European NGO Transport and Environment (T&E) says low-carbon steel credits under the EU's vehicle carbon emissions framework could play a crucial role in creating a leading market for clean steel in Europe, helping steelmakers secure demand certainty while accelerating investment in decarbonisation.
In its latest position paper, T&E said that the automotive industry consumes around 20 percent of all steel used in the European Union and remains heavily dependent on primary steel production, which emits approximately two tonnes of CO₂ equivalent per tonne of steel produced. According to the organization, steel accounts for about 16 percent of the lifecycle emissions of electric vehicles and about 27 percent in internal combustion engine vehicles, making decarbonization of steel a key element in reducing vehicle emissions.
Proposed EU auto rules could support the adoption of low-carbon steel
The paper examines a proposal from the European Commission on the revision of EU regulations on carbon emissions from passenger cars. Under the proposal published in December 2025, the 2035 emissions target would be adjusted from net zero emissions to a 90 percent reduction from 2021 levels. Automakers will be allowed to offset up to seven percentage points of this flexibility margin by using low-carbon steel. Emission reductions will be calculated based on both the volume of low-carbon steel purchased and the achieved emissions savings compared to a specified benchmark. T&E supports this mechanism, but argues that the EU must quickly establish clear definitions for both “low carbon steel” and “EU-produced steel” to provide investment certainty for producers and buyers.
European green steel pipeline could meet automotive demand
Research suggests As cited by T&E, Europe is developing a significant portfolio of green steel projects that could be sufficient to meet future automotive demand.
The report estimates that near-zero-emission primary steel production capacity using green hydrogen could reach 12.3 million
