbonization pathways focus on electrification, cleaner reductants or capturing emissions from existing assets.

The leading near-term pathway is the direct reduced iron (DRI)-electric arc furnace (EAF) route. Instead of burning coke in a blast furnace as a reducing agent, this process uses natural gas or hydrogen to turn iron ore into iron.

DRI-EAF pathway amid hydrogen hurdles

DRI EAF can significantly reduce emissions compared with the traditional blast furnace–basic oxygen furnace (BF BOF) route when powered by renewable electricity and using natural gas as a reductant.

Emissions are further reduced when green hydrogen is used to replace fossil gas in the reduction stage, producing water vapor instead of carbon dioxide.

The use of hydrogen in US steelmaking, however, has slowed under the Trump Administration, with the Department of Energy cancelling over $2 billion in funding for two West Coast hubs that focused on producing hydrogen via renewable energy in October 2025.

“We’ve definitely seen headwinds for hydrogen broadly in the ecosystem,” Ramirez told Fastmarkets, referencing the termination of major hydrogen projects by SSAB and Cleveland-Cliffs.

Despite the slowdown, RMI expressed optimism about the use of hydrogen to decarbonize steelmaking on a global scale.

“There are challenges from the policy side as it relates to hydrogen in the US in the near term, but what is encouraging is that it is not an all or nothing choice,” Ramirez said. “When you first make the investment, it enables a pathway to leverage hydrogen as we build up the infrastructure, as the costs decline, and as the technology is de-risked to shift from gas-based production to hydrogen.”

While hydrogen is a piece of the DRI route and decarbonization solution, some companies are innovating to work around the hydrogen component, Clark-Sutton said.

“We saw proposals in North America… that included a wide range of technology pathways… It’s good to have competition and have innovations to push the field forward in that way,” Clark-Sutton said. “We’ll continue to see startups thinking about ways to avoid the need for hydrogen where possible, so that we can get things to market faster, whether or not the economics of hydrogen makes sense.”

Steel industry outlook: early 2030s as a turning point

Looking ahead, the early 2030s will be an important time for the steel industry, RMI said, as DRI and new zero emissions projects come online.

For example, US Steel announced in November 2025 that it will build its DRI plant at its Big River Steel Works campus in Osceola, Arkansas.

“That’s going to be a pretty significant shift in the US landscape and market as each of these new projects comes online and provides another source of iron supply to the US market,” Ramirez said.

“I’m really excited about the early 2030s because I think we’re going to see millions of tons of near zero emission iron steel production come online in that time,” Clark-Sutton said. “We will continue to see demand signals grow, which will help… get contracts done so that project developers can get financing and start building.”