Smelting Barriers: The Innovators Forging a New Future for Iron and Steel

The steel industry, responsible for 8% of global greenhouse gas emissions, faces a critical need for decarbonization as demand is projected to rise 39% by 2050. While integrated blast furnaces (BF-BOF) dominate production, the report identifies Hydrogen-DRI as the only current net-zero commercial technology, though it struggles with high costs and hydrogen availability. The authors propose a three-pronged innovation strategy: 'Make Less' (circularity and alternative materials), 'Make Better' (retrofitting and improving DRI), and 'Make New' (disruptive low-temperature and modular furnaces). To overcome capital intensity, the report suggests startups target high-margin niche products like high-purity iron and monetize industrial waste streams to gain commercial traction.

• The steel industry is a significant contributor to global climate change, accounting for approximately 8 percent of global greenhouse gas emissions. The sector produces about 1.8 billion metric tons of steel annually, a $1.5 trillion business, with emissions primarily driven by the use of coal in blast furnaces.
• Integrated blast furnace-basic oxygen furnace (BF-BOF) facilities are the dominant production method, accounting for roughly 70 percent of global crude steel production. These facilities are highly inefficient regarding emissions, generating approximately two tons of carbon dioxide for every ton of steel produced.
• Hydrogen-DRI (H2-DRI) is currently the only commercial production technology capable of net-zero emissions by replacing gasified coal or natural gas with 100 percent renewably produced hydrogen. However, commercial scaling is hindered by high costs and limited access to the necessary volumes of hydrogen. Stegra is the only commitment that has translated into a commercial-scale project to date.
• Global steel demand is projected to increase by 39 percent by 2050, potentially reaching 2.5 billion metric tons, with significant growth expected in Africa, India, and Southeast Asia. Without intervention, emissions are expected to rise at a similar rate.
• Innovation to decarbonize steel is categorized into three strategies: 'Make Less' (reducing demand via recycling and alternative materials like wood or mycelium), 'Make Better' (improving existing processes through electrification and fuel switching), and 'Make New' (disruptive technologies like low-temperature reduction systems that operate below 350°C).
• Startups are utilizing strategic business models to accelerate commercialization, such as targeting high-margin, low-volume products like high-purity iron (HPI) to reach cost parity early. Others are monetizing waste streams, such as using steel slag for cementitious materials or recovering cement paste from construction waste to displace virgin lime in electric arc furnaces (EAFs).

APA

RMI (2025). Smelting Barriers: The Innovators Forging a New Future for Iron and Steel. https://rmi.org/resources/smelting-barriers-the-innovators-forging-a-new-future-for-iron-and-steel/

Chicago

RMI. Smelting Barriers: The Innovators Forging a New Future for Iron and Steel. 2025. https://rmi.org/resources/smelting-barriers-the-innovators-forging-a-new-future-for-iron-and-steel/.

Wikipedia

{{cite report |author=RMI |title=Smelting Barriers: The Innovators Forging a New Future for Iron and Steel |date=8 December 2025 |url=https://rmi.org/resources/smelting-barriers-the-innovators-forging-a-new-future-for-iron-and-steel/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025smelting, author = {{RMI}}, title = {{Smelting Barriers: The Innovators Forging a New Future for Iron and Steel}}, institution = {RMI}, year = {2025}, month = dec, url = {https://rmi.org/resources/smelting-barriers-the-innovators-forging-a-new-future-for-iron-and-steel/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }