Decarbonization Pathways and Policy Recommendations for the United States Steel Sector

The U.S. steel industry is already less carbon-intensive than other major regions due to a high reliance on electric arc furnaces (EAFs), which account for 70% of production. However, the remaining 30% relies on integrated blast furnace/basic oxygen furnace (BF-BOF) routes to produce high-quality steel. Decarbonization requires transitioning these integrated mills to direct reduced iron (DRI) and submerged arc furnaces (SAF) or implementing carbon capture and storage (CCS). While clean electricity offers a 'quick win' for EAFs, deep decarbonization is hindered by the high cost of green hydrogen and the need for extensive CCS infrastructure. The report argues that because steel is a low-margin commodity, government policy—including carbon taxes, border adjustment mechanisms, and demand-side incentives—is essential to offset the increased costs of low-carbon production.

• The U.S. steel industry has a lower carbon intensity than other major producing regions because approximately 70% of its steel is produced via electric arc furnaces (EAFs) remelting scrap.
• Switching all current steelmaking power consumption to clean electricity is estimated to reduce carbon emissions by 35% from present levels.
• High-quality steel production still requires ore-based metallics (OBMs) like pig iron and direct reduced iron (DRI) because scrap impurities limit the types of products that can be made; the U.S. requires roughly 30 Mt/y of OBMs to meet forecasted demand.
• Carbon capture and storage (CCS) is currently more cost-effective than hydrogen for decarbonizing OBM production, offering 60% to 90% carbon abatement, though it cannot achieve full decarbonization.
• Green hydrogen is technically viable for DRI production but is currently economically prohibitive, with reductant costs increasing more than eightfold compared to natural gas.
• The Great Lakes region is the most favorable area for CCS implementation due to its concentration of heavy industry and proximity to the Illinois Basin's geological storage capacity.
• Transitioning from blast furnaces to EAFs can lead to significant job losses; for example, replacing a 3.0 Mt capacity blast furnace operation with an EAF facility could reduce employment from 1,545 to 683 workers.
• The report concludes that subsidies alone are not viable long-term and recommends a federal-level carbon tax combined with a carbon border adjustment mechanism (CBAM) to drive decarbonization.

APA

Bailey, S., Lockwood, T., & Wakim, G. (2025). Decarbonization Pathways and Policy Recommendations for the United States Steel Sector. Clean Air Task Force. https://www.catf.us/resource/decarbonization-pathways-policy-recommendations-united-states-steel-sector/

Chicago

Bailey, Sam, Toby Lockwood, and Ghassan Wakim. Decarbonization Pathways and Policy Recommendations for the United States Steel Sector. Clean Air Task Force, 2025. https://www.catf.us/resource/decarbonization-pathways-policy-recommendations-united-states-steel-sector/.

Wikipedia

{{cite report |last1=Bailey |first1=Sam |last2=Lockwood |first2=Toby |last3=Wakim |first3=Ghassan |title=Decarbonization Pathways and Policy Recommendations for the United States Steel Sector |publisher=Clean Air Task Force |date=14 April 2025 |url=https://www.catf.us/resource/decarbonization-pathways-policy-recommendations-united-states-steel-sector/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bailey2025decarbonization, author = {Bailey, Sam and Lockwood, Toby and Wakim, Ghassan}, title = {{Decarbonization Pathways and Policy Recommendations for the United States Steel Sector}}, institution = {Clean Air Task Force}, year = {2025}, month = apr, url = {https://www.catf.us/resource/decarbonization-pathways-policy-recommendations-united-states-steel-sector/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }