ArcelorMittal and the Road to Green Steel: Costs, Policy, and Global Competition
A leading steel executive outlined a stark reality: producing a ton of steel today with net zero CO2 emissions using green hydrogen would cost about 75% more than traditional methods. Looking ahead to 2050, even with mature technology and lower costs, the premium could remain between 30% and 40%. This assessment was shared by Pinakin Chaubal, chief technology officer and one of the vice presidents at ArcelorMittal, during remarks at the International Energy Agency headquarters in Paris about decarbonizing the steel sector.
Chaubal emphasized the need for solid backing to finance the energy transition. He noted that three decades ago solar energy costs were prohibitive, but today solar is a cost-effective method for electricity generation. The challenge now is to push cost reductions at a faster pace, backed by appropriate financial support so the industry can accelerate its shift to low-emission production.
Chaubal’s remarks align with a broader industry conversation as projects to replace blast furnaces with direct reduced iron processes using green hydrogen remain stalled. While substantial public funding supports these projects, they await abundant, affordable renewable energy or subsidies that can make them economically viable. He underscored the need for not only large quantities of clean energy but also energy priced competitively.
“Right now there is no plant worldwide that produces steel with zero or near-zero emissions”
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The company’s technology leader described the European Union’s approach as a mix of regulatory pressure and carrot incentives. The EU plans to reduce free emission allowances from 2026, phasing them out by 2030, and to implement an environmental tariff that penalizes low-cost steel imported from countries without CO2 emissions penalties. In contrast, the United States relies on tax credits to encourage the industry to adopt and develop renewable, low‑carbon technologies.
A crucial point is that steel is a globally traded commodity. Competing producers must manage cost differentials to maintain production competitiveness as markets become more integrated and pricing becomes more sensitive to energy and emission costs.
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High-grade steels require transforming iron ore, so simply recycling scrap is not enough. ArcelorMittal proposes four interdependent pathways to achieve decarbonization in what is widely viewed as a challenging sector: use hydrogen as the reducing agent in direct reduction processes, substitute coal with biomass, retain coal while capturing CO2, and explore the still-immature option of direct electrification using green electricity. Today there is no plant worldwide that produces steel with zero or very low carbon emissions. Investment in sector decarbonization is estimated to run between 5.1 and 6.1 trillion dollars (roughly 4.65 to 5.57 trillion euros).
ArcelorMittal is increasing its industrial commitment to low-emission steel in the United States and Brazil. The company signed an agreement to acquire 28.4% of Vallourec, a global leader in energy pipe solutions, from funds managed by Apollo Global Management for about 955 million euros. Vallourec, which has undergone recent restructuring, has an annual rolling capacity of 2.2 million tonnes, with 85% focused on producing low-carbon products for the United States and Brazil, markets that are becoming increasingly strategic for ArcelorMittal.