A FORK IN THE ROAD FOR THE GLOBAL STEEL SECTOR

The global steel sector, responsible for approximately 7% of worldwide energy-related CO2 emissions, faces a critical transition period as 71% of coal-based blast furnace capacity will require reinvestment by 2030. The report highlights the disparity between current production methods—specifically the high emissions of Blast Furnace-Basic Oxygen Furnace (BF-BOF) versus Electric Arc Furnace (EAF)—and the massive investment required for enabling infrastructure, such as green hydrogen and CO2 pipelines. It advocates for a combination of upstream, midstream, and downstream policies, including Carbon Contracts for Difference (CCfDs) and Green Public Procurement (GPP), to avoid stranded assets and align the industry with a 1.5°C-compatible trajectory. Additionally, the Climate Bonds Initiative introduces sector-specific criteria to guide the certification of climate-aligned steel assets and companies.

• The global steel industry is at a critical juncture because 71% of existing coal-based blast furnaces, representing 1090 Mt of capacity, will reach the end of their operational life and need major reinvestment before 2030.
• There is a significant difference in carbon intensity between primary and secondary steelmaking: the global average for scope 1 and 2 emissions in 2018 was 2.3 tons of CO2 per ton of crude steel for Blast Furnace-Basic Oxygen Furnace (BF-BOF) and 0.7 tons for Electric Arc Furnace (EAF) production.
• Transitioning the steel sector requires substantial financial investment: while USD 47 billion annually is needed to maintain existing facilities and meet demand by 2050, an additional USD 9 billion per year is required for the net-zero transition. Furthermore, the enabling infrastructure for zero-carbon electricity and green hydrogen could require approximately USD 2 trillion in cumulative investment over 30 years.
• To align with a 1.5°C-consistent trajectory, global steel emissions must be reduced by at least 50% by 2030 and 95% by 2050, relative to 2020 levels.
• The report identifies several key policy instruments to facilitate the transition: upstream policies for low-carbon energy infrastructure, midstream policies such as Carbon Contracts for Difference (CCfDs) and carbon pricing to reduce investment risk, and downstream policies like Green Public Procurement (GPP) and 'green windows' for zero-tariff trade of zero-carbon steel.
• The Climate Bonds Initiative has established specific certification criteria for steel, including requirements for CCUS to capture at least 70% of all emissions in BF-BOF lines and a minimum of 70% scrap or hydrogen-based DRI for EAF facilities.

APA

Passaro, F. (2022). A FORK IN THE ROAD FOR THE GLOBAL STEEL SECTOR. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/A-Fork-in-the-Road-for-the-global-steel-sector_2025-02-17-162914_tluz.pdf

Chicago

Passaro, Fabio. A FORK IN THE ROAD FOR THE GLOBAL STEEL SECTOR. Climate Bonds Initiative, 2022. https://www.climatebonds.net/files/documents/publications/A-Fork-in-the-Road-for-the-global-steel-sector_2025-02-17-162914_tluz.pdf.

Wikipedia

{{cite report |last1=Passaro |first1=Fabio |title=A FORK IN THE ROAD FOR THE GLOBAL STEEL SECTOR |publisher=Climate Bonds Initiative |date=November 2022 |url=https://www.climatebonds.net/files/documents/publications/A-Fork-in-the-Road-for-the-global-steel-sector_2025-02-17-162914_tluz.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{passaro2022fork, author = {Passaro, Fabio}, title = {{A FORK IN THE ROAD FOR THE GLOBAL STEEL SECTOR}}, institution = {Climate Bonds Initiative}, year = {2022}, month = nov, url = {https://www.climatebonds.net/files/documents/publications/A-Fork-in-the-Road-for-the-global-steel-sector_2025-02-17-162914_tluz.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }