For much of its history, the United States and its steel industry developed in tandem, with steel being fundamental to the nation’s infrastructure and economic might. Though the industry has experienced periods of fluctuation – and in recent decades, has struggled to keep pace with global competitors – its significance has remained constant. Even though predicting future demand is not easy, it is safe to say steel is not going anywhere. As the Alliance for Innovation and Infrastructure described in a 2024 report, steel is “America’s Backbone.” It is no surprise that there is growing momentum – across industries and within federal policy – to reinvigorate steel production and reinforce U.S. supply chains. National security, blue-collar job creation, and trade fairness dominate the discussion, yet one argument is receiving less attention than it deserves: climate.
Many factors have eroded America’s steel industry, but the plants that remain are among the cleanest on the planet. Thanks to wide adoption of electric-arc furnaces (EAF), high scrap-recycling rates, and a growing portfolio of renewable energy, the U.S. steel industry produces less CO₂ per ton than any other major steel-producing nation and contributes only 1 to 2 percent of total U.S. greenhouse gas (GHG) emissions. The American Iron and Steel Institute estimates that in 2019 imported steel produced 9 million more metric tons of CO₂ than if it had been made domestically.
Green steel – steel made using low-carbon technologies – is emerging as the future of sustainable manufacturing. Innovation is often a key driver of competitiveness, enabling firms to cut costs, improve product quality, and respond more quickly to market demands, and new methods of steel making are more efficient and have fewer emissions. Whether green steelmaking can actually deliver U.S. steelmakers both an environmental and economic advantage is still an open question.
Regardless, the steel industry is a global system and so are its emissions. Today, almost a tenth of global greenhouse gas emissions come from steel. Outside the U.S., a majority of producers use the basic oxygen furnace (BOF) process. BOF depends on pig iron from coal-fired blast furnaces, so both its feedstock and its core reactions inherently generate large volumes of CO₂. Many of these plants are nearing the end of their operational lifespans, presenting a timely opportunity to transition to cleaner technologies. Luckily, there are plenty to choose from.
Electric Arc Furnace (EAF)
EAF is the dominant steelmaking method in the U.S., mostly using recycled steel scrap and electricity. Often called “mini-mills,” EAFs are smaller, more flexible, and more sustainable. Impressively, the process can result in 80 to 90 percent less CO2 emissions per ton of steel than traditional blast furnace methods. As of March 2025, the U.S. has an operating EAF steel capacity of almost 80 million metric tons annually, considerably greater than BOF. In fact, 70 percent of U.S. steel is derived from EAF, compared to less than a third globally. In a world chasing low-carbon steel, the U.S. starts with a running head start. EAF may seem like an obvious choice, but insufficient supplies of scrap is a limiting factor for many countries. The next technique effectively tackles this shortcoming.
Hydrogen-Based Direct Reduction (H2-DRI)
H₂-DRI converts iron ore directly into pure iron using hydrogen gas, producing water vapor as the primary byproduct and significantly reducing CO₂ emissions (without the need for steel scrap). The resulting solid iron (called DRI) is then melted in an EAF to make steel. Between 2010 and 2024, over 600 patents were filed globally, with Sweden leading the way. Studies show H2-DRI can be cost-competitive with conventional steelmaking with clean hydrogen priced around $1.60/kg. But at today’s prices (closer to $5/kg) it makes this particular green steel roughly twice as expensive, adding more than $200 per metric ton. Some combination of policy support, subsidies, or carbon pricing will probably be necessary to scale this process effectively.
Molten Oxide Electrolysis (MOE)
MOE offers a genuinely carbon-free pathway to pure iron (which is then alloyed to make steel). It works by running electricity through molten iron ore at extremely high temperatures (about 1,600 degrees Celsius) to split it into pure iron and oxygen. Because the process uses no carbon and gives off only oxygen gas, it produces zero direct emissions. This breakthrough technology, originally developed at MIT, is now being scaled up by Boston Metal. Boston Metal inaugurated its first commercial-scale MOE unit in Minas Gerais, Brazil, in March 2024 and plans to license full-scale “green-steel” lines by 2026. The technology is cutting-edge, but there is a lot of progress to be made in scaling it up.
Biomass Injection (BioIron)
BioIron is a lower-emission alternative to traditional steelmaking that replaces coal with carbon derived from renewable biomass, significantly cutting net CO₂ emissions. The most notable advancement is being made by British-Australian start-up Rio Tinto with a $143 million investment. This approach cuts power demand to one-third of competing green steel technologies; however, costs remain 10 to 50 percent higher than blast furnace methods, with economic viability largely dependent on local biomass availability. Though still in its early stages, BioIron reflects the kind of ambitious R&D driving global efforts to decarbonize the steel industry.
These possibilities are exciting, but we must remain realistic. Scaling green steel processes will require more than good intentions, and adoption timelines will vary widely across countries, economic conditions, and availability of low-carbon electricity. Even the most climate-conscious should recognize that emissions are not the top priority for steel producers. But as leader in innovation and clean manufacturing, the U.S. should embrace and advance emerging technologies when they align with economic goals. By doing so, it can help shape a future where green steel is not just an American advantage, but a global standard.
Written by Jackson Murray, Public Policy Intern
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization working to advance innovation across industry and public policy. The only nationwide public policy think tank dedicated to infrastructure, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, eminent domain, energy, infrastructure, innovation, technology, and transportation.