Decarbonising steel

The briefing assesses the failure of the EU ETS to reduce emissions in the steel sector, which accounts for 221 megatonnes of CO2 annually. It identifies flaws such as excessive free allowances and stagnant benchmarks—particularly for hot metal—that have led to flatlining emissions since 2012. The author proposes replacing free permits with a Carbon Border Adjustment Mechanism (CBAM) and increasing funding for the Innovation Fund to support zero-carbon technologies like hydrogen direct reduction.

• The EU steel industry is a major polluter, emitting 221 megatonnes of greenhouse gases annually, which represents 5.7% of total EU emissions.
• Emissions in the steel sector have stagnated since 2012, largely because free pollution permits have shielded the industry from carbon pricing and slowed decarbonisation.
• The EU ETS benchmark for hot metal is uniquely disadvantaged, with a minimum annual improvement rate of only 0.2%, which the document argues is incompatible with EU climate goals.
• The author recommends increasing the minimum annual reduction rate for benchmarks to 1%, as iron and steel production is estimated to have this potential without shifting from primary to secondary production.
• Implementing a Carbon Border Adjustment Mechanism (CBAM) to fully replace free allowances could significantly increase the Innovation Fund's resources; full auctioning by 2026 could generate over €13 billion annually, with more than €6 billion from the steel sector.
• The HYBRIT project in Sweden is a key example of innovation, aiming to replace coal-based blast furnaces with hydrogen-based direct reduction to reduce emissions by 14.3 megatonnes in its first 10 years.

APA

Carbon Market Watch (2022). Decarbonising steel. https://carbonmarketwatch.org/wp-content/uploads/2022/03/CMW_Decarbonising-Steel_v02.pdf

Chicago

Carbon Market Watch. Decarbonising steel. 2022. https://carbonmarketwatch.org/wp-content/uploads/2022/03/CMW_Decarbonising-Steel_v02.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=Decarbonising steel |date=March 2022 |url=https://carbonmarketwatch.org/wp-content/uploads/2022/03/CMW_Decarbonising-Steel_v02.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2022decarbonising, author = {{Carbon Market Watch}}, title = {{Decarbonising steel}}, institution = {Carbon Market Watch}, year = {2022}, month = mar, url = {https://carbonmarketwatch.org/wp-content/uploads/2022/03/CMW_Decarbonising-Steel_v02.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }