Green Steel Dearth: A Challenge in the Metallurgical Landscape

PCFImage Source: Klockner


In the imminent green steel shortage until 2030, this exploration unravels the intricacies of supply chains, highlighting the scarcity in green H₂-DRI-EAF and scrap-EAF production. Structural barriers impeding capacity additions are dissected, while burgeoning demand, fueled by emission reduction goals, intensifies the shortfall. The narrative by Klockner delves into potential solutions and the evolution of a green premium, urging stakeholders to navigate decisively in the shifting steel terrain.


As we approach the threshold of 2030, the equilibrium between the promised green steel supplies and the mounting demand for emission-reducing methods appears precarious. The dearth is particularly conspicuous in green H₂-DRI-EAF and scrap-EAF production, ascribed to constraints in scrap steel supply and the formidable challenge of securing green H₂ at competitive prices.

Structural factors restraining the essential capacity additions include limitations in the annual capacity of Engineering, Procurement, and Construction companies for constructing new DRI plants, a scarcity of scrap and DR pellets, insufficient renewable electricity for DRI-EAF plants, and a shortfall in green H₂ availability. Immediate and decisive action is imperative to avert the looming risk of stranded assets for those steadfastly adhering to gray production routes.

On the demand side, the allure of branding and long-term planning due to low emissions positions green steel made using H₂-DRI-EAF and scrap-EAF routes in high demand. The article speculates on the potential amplification of the green steel shortage if corporate emission reduction targets become more widespread and ambitious.

In an intricate examination of the green steel premium, the article delves into its emergence across three distinct market phases. Current prices in Europe already bear significant premiums of 25-40%, but future pricing will hinge on the delicate balance between cost recovery for green steel producers, consumer willingness to pay for emission reductions, and the dynamic interplay of supply and demand.

Emphasizing the paramount need for transparency and credibility, the article underscores the importance of calculating the CO₂e footprint of steel products using globally recognized standards. Producers must furnish Product Carbon Footprint (PCF) certifications to validate their commitment to emission reductions, empowering consumers to make informed, greener procurement decisions.

For buyers, PCFs offer tangible benefits beyond merely validating the green status of a product. In a world where end-consumers and regulators demand heightened transparency, understanding the embedded emissions in purchased goods becomes a pivotal need. External certifications, serving as markers of trust, coupled with the harmonization of PCF calculation logic, facilitate comparability between diverse products and materials.

The conclusion underscores that steelmakers transitioning to green steel need to manage their product portfolios thoughtfully. A swift and decisive entry into the green metals market is not merely beneficial but imperative for maintaining market share, profitability, and organizational flexibility. The winners in this transformative process will undoubtedly be those who position themselves early and decisively, leveraging PCFs as a key enabler to secure a coveted green premium.


In conclusion, the journey toward green steel faces significant challenges, including an impending shortage until 2030. The demand for environmentally friendly production methods surpasses supply, especially in green H₂-DRI-EAF and scrap-EAF routes. Structural barriers, such as limited capacities and resource availability, hinder the industry's transition. The emergence of a green premium in steel prices is evident, driven by cost recovery, consumer willingness to pay for sustainability, and market dynamics. Transparency is crucial, with Product Carbon Footprint (PCF) certifications ensuring credibility and aiding consumers in making greener choices. Successfully navigating this transition requires thoughtful portfolio management, rapid entry into the green metals market, and organizational flexibility, positioning early adopters as the industry's winners

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