Steel production accounts for about 11 percent of the world’s carbon dioxide emissions. And with nearly 1.8 billion tons produced every year, that number is only set to climb if nothing changes — maybe even double by 2050, experts estimate. In response, scientists and manufacturers are exploring green steel: a cleaner alternative that swaps coal for green hydrogen made from renewable electricity.
Green Steel Definition
Green steel is steel produced using low-carbon methods across its lifecycle. Swapping coal out for cleaner alternatives like green hydrogen made from renewables, this next-generation technology is decarbonizing the steelmaking industry to one day achieve zero emissions.
The ultimate goal of green steel is to create a fully decarbonized steel supply chain. While current methods aren’t entirely carbon-free, switching to these greener practices could slash emissions by as much as 95 percent compared to conventional coal-based methods. And because steel is such a foundational material — used in everything from buildings and vehicles to home appliances and consumer goods — cleaning up how it’s made could have a massive knock-on effect, reducing emissions across countless other industries.
What Is Green Steel?
Green steel is a steelmaking method that replaces carbon-heavy processes with low-emission alternatives in the production and transport of the material. It’s not green in color — the term refers to its use of more eco-friendly methods, most notably green hydrogen produced from renewable energy over coal. This shift significantly reduces CO₂ emissions across the entire production process.
Right now, green steel is made possible with cutting-edge technology like hydrogen-based direct reduction, electric arc furnaces and molten oxide electrolysis. Although the method dates back to the early 2000s, it’s still in its early stages of development and has not been widely adopted yet.
Traditional Steel vs. Green Steel
Traditional steelmaking is one of the dirtiest industrial processes on the planet, relying on coal-fired blast furnaces that emit staggering amounts of carbon dioxide. Green steel, on the other hand, exclusively uses green hydrogen generated from renewables to strip oxygen from iron ore, cutting fossil fuels out of the equation altogether. The iron is melted in sustainable, electric arc furnaces, creating a radically cleaner steel product with a fraction of the carbon footprint.
How Does Green Steel Production Work?
Green steel is a cleaner way of making steel that replaces coal with green hydrogen, a fuel made by splitting water using renewable electricity. In traditional steelmaking, coal is burned to extract iron from ore, releasing large amounts of carbon dioxide. When green hydrogen is used instead, the main byproduct is just water vapor.
The most common method involves a process called hydrogen-based direct reduction (H-DR), where hydrogen is used to strip oxygen from iron ore, producing a solid form of iron known as DRI (direct reduced iron). This DRI is melted down in an electric arc furnace, which can also recycle scrap metal. When powered by renewable energy, this method produces steel with a much smaller carbon footprint. Other emerging techniques, like molten oxide electrolysis, aim to push emissions even lower.
Companies Developing Green Steel
Stegra, formerly H2 Green Steel, is building one of the world’s first large-scale green steel plants in Boden, Sweden, with production set to begin in 2026. Powered by renewable electricity, the facility’s 690-megawatt electrolyzer would produce green hydrogen, which would replace coal in the process of turning iron ore into a sponge-like, nearly pure form of iron. With the only byproduct being vaporized water, the sponge iron is then turned into high-quality steel using electric arc furnaces, all on the same site to minimize energy waste. Once fully operational, Stegra aims to produce five million tons of green steel per year while eliminating seven million tons of CO₂ annually — the equivalent of taking 25 million petrol cars off the road.
Boston Metal’s approach to zero-emissions steelmaking tech is based on its patented molten oxide electrolysis process. Originally developed in MIT labs, this method uses renewable electricity to liquify iron ore inside of a high-temperature cell — around 1,600 degrees celsius — without generating CO₂. Today, the tech has scaled to industrial volumes, with a commercial demonstration plant expected by 2028 with plans to license its modular process to steelmakers worldwide.
Swedish steel manufacturer SSAB is also replacing coal with hydrogen in its steelmaking process and increasing its use of recycled steel. According to the website, this method is designed to lower emissions to as little as 0.05 kilograms of CO₂ per kilogram of steel, compared to approximately 1.5 kilograms from conventional methods. Founded in 1978, SSAB expects to cut Sweden’s total carbon emissions by 10 percent, and another seven percent at its Finland-based facilities after completing its transition to fossil-free production.
Germany-based Thyssenkrupp is one of Europe’s largest steel producers, and is currently transitioning to low-emissions steel through its “tkH2Steel” initiative. The company plans to replace its coal-fired blast furnaces with hydrogen-powered direct reduction plants, aiming to cut annual CO₂ emissions by up to 3.5 million metric tons in the first phase. Backed by high-profile partners like Volkswagen, BMW and IKEA, Thyssenkrupp is targeting large-scale production of climate-friendly steel by 2027 in its effort to decarbonize heavy industry.
POSCO, the largest steelmaker in South Korea — and one the world’s top carbon emitters — is developing hydrogen-based iron reduction technology, called HyREX, to replace coal in its production processes and sharply cut CO₂ emissions. Its Pohang site is piloting hydrogen fluidized bed reduction, with a full-scale plant expected by 2027 as the company advances its transition to low-emission steel. Alongside this, POSCO is also investing in carbon capture and recycling initiatives to support its goal of carbon neutrality by 2050.
Electra is a newcomer to the green steel space, developing a low-carbon process that converts iron ore into iron that’s 99 percent pure. This approach runs at low temperatures, so they can match production to the amount of renewable energy that’s available at the time, and allows the company to work with a wider variety of iron ores inaccessible through traditional methods. Plus, this technique extracts useful byproducts like silica and alumina, cutting down on waste and protecting important minerals — a crucial advantage for both steel and battery production.
Benefits of Green Steel
Drastically Reduces Carbon Emissions
Green steel could cut carbon emissions by up to 95 percent compared to traditional steelmaking methods. That’s a big deal considering the steel industry is responsible for nearly 8 percent of the global CO₂ emissions — more than the entire aviation and shipping sectors combined. By replacing coal with green hydrogen, green steel offers a promising path toward decarbonizing one of the world’s most carbon-intensive industries.
Conserves Natural Resources
Many green steel production methods make use of recycled scrap metal. They can also process lower-grade iron ore that might otherwise go to waste. This reduces the need for intensive mining — helping preserve natural resources and limit environmental disruption — while also making better use of existing materials. This creates a more circular, sustainable model for steelmaking.
Drives Job Growth
As demand for low-carbon steel increases, so too does its rate of production. According to BCC Research, this industry is projected to grow at a compound annual rate of about 20 percent through 2030. This growth translates to new job opportunities across the supply chain, from hydrogen production to plant operations.
Challenges of Green Steel
High Production Costs
At the moment, green steel is much more expensive to produce than conventional — typically costing 20 to 30 percent more, though some estimates (like those from Bloomberg New Energy Finance), put the premium as high as 40 percent. Other sources have it at an additional $150 per metric ton. Either way, this price gap largely stems from the need for new technologies and upgraded infrastructure. Bridging it will likely require government subsidies, carbon pricing and other incentives to make green steel more competitive in the market.
Massive Renewable Energy Demand
From start to finish, green steel production is designed to one day be a fully carbon-neutral process. Achieving that vision depends on a massive scale-up of clean energy, primarily green hydrogen from renewable electricity. However, current infrastructure and production capacity aren’t yet capable of meeting that demand. In fact, fully meeting the renewable electricity needs of the green steel projects announced in the European Union alone could reach up to 135 terawatt-hours per year — enough to power 12.5 million American homes for a year.
Technological and Infrastructure Barriers
Switching from traditional blast furnaces to green steel isn’t as simple as flipping a switch — it takes major overhauls to both technology and infrastructure. Many steel plants would need expensive retrofits or even full replacements. And some green methods, like molten oxide electrolysis, are still in the early stages of development. All of that adds up to a slow, costly transition that delays real progress on cutting emissions.
Frequently Asked Questions
What exactly is green steel?
Green steel is still steel, but it’s made using cleaner methods that significantly reduce carbon emissions. Instead of relying on coal, green steel production uses renewable electricity and green hydrogen, aiming to cut emissions at every stage of the process — from extracting raw materials to final production and even transport.
What is the difference between green steel and normal steel?
Traditional “normal” steel is made by shoving coal into industrial-grade furnaces. It’s also a major contributor to global greenhouse emissions. Alternatively, green steel is fueled by green hydrogen sourced from renewables, cutting emissions across the entire supply chain with the ultimate goal of becoming fully carbon neutral.
How much more expensive is green steel?
Green steel can cost up to 40 percent more than conventional steel, according to Bloomberg New Energy Finance. Other estimates put the added cost at around $150 per metric ton.
Who invented green steel?
Green steel was invented in 2003 by materials engineer and professor Veena Sahajwalla at the University of New South Wales while researching ways to replace coal with recycled tires and plastics. Inspired by the waste-pickers of Mumbai, her breakthrough laid the groundwork for commercial green steel production, which major manufacturers began adopting just six years later.
Is green steel feasible?
Yes, green steel is already being produced through pilot programs and early commercial projects. However, scaling it up across the industry remains a challenge. Broader adoption will depend on reducing production costs, expanding access to renewable energy and upgrading existing infrastructure to support new technologies.
