Differences in emissions accounting and certification, along with high investment costs, are limiting the wider use of low-emission steel. That is the conclusion of a report by the Technology Executive Committee of the United Nations Framework Convention on Climate Change (UNFCCC), presented at COP31.
The report, “Analysis of Standards and Labels for Low and Near Zero Emission Production and Products,” examines regulatory and voluntary standards for steel, carbon-intensity thresholds and certification systems. Steelmaking accounts for about 7% of global emissions. Yet certified low- or near-zero-emission output represents less than 1% of global production of steel, cement and hydrogen.
About 71% of the world’s steel is produced through the blast furnace-basic oxygen furnace (BF-BOF) route, which emits around 2.3 tonnes of CO₂ per tonne of steel. Electric arc furnaces (EAF) account for the remaining 29%. In 2024, predominantly scrap-based EAF production had average emissions of about 0.69 tonnes of CO₂ per tonne of crude steel. Actual figures depend on electricity sources, raw materials and accounting methods, the report says.
Benchmarks for low-emission steel also vary. ResponsibleSteel certification corresponds to emissions of about 1.1–1.8 tonnes of CO₂ per tonne of crude steel, depending on the production route and assessment boundaries. EAF steel can reach around 0.6–1 tonne. The First Movers Coalition defines near-zero-emission steel as material produced with no more than 0.4 tonnes of CO₂ per tonne on a cradle-to-gate basis.
For comparison, the free-allocation benchmark under the EU Emissions Trading System (EU ETS) is about 1.328 tonnes of CO₂ per tonne of hot-rolled steel. The 0.4-tonne threshold is mainly associated with hydrogen-based direct reduced iron (DRI) and electric arc furnaces powered by renewable electricity. Differences in how standards account for scrap, production routes and lifecycle emissions complicate product comparisons, procurement and international trade.
Projects and barriers to wider adoption
The report highlights several industrial projects. In December 2025, China’s Baosteel completed the connection of a one-million-tonne near-zero-carbon steel production line at its Zhanjiang plant. The line combines hydrogen-based direct reduction, scrap, EAF steelmaking and low-carbon rolling. According to the report, it is expected to cut emissions by 50–80% compared with conventional BF-BOF production and avoid up to 3.14 million tonnes of CO₂ a year.
Sweden’s HYBRIT project aims to replace coking coal with renewable hydrogen in iron ore reduction, potentially cutting emissions by 90–95% compared with conventional steelmaking. Stegra plans to build a plant in Sweden with annual capacity of five million tonnes of steel by 2030. In Germany, SALCOS aims to replace blast furnaces with hydrogen-based DRI and EAF production, reducing emissions intensity from about 2.3 to 0.4 tonnes of CO₂ per tonne of steel.
Despite technological progress, near-zero-emission steel remains below 1% of global output. The report cites high capital costs, insufficient hydrogen and renewable-power infrastructure, financing difficulties and limited demand for certified products as major obstacles.
A separate section examines Turkey. The country’s first Climate Law entered into force in July 2025, providing a legal basis for a national emissions trading system and creating governance bodies, including a Carbon Market Board. Draft ETS rules published on July 22, 2025, proposed an emissions-intensity-based cap, benchmark-guided free allocation and coverage of power and industrial installations emitting at least 50,000 tonnes of CO₂ equivalent a year. The system is intended to support decarbonisation and Turkey’s 2053 net-zero target.
Electric arc furnaces account for around 70–75% of Turkey’s steelmaking capacity. This production mix gives the sector a lower average embodied-emissions profile than industries dominated by blast furnaces and could benefit Turkish steel in procurement and trade affected by the EU Carbon Border Adjustment Mechanism (CBAM), the report says.
To expand the market, the report recommends international reference standards that reflect differences in industrial development and technology readiness, as well as better interoperability between national certification systems and stronger digital emissions monitoring. Other proposed measures include concessional finance, tax incentives and carbon contracts for difference. Green public procurement and joint purchasing commitments could also boost demand. First Movers Coalition members, including Ford and Volvo, have committed to sourcing steel with emissions below 0.4 tonnes of CO₂ per tonne by 2030.
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