No fossil-free steel without sustainable power: banks must step up

The steel sector, responsible for 11% of global CO2 emissions, requires a significant increase in sustainable electricity to transition from coal-based production to electricity-intensive methods like green hydrogen-DRI and electric arc furnaces. However, the world's 65 largest banks continue to prioritize fossil fuel financing over sustainable power, with a financing ratio of 0.42:1 between 2021 and 2024, far below the IEA's Net Zero scenario. The document warns that insufficient investment in renewable energy risks a 'gas trap' where steelmakers remain locked into fossil gas instead of switching to green hydrogen. It specifically criticizes European banks for continuing to support coal-based steelmakers and met coal developers despite having decarbonization targets.

• The steel industry accounts for 11% of global CO2 emissions, with 70% of total production currently relying on coal-based methods. Deep decarbonization is technically achievable, potentially making the industry coal-free by the 2040s.
• Decarbonizing steel requires highly electricity-intensive technologies, including scrap-based electric arc furnaces (EAFs), green hydrogen-based direct reduction of iron (green H2-DRI), and direct electrification through electrolysis. To meet 2021 production levels alone, 1,371 GW of renewable energy and 97.6 Mt of hydrogen would be required, representing nearly half of current global renewable capacity.
• Between 2021 and 2024, the 65 largest banks globally financed fossil fuels at more than twice the rate of sustainable power, providing US$3,285 billion to fossil fuels compared to US$1,368 billion for sustainable power. This 0.42:1 ratio is significantly lower than the IEA's Net Zero scenario target of 6:1 by 2030.
• European banks exhibit a sustainable power to fossil fuel financing ratio of 0.7:1. Despite this, banks such as BNP, Crédit Agricole, and ING have provided funding to ArcelorMittal via a USD650 million bond on September 30, and to met coal developer BHP in September, indicating a gap between their stated decarbonization targets and actual financing practices.
• A lack of sustainable power investment risks a 'gas trap,' where steelmakers use fossil gas for iron reduction longer than necessary due to the unavailability of green hydrogen. By 2050, producing virgin iron will require 54 Mt of green hydrogen annually and 2,700 TWh of renewable electricity, which is equivalent to the current annual electricity demand of the EU.

APA

Manickawasagar, A. (2025). No fossil-free steel without sustainable power: banks must step up. Reclaim Finance. https://reclaimfinance.org/site/en/2025/10/20/no-fossil-free-steel-without-sustainable-power-banks-must-step-up/

Chicago

Manickawasagar, Aatiraï. No fossil-free steel without sustainable power: banks must step up. Reclaim Finance, 2025. https://reclaimfinance.org/site/en/2025/10/20/no-fossil-free-steel-without-sustainable-power-banks-must-step-up/.

Wikipedia

{{cite press release |last1=Manickawasagar |first1=Aatiraï |title=No fossil-free steel without sustainable power: banks must step up |publisher=Reclaim Finance |date=20 October 2025 |url=https://reclaimfinance.org/site/en/2025/10/20/no-fossil-free-steel-without-sustainable-power-banks-must-step-up/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{manickawasagar2025fossilfree, author = {Manickawasagar, Aatiraï}, title = {{No fossil-free steel without sustainable power: banks must step up}}, publisher = {Reclaim Finance}, year = {2025}, month = oct, url = {https://reclaimfinance.org/site/en/2025/10/20/no-fossil-free-steel-without-sustainable-power-banks-must-step-up/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }